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ECOMMBX: Steady as you go

ECOMMBX: Steady as you go

By Adonis Adoni | Photo by TASPHO

 

Sitting in the ECOMMBX coffee bar and sipping an espresso while waiting for the fintech’s CEO Michael C. G. Charalambides, I had the faint suspicion that this company marches to a different beat. A quick assessment of the space: The Christmas spirit was high, with a huge tree dressed to impress in the middle of the park; an arcade game next to an industrial popcorn machine by the wall; an electric scooter and and hovercrafts stood in a corner; and people with broad smiles on their faces, making, dare I say it, childlike gestures. Then, I got to meet Charalambides himself. He had wiry, unruly hair, wore bright orange sneakers and walked with an effortlessly unaffected temperament that was most endearing.

 

The fintech industry casts a very wide net these days: you have EMIs, like ECOMMBX, payment processors, neobanks, gamemakers and insurance companies, to name just a few. More recently, tech giants have staked their claim. Drivers are raving about Lyft’s accounts, ApplePay has some 500 million users worldwide and Amazon is constantly churning out new financial products. Charalambides doesn’t think they’re stepping on anyone’s toes. “They’re simply expanding their scope and their verticals into other industries,” he explained. Banks, though, are a different story. For the better part of the fintech revolution, banks looked down on the industry from the sidelines, feeling they still held all the cards. They didn’t; the fintech industry, especially in payments, grew exponentially, leaving banks scratching their heads in wonder. In 2018, the European Union introduced the Payment Services Directive (PSD2) with the intention of levelling the playing field between Electronic Money Institutions (EMIs) and payment companies and the banks.

 

Charalambides, though, is not entirely convinced that the directive fulfilled its purpose. “It managed to a certain extent,” he said, “but only as far as encouraging collaboration between the two verticals.” Banks have since changed their tune.

Santander recently bought a piece of the now defunct Wirecard to use as the backbone of its own payment processor platform. Others will follow – and this presents more of a threat to the industry than the vertical movement of big tech, as banks have the muscle to bully away competition through aggressive takeovers and restricting business. “I think we’re looking at a time when PSD3 should be introduced,” Charalambides argued, “in order to facilitate the growth of those fintech companies that brought the market where it is today, allowing other verticals, including the big technology companies, to create a whole new world where people can transact faster and more easily.”

 

Meanwhile, during the fintech boom, so-called ‘unicorns’ were born. Companies like Revolut, Monzo and N26 grew at mind-boggling speed and their mere existence expanded the English language to include the word ‘neobank’. That growth, though, was a product of sacrifice, which affected profitability. Charalambides cautioned that these companies need to find ways to generate profits fast. “We have seen with Wirecard what happens when a big company fails,” he said. The spillover effect from the Wirecard scandal on the entire financial industry was akin to a tanker creating an oily Jackson Pollock work in the Pacific Ocean. Were these companies to continue sacrificing profitability, the entire industry would be at risk. “There are two possible outcomes,” he suggested. “EMIs will be loss-making, which will drive the banks away, or the payments industry will be considered high-risk. If those two things happen, then we will lose any support from centralized authorities.” Taking a rather sober tone, he assured me that ECOMMBX is not growth-hungry.

 

The company is partial to growing organically, funnelling its investments into improving its technology, infrastructure and people, as well as its regulatory scope. “By focusing upstream rather than downstream,” he went on, “we will be able to understand how fintechs behave and create a sustainable ecosystem, where we can provide our services to other fintech companies and not just to general retail, which is where most of our competitors are focused.”

I took a step back to compute this information. It is easy to see the appeal behind grabbing as much as you can as fast as you can. “Is there really any other way? I eventually asked.

“I think it’s more important to understand where I’m coming from than the answer itself,” Charalambides said.

 

When I mentioned that his enigmatic reply contained traces of Lacan psychoanalysis, he gave me a knowing nod.

For Charalambides, working on the assumption that every company on earth has a limited amount of time under the sun, this can only suggest that growth, whether organic or not, also runs on borrowed time. When a company becomes too aggressive and has a sudden growth spurt, it essentially burns through that time. The only way forward is to die off and be reborn as a new entity. “So, you have a choice: live against the test of time, or against the masses you want to obtain,” he said. In Marketing 101, the fastest way to obtain critical mass in a short time span is by slashing profits and giving bread to the people. But, when the time comes – and it will – for these companies to re-emerge as new entities, in their search for profits, they will have to introduce fees for products that used to be free. Is it at all implausible to suggest that their customers will simply switch to another provider for those free pretzels? “That’s the same strategy many Caesars employed and their reign was always short-lived,” he pointed out. “Their backbone was made of opportunists; there was no loyalty.” 

 

In the not-so-distant future, Zoomers stand to become the strongest purchasing power in the world economy. This generation has a few particularities: it is the first to have not experienced an unplugged world; a generation that shuns credit lines and mortgages (not unlike how banks treated fintech at first) and doesn’t need to define itself by a career. Banks have no means of capturing this market, even though they are trying to enter the game. Charalambides maintains they are going about it the wrong way, as they are not trying to unpack the finer details behind the peculiar movements of the fintech machine, but rather imitate data on a spreadsheet. In contrast, EMIs and payment providers will have a whole new market to serve, and this where the opportunity lies to provide services to other fintech companies. For an EMI, like ECOMMBX, monitoring compliance, risks, AML exposure – and even plasmatic growth – is already part of their DNA.

 

Charalambides’ references to the Roman Empire and the nod to Lacan had me wondering about the role of philosophy in his life, and, by means of osmosis, to ECOMMBX. He talked about the importance of sharing a common state of mind, as in everybody working toward the same goal, operating on the same frequencies. That’s a tough proposition; the only way to achieve is to constantly reorient himself and, indeed, the entire company, always minding the path. ECOMMBX keeps its internal lines of communication open, either through meetings, appraisals, via the large wooden lunch table on the ground floor, the open-plan aesthetic and Charalambides’ own idiosyncrasies, so that everyone knows where they stand at any given instant. So my hunch was right: there is, after all, something different about this company. Where most fintechs want to run, ECOMMBX exercises common sense, not out of necessity, but through sheer will. This might just be the difference between wisdom and knowledge.

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