The CFO Journal with Sergio Sánchez: capitalizing on trends in FinTech like PSD2 and Open Banking
In The CFO Journal we share insights and advice from Chief Financial Officers and other financial leaders from diverse industries and backgrounds. In this installment, Eurobits Technologies CFO Sergio Sánchez shares what it’s like to be a leader in a highly regulated and rapidly evolving industry such as Open Banking.
The CFO Journal “Who Is”
Where: Founded in 2003, Eurobits Technologies is a European pioneer in account aggregation services. The company helps banks and FinTechs such as BBVA, LBP, Santander, KBC, and Fintonic to give trusted third party providers access to customer account information. Eurobits is part of the European Third Party Provider Association, created to represent third party providers in negotiations surrounding the Payment Services Directive 2 (PSD2). But more on that later!
Joined: July 2018
Based: Madrid, Spain
Qualifications: A bachelor’s degree in Business Administration from the Universidad Compultense de Madrid and a Master in Financial Options and Futures from the Institute of Advance Finance. Sergio has over 20 years of experience in corporate and investment baking, managing portfolios in energy, IT, real estate, retail, and more. He has also served as a financial advisor for small and medium sized companies and startups in a range of sectors.
Formerly: Senior Manager of Corporate Banking at Fortis; Associate Director of Corporate Banking at Barclays; Associate Director at Consejeros Empresariales Españoles; Director of Corporate Finance at Banco Privado Portuguese; Founder and Director of SSV Corporate and Value-On.
In His Own Words
To start, what are your primary responsibilities? What is your day to day like?
My responsibilities include leading the Financial & HR teams to develop business plans, managing cash-flow, fundraising strategy and capital structure, managing relationships with banks, public lenders and compliance with BdE (Bank of Spain), and reporting to the Board (private equity investors jointly with the CEO-Founder). I support the IT & Development team with new issues and am responsible for negotiation with suppliers and external development providers. I’m also responsible for M&A deals and I’m a member of the Steering Committee and Commercial Committee.
What would you say is the greatest internal and external challenge you and your team are facing right now in the Open Banking sector?
An external challenge could be PSD2 implementation and following up with our clients. Internal challenges are to execute our business plan, manage the team building we started last year, organize the company for external challenges and international growth, and, of course, manage finance and P&L.
Is there anything that still surprises you about the job?
Not yet. However, I always learn something new and these challenges are one of the main reasons. I love challenges.
You have experience starting your own business. How, if at all, do you think that has impacted your work as a CFO?
Yes, I was self-employed for 8 years, from 2010 to 2018. It impacted me very positively, mainly in three ways: (i) fostering an entrepreneurial mindset and an open mind, with a focus on business viability and new business models to achieve goals; (ii) experience overcoming adversities in terms of believing you can do everything you set out to do and; (iii) experience managing different people with different skills and in different teams, because really you manage all areas of the company. A great experience!
And does that insight change the way you work or the way you manage your team?
Yes, because you have a 360° vision of the business.
Can you briefly explain what PSD2 is and how it impacts Eurobits and Open Banking?
PSD2 regulates the FinTech sector at the European level and gives third parties access to bank infrastructure. At Eurobits, we have been operating in this sector since 2003 and we are ready for PSD2. We’ve invested to develop new APIs, for AIS and PIS licenses, and to grow our team. We’re ready, we’re a leader in Spain, and we also have opened new markets including Mexico, Colombia, and Chile. So, PSD2 is going to be good for Eurobits.
How is Eurobits keeping up with the changes stemming from PSD2, and how are you and your finance team contributing?
We are ready! In Spain, we are still testing API banking and going on with our non-PSD2 products through screen-scraping. We are contributing in many ways: compliance, AIS and PIS licensing, financing, recruiting, executing directives, and more.
Finally, what is something you are excited about in the coming year?
FinTech is coming strong so it could be an opportunity for us with the new markets and new products we are developing.
Industry Rundown: staying ahead of the competition
Eurobits was founded by Bankinter and CajaMadrid in 2003. The company has faced numerous challenges and some stiff resistance over the years. Most notably, during the financial crisis in 2012, many of its customers merged and shareholders pulled out. Eurobits’ employees and directors cut their own salaries to help save the company. Finally, when the largest shareholder was forced to sell its shares, the company became privately owned in July of 2016.
Maybe it’s this resilience and adaptability that has made Eurobits Technologies a leader in the face of new European regulations. With the writing of PSD2, or Open Banking, banks have scrambled to adapt to the new changes and obligations. On the other hand, for organizations like Eurobits this has been an incredible chance to exploit new growth opportunities.
Essentially, PSD2 forces banks to provide Third Party Payment Providers (TPPs) secure access to their customers’ accounts, allowing them to offer financial services to users. Classic examples include popular third party payment or money management apps. The objectives of PSD2 are to lower barriers to entry, encourage competition, promote the development of new payment technologies, and protect the rights of consumers.
To put PSD2 into practice, FinTechs and banks use standardized APIs providing Account Information Services (AIS) and Payment Initiation Services (PIS). These allow for safe, simple, and efficient integration between entities. Few sectors are so heavily regulated, and for many years Eurobits was practically alone in the open banking field. Now, the market is expanding and Eurobits’ competitors are growing. These include companies like Plaid, Salt Edge, Unnax, Credit Kudos, TrueLayer, and Tink. As a market veteran Eurobits has an upper hand, but still must move quickly to continuously adapt to this fast growing field and maintain its competitive advantage.
Photo by steve_j on Unsplash
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