Money 20/20 Europe is the yearly 3-day discovery of inspirational new ideas, meeting change-makers in the industry and discovering new companies that achieve real impact for the Fintech and Financial Services Industry.

This year, I discovered that Episode Six is such a company. E6 is a global provider of enterprise-grade payment processing and digital ledger infrastructure for banks and companies looking to offer payments to their customers. Their modern payment technology is built to simplify your paytech stack and help lower costs while offering a configurable foundation to build any payment product you want to take to market.

Rik Coeckelbergs spoke to John Mitchell, CEO and Co-Founder of the company.

I can imagine I am not the only one that didn't hear of Episode Six before. Please tell me. Who is Episode Six, and what role do you play in the payments ecosystem?

John Mitchell: Episode Six is a global provider of enterprise-grade payment processing and digital ledger technology. We offer payments infrastructure on which our clients build their solutions. That is: software used by banks, financial institutions, or any other brand to allow them to create more innovative payment products via API.

You recently surveyed the state of banks' payment and technology with IDC Financial Insights. What were the key conclusions of that study?

John Mitchell: Since Episode Six is on four continents right now with the fifth on the way. I talk to banking leaders all over the word frequently, and so, personally, the key conclusions reveal the same pains I hear in those daily conversations. Whether Tier 1 or Tier 2 or other, financial institutions around the world are all facing very similar problems.

Sure, their business practices and cultures might be different, but the underpinning technology is preventing financial institutions from meeting the demands of the market. We found that the cost of supporting outdated systems is to rise by an estimated 7,8% per year until 2028, with global banks to spend $57,1 billion on legacy payments technology in 2028, from $36,7 billion in 2022, impacting costs and limiting growth.

Banks are understandably hesitant to rip and replace their legacy technology. There’s a lot of risk in that, which is why IDC’s research recommended a progressive approach. That's where we come in: to help them make changes by progressively modernizing their tech stack so that they can meet the demands of their customers, whether they're consumers or merchants.

The study showed that, although the market is starting to shift, most financial institutions still rely on tech stacks that aren't suitable for future state. The vast majority of payments are processed on systems that are decades old. They were created for requirements that don't exist anymore.

And so, because of that, we saw an opening in the late 2010s, where these startups and FinTech companies saw these holes in how people live their lives. Finance wasn't included, so they created these beautiful apps and beautiful technologies.

Take, for example, BNPL Klarna takes transactions at the point of sale, which means that banks are losing that revenue.

Banks want those transactions and the associated revenue back. But it isn’t that simple. The IDC research showed that banks need to address their technology to take those transactions back. And right now their legacy technology is not allowing them to take on all these new players, like Revolut and Thyme, companies offering services that used to belong to banks.

What would you consider the main reason for tier-one banks to stick to their legacy, to leave the mainframe for core banking to switch everything to the cloud?

John Mitchell: Putting something in the cloud doesn't make it necessarily better. However, considering cloud assets when building solutions for cloud-native types of technology is a different matter and can significantly improve the performance, agility, and adaptability of these solutions.

Our system is strategically deployed across eight AWS regions worldwide, spanning from Osaka to Dublin and beyond. In fact, we recently expanded our presence to Indonesia and Australia.

Our approach revolves around progressive modernization, enabling Tier 1 and Tier 2 banks to seamlessly transition specific programs to our cloud-based infrastructure. This gradual migration ensures that the CEO, CTO or CIO, can manage the process effectively in terms of budget, timing, and risk. By adopting this strategy, not only can they penetrate the market swiftly, but it also extends the lifespan of their substantial legacy systems developed over the past 40 years.

Banks’ focus on today’s needs are making them spend astronomical percentages of IT budgets to keep legacy systems running, without planning for the long-term growth needs.

What if you could take 10% of that, put it towards R&D and innovation, and take another 50% and put it somewhere else in the bank to drive efficiencies and profitability?

The approach is starting to shift now because it has to as competition from ‘big techs’ and fintechs is pushing banks to revise their approach, but a new wave of innovation is going to happen again.

Maybe the last question to make all this concrete. How did you help HSBC in its payments journey?

John Mitchell: HSBC implemented a program called PayMe, a social payments wallet enabling P2P transactions. Their migration to Episode Six offered enhanced scalability and resilience.

Additionally, leveraging our extensible platform, they expanded with PayMe for Business, facilitating seamless P2P and P2B transactions in Hong Kong, similar to platforms like Venmo in the United States or Payconiq in Belgium. This unified system supports high-capacity processing, streamlining transactions through a single ledger.

Presently, approximately 2.5 million consumers and merchants in Hong Kong are utilizing this solution, reflecting its widespread adoption.

For more Money 20/20 Europe 2023 discovery, you are advised to have a look here:

The Banking Scene Talks at Money 20/20 EU with Colin Digby, Head of Strategic Client Coverage, Crown Agents Bank

Andrew Vorster’s Reflections from The Banking Scene's Money 20/20 EU Boat