When thinking of the broader financial services industry, it is the venerable banks that come to mind first. For centuries, they have fine-tuned balance-sheet banking and placed themselves strategically within every aspect of a developed economy.
Banking is so developed, in fact, that it is all but completely commoditised. Of course, banks employ an array of complex financial instruments, but they depend on the deposit/loan cycle for revenue – a cycle that comes with inherent risk.
It is no surprise that estimating and pricing this risk is make-or-break enterprise for traditional banks.
The last decade has seen a steady change in the transaction landscape. Just ten years ago, we probably would not have considered paying for a coffee with our bank card – cash was the undisputed king of the small transaction. Just ten years ago, it was easy for anyone to walk into a traditional bank and open an account. Plenty has changed since then.
As online commerce grows steadily and as new technologies make electronic payments easy and convenient, we are seeing a steady decline in the dependance on cash. From the purchase of physical goods to subscribing to streaming services, society is mostly happy to transition to a largely cash-less paradigm.
As our behavior shifts online, we also make changes to our physical world transactions, reducing our cash-purchases to a minimum. With this worldwide behavioral shift comes a significant increase in electronic microtransactions that need a robust and secure infrastructure that can handle the staggering number payments that occur every second.
Enter the Electronic Money Institution. These are financial institutions that are licensed to handle electronic transactions. They give hundreds of millions of daily users a safe and convenient way to make payments within a convenient user interface.
EMIs aren’t new. One could argue that a large part of the success of eBay was the convenience of PayPal as a safe and easy-to-use EMI that millions of users were happy to adopt. That was over two decades ago, and it set the tone for a completely different way of doing business.
Established in 2012, Finance Incorporated Limited is an EMI that is licensed to operate several brands such as iPaymix and Paymix Pro to deliver a complete financial gateway to its clients. When establishing FIL we were committed to creating a financial institution that abides by a set of core values, that cares for its team and for its customers, and that would retain the flexibility of a startup even as we grew.
We came together as a team because we all abide by the same principles as well as a shared vision of the future of financial services. Anything that can be automated and replaced by technology should be. Much of the time people spend inside the branches of traditional banks can be replaced by technology. This is a zeitgeist we all form part of and the failure of traditional institutions to acknowledge it is leaving them behind.
Today we handle more payments than any other financial institution in Malta and we do this thanks to the happy ecosystem that is built around EMIs. Whereas most industries see similar organisations as competitors, we have teamed up with many of the ‘competing’ brands and we collaborate to deliver payments that are as rapid, secure, and uncomplicated as possible. The hundreds of thousands of transactions that go through our systems every day are testament to that.
As we progress towards a civilization that has electronic money at the core of its end-user transactions, the trend is towards a larger number of transactions that have a smaller value. Large retailers are partnering up with buy-now-pay-later providers to split large purchases into easier monthly payments, the subscription model that was the reserve of entertainment delivery is extending to physical products, and more and more digital products and professional services are being offered as a pay-per-use or subscription model service. Every one of these transactions is more than a payment – it is a valuable data-point that tells us something about a consumer’s behavior.
A fundamental difference between banks and EMIs is that EMIs only make money when a transaction is made – they are focused on service use rather than accumulating capital. This means that they do not use their customers’ money as an instrument, keeping customer’s funds completely free from risk. This extends to the way EMIs treat merchants. Unlike banks, EMIs pass on money that merchants make almost instantly while banks have every reason to delay the transfer of merchant funds.


As banks tend towards making personal client relationships a struggle for almost all categories of clients, EMIs are there to offer uncomplicated access to money to practically everyone. And as banks continue to lag behind the realities of modern living that their clients show plenty of evidence for, EMIs use their inherent creativity to deliver an continuously evolving set of services that banks simply can not deliver.


Of course, EMIs do not compete with banks for the traditional services such as lending and deposits. But, for the average user who wants an app that tells them how much money is in their account and that gives them the ability to pay anyone, anywhere on earth, EMIs represent the future of microtransactions, of consumer behavior data collection, and of uncomplicated payment processing.


The time for all financial services to be delivered by a single entity, such as a legacy bank, is fading fast. Smart business is moving to best-of-breed partners and, for the entire payments supply chain, this means choosing an EMI. The businesses of tomorrow that value security, speed, and simplicity of payments are making the transition, giving their customers a significantly quicker and less complex payments experience. When coupled with the cost benefit and the wealth of customer behaviour data that today’s EMIs provide, it becomes even harder to justify retaining legacy payments providers