PagoNxt CEO: Blurring of Bank, FinTech Lines Will Drive EU Payments Growth

If there was ever a time traditional banks have felt the intense pressure to abandon legacy infrastructure and embrace digital innovation, it has been in the wake of the pandemic, as consumers’ and merchants’ desire for seamless, faster and innovative solutions gave newer, more modern FinTech firms a competitive edge in the payments market.

For Spanish banking giant Banco Santander, the eurozone’s second-largest bank by market value, fending off that competition from technology firms and keeping pace with the rapidly evolving payments landscape led to the creation of PagoNxt, a dedicated FinTech unit operating as the backbone of its business payments architecture, in late 2020.

See also: Santander Speeds up Digital Move, Shifts Corporate Structure

As PagoNxt CEO Javier San Félix told PYMNTS in an interview, there are key benefits to being an “established player from the banking system, while at the same time, bringing a FinTech touch to how we do things.”

Related: Santander Bank Debuts Santander eLockBox to Consolidate Digital Payments

That combination is critical today, he added, especially as merchants’ expectations have evolved in recent years and they are increasingly looking for seamless, frictionless solutions to increase their sales and payments acceptance rates.

PagoNxt meets that need by offering them a wide range of payment methods, from global solutions like Mastercard, Visa or American Express right “to the very local ones in different geographies,” San Félix noted, pointing to instant payment solutions like Spain’s Bizum and Poland’s Blik as two of the 45 alternative payment methods they offer customers across markets.

Since its launch, the FinTech firm has grown by over 140%, generating a total income of €162 million ($163.3 million) in the first quarter of 2021.

Read more: Santander’s BNPL Product Zinia Expands to the Netherlands

Crypto Is Here to Stay

Emerging, innovative technologies like blockchain and cryptocurrency are quickly gaining traction, San Félix said, especially as merchants in emerging markets with high currency volatility begin to accept payments in digital currency or stablecoins.

See also: Market Crash Tests Crypto’s Survival of the Fittest

And despite the ongoing crypto market crash, he was of the view that virtual currencies are here to stay and it’s more reason why companies that want to be relevant payment players will “need to [invest in] better understanding how it impacts our business and cater to those solutions that are going to be more mainstream.”

Related: Santander: ‘Celebrity-Endorsed’ Crypto Scams in UK Could Double

However, due to the heightened scrutiny and controversy surrounding the nascent market, he still cautioned against “going faster than regulation and the market itself.”

Instead, PagoNxt will be closely following how regulation and propositions in the market evolve to determine the right time to fully integrate that option in their solution, he explained.

UK Market Relevance Still High Post-Brexit

Building on Santander’s strong presence in Europe, San Félix said they now have “the opportunity to serve other European markets beyond the Santander franchise,” following several recent acquisitions, including a 30% stake in U.S.-based Atempo Growth earlier this year.

Read more: Santander Buys 30% Stake in Atempo Growth to Fund Tech Startups

One of those core markets is the U.K., he further said, adding that despite the regulatory and financial complexities brought on by Brexit, he was still a firm believer in the strength and the importance of the British market.

“It’s a highly competitive market and one that often sets the standard for how other markets are going to operate. So, for us to have global reach, we need to be able to compete and be relevant at the U.K. level,” explained San Félix, who was previously head of retail and business banking and deputy CEO for Santander UK.

See also: Santander, Billionaire Salinas Express Interest in Citibanamex Acquisition

He further noted that international trade, particularly the need to support U.K. companies that conduct trade globally, will keep gaining traction moving forward as the U.K. continues to navigate business operations with the rest of Europe post-Brexit. And those businesses can count on PagoNxt to provide the needed support.

“International trade is going to be even more relevant for U.K. companies and our solutions, we believe, will have a good echo in the market,” San Félix said.

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