Gordon Baird has seen what he believes could be the future of banking — and is looking to popularize the concept in Fairfield County.
“Banking is one of the few industries that still rely on old technology,” said the founder of private investment, consulting and technology company G.A. Baird & Co. at its Stamford office in the Workpoint coworking center at 290 Harbor Drive. “There are something like 5,600 banks in the U.S. and most of them rely on technology that hasn’t changed much in 30 years.”
Since such firms are slow to adapt to today’s move toward mobile- and online-friendly tech, Baird said, the time is right for a new, more nimble and consumer-friendly institution — one that he hopes to provide.
The germ for the idea came from such overseas companies as Kenya’s M-Pesa and China’s Ant Financial, both of which have quickly revolutionized the way banking is done in their respective territories. M-Pesa — whose name is derived from “mobile” and “pesa,” the Swahili name for money — allows customers to deposit, withdraw, transfer money and pay for goods and services with a mobile device.
The service allows users to deposit money into an account stored on their cellphones, to send balances using PIN-secured SMS text messages to other users, including merchants and to redeem deposits for regular money. Launched in 2007 by Vodafone for Safaricom and Vodacom — the largest mobile network operators in Kenya and Tanzania, respectively — it has since expanded to such countries as Afghanistan, South Africa, India and a several Eastern European nations.
On Oct. 1, Safaricom entered an agreement with South African wireless telecommunications provider Telkom whereby customers can easily transfer cash between each other; Safaricom and Indian company Airtel integrated their mobile money wallets in April under a similar arrangement.
Kenya has 28.2 million mobile money subscribers, 80 percent of whom use M-Pesa. The system processed around 6 billion transactions in 10 countries in 2016; in July 2017 its market valuation passed roughly $9.9 billion.
Ant Financial, an affiliate of the Chinese Alibaba Group, is the world’s highest-valued fintech, at $150 billion. Established in 2014, it operates the world’s largest mobile and online payments platform, Alipay, and the world’s largest money-market fund, Yu’e Bao.
Last month it launched Ant Financial Technology, targeted specifically at financial institutions, with the aim of helping them grow by improving the user experience. On Oct. 2 it detailed expansion plans designed to make the U.K. one of its largest international markets for mobile payments. The company cited the explosion of Chinese tourism in the U.K. — up by 30 percent in 2017, it said — as one reason for the expansion.
As Chinese travelers in Europe are limited to bringing €10,000 (roughly $11,600) in cash, Ant believes its service will be a godsend for such tourists — and of course a financial godsend for itself.
While Baird isn’t necessarily expecting to realize those kinds of windfalls in the short term, he said he firmly believes that the potential is there for a similar service in the U.S.
“We’re looking to use similar types of technology (to that used by M-Pesa and Ant),” he said. “The advantages for the customer are obvious — it increases efficiency and convenience, lowers costs and will include all the modern safety and security that people expect.”
Baird said he was confident that the Stamford area’s rich supply of tech talent and his own banking background — which includes stints as CEO of Independence Bancshares in Greenville, South Carolina, and as director of the Financial Institutions Group at Citigroup Global Markets — would make the yet-to-be-named venture competitive in short order.
“Our goal is to open by the end of next year,” he said, noting that work on developing the concept began about 18 months ago. That was when the company launched The Financial Technology Project, designed to examine opportunities to expand modern banking infrastructures through cloud-native applications, artificial intelligence capabilities, complex event processing, cybersecurity, cryptography and functional programming.
Unlike firms such as M-Pesa, which does not maintain physical branches, Baird’s bank will start with “one or two” brick-and-mortar branches in the Stamford area, with plans to expand around Fairfield and Westchester counties as momentum grows, he said.
“We’re taking a hybrid approach,” Baird said. “We want our customers to be able to come in and meet our employees and salespersons, to talk about our products in person. That’s an important part of providing the kind of customer service that people want.”
Despite popular notions that millennials and other younger customers prefer to do everything online or on their phones, Baird said his company’s research has shown that the appeal of digital banking crosses “a broad range of age groups and ethnicities.
“Multilingual customers are very comfortable with adopting these kinds of applications,” he said.