Stephane Dehaies, CEO of Spendesk Financial Services: “I anticipate new partnerships and alliances between traditional banks and fintech innovators”

If you don’t yet believe that fintech is one of the most exciting areas to work in right now, you will be by the end of our interview with Stephane Dehaies, CEO of Spendesk Financial Services. Whether from a personal or business viewpoint, opportunities abound.

Why? Because, as Sherlock Holmes would say, the game is afoot. Inflation is coming down, regulations are pushing more open markets, and the old, slow way of working simply isn’t going to cut it anymore.

There’s also the sense of a market that’s maturing. “I expect to see consolidation across the sector,” said Stephane. “I also anticipate new partnerships and alliances between traditional banks and fintech innovators through M&A.”

In this interview, we cover the factors driving the changes – from regulation to AI – along with the sub-sectors within fintech that are likely to benefit the most. Or at least the most immediately. Plus, Stephane reveals the four fintech startups that he believes are set for a great year.

So who is Stephane and why should you listen to him? Because he’s been working in the business transformation sector within banks for years – we’ll let his answer to the first question do the talking.

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Could you please introduce yourself to our audience and share how you ended up working in fintech?

I’m Stephane Dehaies, the new CEO of Spendesk Financial Services. Over the last 15 years, I’ve had the honour of leading significant international banking transformations at RBS/NatWest and KPMG, before moving on to work with global banks, fintech organisations, private equity companies and venture capitalists in the UK, US and Europe.

Having had a privileged insight into the challenges faced by the industry since the financial crisis in 2008, I’m lucky enough to be involved in an exciting new phase of the transformation in financial services. While the regulatory and macroeconomic environment is complex, there is great potential for technology and fintech companies to revolutionise the financial system both for consumers and businesses.

What do you think traditional finance and banking companies can learn from disruptors in the fintech space?

Through technologies such as APIs, microservices, cloud-native architecture, blockchain and generative AI, traditional financial institutions can adapt and accelerate their business model transformation. However, they need to learn from the disruptive approach of fintech companies not just in terms of technology, but by embracing an innovative mindset and placing greater emphasis on diversity and inclusion if they want to build better products and services for society and the wider economy.

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In what ways is artificial intelligence impacting the fintech sector?

While artificial intelligence has been used in financial services for a long time relative to other industries, its most recent applications enable greater operational efficiency, lower costs and increased personalisation. AI solutions are also having a transformational impact on other aspects of fintech, particularly fraud prevention, risk management, customer services and even supporting financial institutions in meeting their sustainability goals.

For example, AI helps the financial industry streamline processes ranging from credit decisions to quantitative trading and credit risk management. Artificial intelligence solutions also assist banks in making smarter underwriting decisions, using various factors that more accurately assess traditionally underserved borrowers in the credit decision-making process.

Anti-money laundering (AML) regulations increasingly require real-time analysis for banks to enable faster transactions or to fight financial crime. As a result, companies are turning to artificial intelligence to navigate industry AML regulation and increase efficiency through real-time analysis against fraud.

What are some of the biggest regulatory challenges affecting the fintech sector?

Fintech is a diverse space, with regulation constantly evolving around areas such as sustainable finance, digital currencies, decentralised finance, embedded finance, data protection, fraud prevention and biometrics, for example. But while fintech is confronted by a number of regulatory challenges, the biggest issue from my perspective is that the pace of regulatory changes makes it difficult for fintech organisations to operate confidently.

Those operating within existing fintech and payment ecosystems are struggling to keep up with the evolution of regulations due to the incremental costs incurred and the level of investment required for keeping this sector safe. On top of this, there is a talent shortage in risk and compliance roles. Against a backdrop of economic and political instability, as well as a lack of harmonisation between geographies, fintech organisations don’t have the stability and predictability they need to prosper and to focus on product innovation.

Which geographical hubs around the world are leading the charge when it comes to fintech innovation?

Backed by the technological might of Silicon Valley and the established finance industry in New York, the US is the world’s largest fintech ecosystem and attracts the largest share of fintech investment and deal volume.

However, the UK is also a fertile home for fintech with its favourable infrastructure, talent, capital and regulatory environment. Other leading and innovative markets for the fintech sector in Europe are France, Netherlands, Germany and Ireland – all of these markets are attracting significant venture capital investment due to their solid financial ecosystems and talent pools.

China is also a solid hub with its mega-payments firms such as Tencent and Ant Group, while India is now among the leading fintech ecosystems in the world, with as many as 17 fintech unicorns in the country. Both Singapore and the UAE continue to evolve into regional fintech hubs, attracting attention from global investors.

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How does your company differ from its direct competitors in the fintech space?

Spendesk is a complete spend management platform that saves businesses in the EEA and UK time and money by connecting company spending. We differ from our direct competitors in Europe by focusing on the needs of businesses consisting of 50 to 1,000 employees with our all-in-one spend management solution. As a France-based company, Spendesk was also designed from the beginning with multiple markets in mind, built on international talent.

Our comprehensive feature set – spend approvals, purchase orders, employee expense cards, virtual cards, expense reimbursement, invoice management, and procurement in a single source of truth – represents a complete spend management solution and payment platform, which we have built through a combination of proprietary technology, new products and strategic partnerships in payments for our core markets.

What are your top three fintech predictions for the upcoming years?

I expect to see consolidation across the sector as the valuation landscape for fintech has changed due to central banks tightening monetary policy in an effort to tame inflation. I also anticipate new partnerships and alliances between traditional banks and fintech innovators through M&A.

In parallel with this, regulatory changes caused by PSD3 in Europe and Section 1033 of Dodd-Frank in the US, will lead to the principles of open banking being embraced by more financial institutions. This will also provide foundations for more collaboration between banks and fintechs, leading to better and more cohesive financial services for consumers.

The march towards embedded finance will continue with new solutions that will enable businesses to embed native banking and payment capabilities into their existing services to expand their product offering and improve customer experience.

Fintech organisations focusing on analytics and AI will explore new generative AI solutions that will increase operational efficiency, deliver better customer services, and strengthen fraud detection and prevention. However, it will still be too early to monetise these services as it will take time to change the way traditional finance and banking operate.

It is also becoming increasingly clear that sub-sectors like asset management and the wealth management industry will benefit first from AI in terms of improved service, risk assessment, investment management and greater efficiency.

Which fintech sectors do you believe are prime for investment in 2025 and beyond?

The financial services industry is still one of the largest and most profitable segments of the global economy, yet have low levels of customer satisfaction compared to other industries. This provides fertile ground for disruption and innovation in terms of improving the overall customer experience, and I believe that there are great opportunities for investments in the fintech players that offer not only smart solutions and business models but also specific geographic opportunities.

There is also more room for growth in the fintech sectors that offer diversified revenue potential with strong governance and sustainable business models. AI is likely to continue to be a key area of activity for investors across the fintech sector. There is also strengthening interest in B2B fintech solutions aimed at enablement, ­with a continued focus on embedded financial products – particularly payments and lending – as part of the transition to open banking. The payments sector will continue to account for the largest share of fintech funding among all sub-sectors, with increasing consolidation in this area as companies look to scale and grow locally.

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What are some of the biggest challenges the fintech sector is experiencing as a whole?

The biggest challenge for the fintech sector is achieving profitable growth and strengthening fundamental processes around governance and risk while building a sustainable model in a vulnerable and complex macroeconomic environment. Interest rates should start to come down by year-end 2024, meaning valuations will normalise, providing better conditions for investment, though VCs will still have a very strong focus on profitability.

Another challenge is the lack of regulatory harmonisation in different regions. Regulators in the EMEA region, for example, have recently emphasised the importance of fraud and financial crime prevention and taken a much stricter approach with financial institutions in terms of their AML and KYC processes. The FCA in the UK in particular has handed out a number of penalties, including restricting activities such as the onboarding of customers.

What are some fintech startups you are excited about?

The fintech startups I’m excited about in 2024 are:

• JustiFi, a US-based startup that provides an embedded finance infrastructure, enabling businesses to integrate banking services such as payments, Insurance and lending, directly into their platforms;
• Canadian startup Levr, which provides an intelligent loan platform that simplifies loan applications for small businesses;
• Swoop, which provides a range of funding and savings solutions to help UK businesses protect their financial health, empowering them to grow;
• And Mistral AI, a French artificial intelligence company that makes open, efficient, helpful and trustworthy AI models.

What advice do you have for aspiring professionals wanting to work in fintech?

Fintech is a great industry to work in, and there are five key principles that professionals entering the industry should follow.

1. Be open to disruption and innovation;
2. Align with the values, purpose, ambition and economic units of the fintech company you work for;
3. Develop emotional intelligence, adapt quickly to new challenges and build resilience at work;
4. Foster a culture of open communication and collaboration, and celebrate your successes;
5. Adopt a ‘make it happen’ attitude.

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