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Interview with Myles Stephenson, CEO of Modulr

Henrietta Curtis
Reading Time:
7 minutes

Could you describe, in layman's terms, what Modulr does?

In layman's terms, we provide an alternative for business payments for digital businesses. This means that rather than businesses going to a bank to get a bank account, they can come to us for an alternative digital payments account. 

Our digital payments account looks, feels and operates in a very similar way to a bank account but it allows you to manage your pay out and pay in through our APIs.

Have you been with Modulr since the beginning?

Yes, I founded the business in late 2015 to launch in January 2016. We put together a team of people that had previously worked together in founding a payments technology startup back in 2008/2009 which we had grown and then exited. We then got back together to form Modulr in 2015.

What was different about Modulr that made you want to start this particular business?

There were two key drivers to start the business. The first driver was that, in our previous company, we found it incredibly difficult to access banking and payment services and we know the sector well. If you did manage to get over that hurdle, getting the technology access we wanted was even harder. 

If we, as people who knew the sector, found it hard then those outside the industry would find it even harder. We felt that this was a problem that we could solve by making it easier and removing the barriers to enable people to get access to and integrate payments in a really easy way. 

The second part was that when we were building, growing and expanding the previous business, we came across lots of opportunities that we couldn't serve. Our previous business worked well in particular sectors and deep niches, but clients were asking, “can you also apply the same logic and approach to a broader set of payments?” 

Those two drivers were why we decided to start Modulr.

What is your background? 

I’ve been in payments most of my career. I started in retail for Marks and Spencer where I ran payments projects including the implementation of their charge card in Ireland. That was before M&S used to take credit cards many years ago.

I left Marks and Spencer to join a relatively small payments business called Retail Decisions in broader financial services operating in the card processing, fraud analytics and fuel card industries. I helped grow that in the UK and Europe and later worked on M&A for strategic projects. 

I left there to start a business called Corporate Pay, which was the first business I started by myself along with Blenheim Chalcot, a venture builder, which provides an incubator, venture capital and seed capital to help founders and entrepreneurs start businesses. We started back in 2008, grew and then exited in 2012 to a US commercial payments firm. I went to work for them for a period of time, expanding services and growing their business. I left to start Modulr.

Who are the typical customers of Modulr?

Modulr takes the package of technology, regulatory permissions and access to the payment networks and schemes and applies it to specific industry sectors. 

We're an API led business enabling others to integrate us into their platform or system. Rather than providing the front-end app or website, we’re often hidden behind the scenes, delivering the service.

We started out in the lending sector, serving many alternative consumer and business lenders, automating their pay in and pay out functions.

We also serve a lot of payroll providers as well as working with accounting software and platforms, enabling payments automation.

Through our partnership with Sage, we operate a product called Sage Salary and Supplier Payments which allows them to provide a value-added service to their customers, automating payments from within the Sage software through to employees, suppliers or the companies themselves. 

We recently received a £10m grant from the Capability and Innovation Fund, part of the RBS Alternative Remedies Package, to support our work in providing the UK’s underserved SME and accountant contingent with better access to payment functionality. We expect to reach 860,000 SMEs by 2024 through our partner network.

We also operate in the broader fintech sector as the ‘tech behind the tech’ delivering the infrastructure that enables others to build go-to-market propositions and embed payments within their idea, their proposition and their service. 

We've moved into the travel industry, enabling online travel agents to make payments to their supply base. We work with an aggregation booking platform called Paxport which enables online travel agents to search the availability of flights and hotels and then, through our payment capability, they can make the transaction. 

You mentioned the Capability and Innovation fund. Could you explain why you were successful? 

We were successful with the BCR grant because of the strong alignment between what we were doing in the business and what they required in terms of driving competition into the market. 

The grant allows us to invest faster and deeper into the plan we already had which is about creating competition in the business banking and payments market. It will allow us to create more feature functionality, particularly in the accounting software, payroll and accountancy practice market, and distribute the services through accounting practices across the UK.

It also enables us to expand our proposition of providing the infrastructural layer to other providers. We have a multiplier effect on competition by delivering a one-to -many approach and providing the platform on which our partners and clients can build their own proposition. This will significantly drive up competition in the market, which is absolutely aligned with why the grant exists.

What trends have you seen affecting the payments market?

One of the reasons that Modulr exists is down to the massive regulatory disruption which is happening right now. 

For example, new and non-bank financial institutions are operating services in a fully regulated, yet different, way to a bank. Our regulator, the Financial Conduct Authority and the European regulators are proactive in driving competition in the market by allowing other organisations and institutions to challenge banks. 

This change is enabling us to compete with the banks on a level playing field. Especially as we’ve announced our direct access to the Bank of England, which is relatively new, different and unique to the UK. 

Direct access means we can participate in the interbank settlement processes and payment schemes networks directly without relying on a wholesale bank client service.  

We're now in complete surety and control of our supply stack and can therefore make our own decisions on what we do and how we operate. 

Great, it sounds like you have a lot of exciting developments. What would you say has been Modulr’s biggest challenge in the last three years, since you began?

I think there’s always a lot of challenges in starting and scaling a business. The one biggest challenge, if I had to call one out, is being able to hire enough good people quickly enough. In order to hire at the pace of our growth, we have to be an attractive place to work and our listing in LinkedIn’s Top 25 Startups to work for in 2019 attests to that. 

Looking ahead, how do you think the environment will be different in the next five years?

Given the pace of change, I think it's difficult to answer. If anything, the rate of change is only increasing, which is a good thing for organisations like ours which are changing rapidly and developing new services. I think the challenge will be just constantly evolving and building new capability functionality into the platform. 

We're constantly increasing people's expectations around getting things completed in real-time. Businesses want real-time payments, real-time confirmations, real-time actions, which is very much linked to what we're doing with the infrastructure and API platform. I call it the Instant Economy.

Henrietta Curtis

Henrietta is Marketing Manager at Dock9