Exclusive: ‘The Nordic power behind payments’ – Denise Johansson, Enfuce in “The Paytech Magazine”
Finland’s biggest startup by revenue in 2018, Enfuce’s rise has been impressive. Co-founder Denise Johansson says its mission is to allow its customers to focus
Established four years ago, Helsinki-based payment services provider Enfuce has been a boundary-breaker from the outset, becoming the first Nordic payment services company to launch Apple Pay and, in June this year, having its authorised payment institution licence approved. Now, it has its sights set on worldwide growth.
Its raison d’être? As co-founder Denise Johansson explains: helping banks, fintechs and other financial services operators, succeed in a fast-changing, highly competitive financial services environment by allowing them to concentrate on their core purpose of serving customers.
She believes banks can no longer afford to be encumbered by the limitations of out-of-date legacy systems, or expect to develop, in-house, the kind of complex tech needed to service the demands of today’s customers. Rather, they should allow out-of-the-box services, developed by the likes of Enfuce, to take care of the heavy lifting around everything from product enablement, to compliance.
“We are the enabler, the hub, the integrator, the tech behind banks, and we don’t allow ourselves to become legacy,” she says. “They can trust us to be compliant, relevant and secure, so that they can focus on whatever great consumer or corporate ideas they have.
“We are a processor, offering card issuing-in-a-box for any organisation that wants to enable digital payments, or attach to Visa or Mastercard payment rails. It’s a huge thing for banks to get this working on their own if they haven’t done it before, but we know how this part of the ecosystem operates and will make sure they succeed with whatever they want to achieve.”
Enfuce proved the potential of its scalable, Cloud-based systems in 2019, when it nailed the Middle East’s largest ever card migration of almost six million cards belonging to customers of International Smart Card (ISC – the region’s biggest provider of efinance transaction services, responsible for paying public sector salaries, pensions and benefits via its Qi debit card), remotely from Finland. Enfuce is committed to helping organisations, big and small, to achieve their goals, from leviathans like SmartCard, to fintech minions looking to test new products.
It arose from changes in the Nordic financial services landscape: a perfect storm of technology, regulation, venture capital and evolving customer needs.
“If we go back five or seven years, you didn’t see many new entrants into the market, or a lot of new stuff happening,” says Johansson.
“Then we started to see movement, with new players wanting to enter the market but not sure how to do it, and that’s when we found our sweet spot. We wanted to come in and help, enable change and allow new players to join in.
“People were not happy with the services we had always had, they wanted things to go smoother, payments needed to become more seamless. We don’t use as much cash as we did 10 years back, so virtual money needs to be easy and safe to use.”
“There hasn’t been that much change in the technology,” adds Johansson. “It’s really been about more players being enabled to use it in the push for new services for end users.”
That said, the Cloud has had a major impact across the industry.
“Looking back, when you used to put something into production, five to 10 years later that system could be working exactly the way it did initially, because you built it so well you didn’t need to make upgrades,” says Johansson. “Today, in the Cloud, everything moves so fast that what you put into production today will be legacy tomorrow, so you need to have new ways of working with tech because otherwise you will be left behind.
“We’re now four years old and we have already changed around 80 to 90 per cent of our tech to something new. And that’s the only way not to become legacy; you constantly need to redevelop. If you think about a business with systems from 10, 15 or 20 years back, for it to change all that, piece by piece, requires so much. But when you are born out of the mindset that what goes into production today will be legacy tomorrow, you start to develop the processes to run tech services in a whole new way.”
Just such an example is Enfuce’s recent tie-up with Swedish neo, Rocker, around its VISA-enabled, prepaid cards.
“We love working with Rocker because they are so determined to find better solutions for consumers, with great ideas about future needs. We serve their back office and tech side so that they can focus on their consumer services,” says Johansson. For her, it is a great example of a fintech concentrating on serving its customers well, while outside specialists – in this case Enfuce – deal with everything from payment processing to compliance and licensing.
“When we started off, we had an idea that banks would need to start focussing on their core businesses because the neobanks had started to emerge, although they weren’t that big then. However, today, the neobanks are pushing forward, focussing on what they are really good at. So, for the legacy banks to keep up, they also need to focus on where their core business is and be the best at that, scaling off everything that is not core.
“We do this as well. We look at our core business and how to be best at what we do, but we won’t start to put more and more half-services on it, and be semi-good at anything. If we are launching something new, we need to know we are the best at it.”
Rocker’s prepaid card is part of plans by the Stockholm-based challenger, formerly known as Bynk, to expand its mobile personal finance platform into other areas. It also offers services like loans, payments, savings and a debit card. For its pre-paid card, Enfuce took care of everything from licensing to compliance, processing and back-office services, including dispute handling, and helped to create a product which is compatible with any payment method, currency or geography, thus supporting Rocker’s plans to expand its offering across Europe. Using Enfuce’s web-based application programming interface (API), Rocker can instigate dynamic spending limits, push notifications and geo-blocking.
Emil Hansson, Rocker’s CEO, shares Johansson’s philosophy of tech delegation: “I understand tech must be frustrating for big bank CEOs who built their platform in the 80s or 90s as a supporting part of their company, based in the basement. But today, it’s the heart of the company, what the culture is built around, and they’ve got to be customer-first and not religious about how they build their platform because it’s going to change over time, no matter what,” he says. “Tech is not IT, it’s development, it’s the core of the company.”
Similarly, Enfuce has been instrumental in enabling the first new challenger bank in Iceland for decades, Indó, to get to market. Enfuce’s turnkey service provides payments, open banking and sustainability services to the newbie, which has designs on being ‘the world’s least powerful bank’, by never directly managing users’ funds but instead adopting a ‘narrow banking’ model where it places deposits securely with the local central bank.
Founded in 2018, Indó aims to reinvent Icelandic banking with a simple and transparent service. Once its pending banking licence is approved by the Icelandic Financial Supervisory Authority (FSA), it plans to launch a card-linked app and current account with market-beating interest rates. As Indó’s full-service partner, Enfuce is helping it set up compliant banking services quickly and at scale, including implementing data-driven features within the Indó app, due to launch later in 2020.
Indó co-founder Haukur Skúlason, says: “We know, from bitter experience, that the problem banks have, in Iceland, is their desire to build stuff themselves. So, you have hundreds of IT systems that are, to varying degrees, outdated, but all interconnected, and it’s extremely expensive to keep them all running. So, we’re not going to do that. We are going to build as little as possible, and look at companies to partner up with in providing specific solutions that are best in class.”
Key pillars of Enfuce’s offering – its payment services, open banking and My Carbon Action services – will underpin elements of the Indó user experience, including providing customers with insights around the carbon footprint of aspects of their shopping, for items like food.
Consumers will benefit from Enfuce’s technology and experience without ever knowing who’s providing it – and that’s the point.
“We are the enabler, the hub, the integrator. Whatever word you want to call it,” says Johansson, “those who are managing their customer relationship need to be in the front but we need to be supporting them from behind.”