The impact of technology on the world over the past two decades has been unsurpassed, with countless industries being disrupted by technological advances and developments. Over the past five years, this impact has become prevalent in the established financial sector, with emerging technologies increasingly affecting incumbent businesses and their clients.
One of the businesses leading this global financial evolution is Traderoot Technologies, a South African based fintech software company that has been building and supplying world-class fintech solutions to central banks, financial institutions, and a multitude of other sectors in 12 countries for over 20 years.
“There is a huge focus of innovation in the fintech space globally,” says Traderoot CFO, Daniel Templeman “According to a recent report by KPMG, global fintech investment in the first half of 2021 reached a record $98 billion, up from $87.1 billion over the same period in 2020. Given that the global fintech market is already valued at around $5.5 trillion with an expected CAGR growth of 23.58%, it is no surprise that investors are so bullish about the space.”
Over the past few years, a number of “disruptors” have entered the finance sector, including online banks, streamlined payment gateways, and alternative investment engines. These disruptors have come in the form of innovative start-ups such as Revolut and MAMBU in Europe, and better Finance in South Africa, or have emerged from established corporates entering the finance sector, such as Discovery Bank and Vodapay. As a result, incumbent banks and payment providers are finding the competition becoming more innovative, aggressive and diverse, so they in turn are looking to innovate and grow.
“All of these factors are contributing to a land grab in the fintech sector, where venture capitalists, investment banks, private equity and other institutional investors are ploughing money into financial technology,” says Traderoot CEO Jan Ludik. “At the same time, the incumbents and challenger corporations are similarly investing in upscaling their fintech development teams to keep up with the rate of innovation.”
This presents a massive opportunity for Traderoot at a global level, as many of the solutions that both the start-ups and incumbents are trying to pioneer have already been built and commissioned by Traderoot to blue chip clients across 12 countries.
“In the case of many of these disruptors and innovators,” Ludik explains, “Traderoot is the reason for their success. Some of the most innovative and disruptive players entering the market have been able to quickly and cost-effectively develop and deploy their solutions because their core business is built on Traderoot technology. This is why we are now embarking on an ambitious global expansion plan and have set up offshore offices to expand our global offering.”
The fintech development space is an intriguing one. Building new solutions from scratch comes with a plethora of challenges and barriers to entry. They require massive funding, a prolonged development cycle, and countless unforeseen hurdles. Fintech software providers like Traderoot offer a faster, simpler, and more affordable route-to-market, with their plug-and-play and white-label solutions removing many of these obstacles.
“It’s interesting seeing the amount of money being sunk into fintech projects and start-ups,” says Ludik. “Fintech investors appear to be solely on the hunt for the golden egg when they should really be turning their attention (and their investment) to the goose that produces that golden egg. Through licensing or managed service of Traderoot’s solutions, modules, software and APIs, operators or fintechs are able to achieve their business objectives in record time and at a fraction of the cost.”
These operators span from national payments systems to acquiring banks, aggregators, payment service providers (TPPPs) and payments gateways. Traderoot has licensed solutions on premise, in the cloud or under managed services with first-world technology and competent services that allow our partners to compete at the best possible cost-per-port or transaction metric in real-time or instant digital payments. In its own right, this is shifting the operating model from the older bricks and mortar format.
Traderoot also offers a Banking-as-a-Service (BaaS) operating model which is rapidly gaining traction with the latest forms of fintech “disruptors”. BaaS is a concept whereby banks support emerging platforms by offering their bank-license as a service in partnership with an experienced Fintech provider like Traderoot.
Traderoot is looking to set up a Banking-as-a-Service platform in the UK and European territories initially, and is inviting multiple regional fintech disruptors to join the BaaS platform on a “build-operate-transfer” (BOT) model instead of creating their own platform on a traditional alliance bank model from the start. This will allow for a substantially lower investment requirement and reduced capital risk in the setup and initial burn. Once the new fintech operator becomes successful, they may then easily transfer the platform to their own ICT teams if they so wish.
Where an investment bank can provide the banking license and facilitate UK, EU and international payments, Traderoot can provide the Universal Issuing Product stack in the cloud and integrate it seamlessly with the Core Banking System (CBS) of the bank. In parallel, Traderoot will seamlessly and speedily integrate with the Payment Rails of the UK, EU and International Payment System.
Traderoot will, within a period of less than a year, be in a position to approach the fintech investment houses and Venture Capital companies to offer the Banking-as-a-Service platform to their new entrants.