The stablecoin opportunity for fintechs: Q&A with Freemarket’s Nirav Parekh
Nirav Parekh discusses customer demand for stablecoin payments and Freemarket’s plans to build them.
Jane McEvoy, VP Platform Partnerships at BVNK caught up with Nirav Parekh, Global Head of Banking Relationships at Freemarket, a B2B payments provider. You can watch the interview in full below.
How is distributed ledger technology changing the way fintechs build?
It's in the early stages of development, but there is huge potential for many industries. Fintechs specifically can build superb, transparent and efficient financial products and services around this technology.
What sort of demand are you seeing from your merchants for stablecoin payments?
Our existing customers are asking for stablecoins. They’re coming to us saying: why can't you offer us that particular solution?
There is huge demand for new ways of moving funds from our customers. This technology not only helps them to reduce costs, but also improves their efficiency significantly. And it can also enable our customers to enter new markets and reach new customers.
The demand we see is primarily for stablecoins because they’re less volatile, and the major stablecoins are pegged to fiat currencies like US dollars - which is a requirement for many of our customers.
So, we’re exploring stablecoin as we want to be a one-stop-shop for our customers, so they don’t need to go elsewhere for their cross-border payments requirements.
Freemarket's Nirav Parekh, CMS UK's Charles Kerrigan and BVNK's Jane McEvoy and Bernie Niebsch discuss the stablecoin opportuity for fintechs.
What’s your take on ‘build vs buy’ when it comes to stablecoin services?
We’re a payment institution in the fiat space. That’s what we do, but we’d also like to be in the DLT space. As the world progresses, everybody is looking at collaboration as the way forward, rather than reinventing the wheel with reference to licensing and technology. Doing it yourself is a huge investment of time and resources, so we think partnering is the best option and a quick-win for our customers.
For example, BVNK has fantastic technology and fantastic regulatory approvals in place: why wouldn’t we use that? From a strategy point of view, that’s really the way forward for us.
What are the use cases for your customers?
We’re looking at enabling customers to accept stablecoin or collect from third parties and convert it into fiat as and when they want to. As well as enabling them to buy stablecoin using our proprietary platform and pay out in stablecoins as and when required.
From our customers’ perspective, this will be an additional capability they can access via our existing platform in the same way they access fiat payment services.
How did you build a business case for this?
The genesis of this initiative was our commitment to meeting our customers’ evolving needs. So it really started from customer demand. And of course, we want to be ahead in the race when it comes to offering innovative new payment methods in our space.
Engaging with companies like BVNK helped us get a deeper insight into industry, the trends, the overall potential and the competitive landscape. We consolidated everything, articulated the rationale to our leadership team, and decided how to move forward.
Does integrating stablecoins harm your relationships with banks?
As the head of banking relationships, that was the first question that came to my mind when we started talking about this proposition!
But actually, because our existing customers are demanding this, if we can offer it, we expect we’re going to significantly increase our volumes. This will help our existing banking providers too, as we’ll likely be processing more flows through them, rather than reducing the numbers.
We've always been transparent with our banking partners, so we’ve been engaging constantly with them on this. Overall banks are quite open and positive. And because we want to implement this in partnership with another good company who already has strong compliance credentials, that helps when we speak to the banks.
Do we think more fintechs will adopt stablecoins as a payment method?
Fintechs have always been at the forefront of innovation. Whenever we talk about any innovation in the financial sector, two factors always come to mind: speed and accessibility.
On both those fronts, stablecoins and blockchain payments have huge potential, and because of that I think they’ll gain a lot of acceptance going forward.