JP Morgan backs UK payments fintech Icon Solutions

JP Morgan has made an undisclosed strategic investment in Icon Solutions.

The UK-based fintech helps banks like JP Morgan carry out their digital transformations – a process almost every major bank is currently undergoing.

Specifically, Icon helps banks re-invent their real-time payments and – where it can’t be replaced – optimise their legacy architecture.

“Banks are having to find ways of cutting costs,” says Icon

Customers include Citigroup, BNP Paribas, Lloyds, HSBC, and Wells Fargo.

Icon plans to use the investment to grow its business and expand internationally.

As part of JP Morgan’s investment, its head of digital payment solutions for Europe, the Middle East and Africa, Sara Castelhano, will join Icon’s board.

Icon’s global payments solutions head, Simon Wilson, tells Reuters that banks need to fight back.

“The banks are having to find ways of cutting costs. But with the competition out there they can’t afford to just slash and burn.

“They are forced to look at innovative ways to do things. It’s simply not sustainable to remain on the cost base with the old technology they have.”

Why banks need to revamp payments

Icon published a whitepaper over a year ago with Aite Group which surveyed the state of payments transformation in major global banks.

Of some 22 banks surveyed, 68% said they worry about losing existing clients or prospects if they don’t innovate in payments.

Whilst more than two thirds of these banks were midway through payments transformations in September 2019. Just 9% said they were “almost complete”.

For banks, retaining customers is paramount as revenues fall and digital challengers with competing offerings continue to emerge.

Aniruddha Maheshwari, a payments consultant at Icon, told FinTech Futures in January that such sliding revenues and increasing costs “threaten ‘free’ banking in the UK.”

“This commodification could have a serious knock on effect to consumers. As institutions begin to charge for services that were once ‘free’.”

Maheshwari argues that the cloud – the technology Icon rests on – “either limits or reduces many of these costs”.

“On a transaction basis for example, the cloud can handle higher volumes at lower costs.”

By eliminating hardware, software or technical payments teams, one of the world’s global banks saved around 60% on payments transaction costs, according to a BBVA survey.

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