Finally the payment sector goes the right route, London-based bank on the cards

Gradually going are the days in which FX brokers had to use dodgy middle eastern PSPs for their deposit and withdrawal facilities

Payment processing is one of the most tricky components of the retail FX industry, largely due to its extreme importance as a vehicle for facilitating client deposits and withdrawals, but also due to the back street nature of many of the payment services providers that have targeted FX brokers over the years.

FinancsFeeds has been highlighting recently that brokers may be able to have more software as a service oriented options available as that sector develops in some more important and genuine financial markets centers, and today is no exception as a new bank and payment provider puts its mind towards heading into business in London.

AS LHV Group, the fintech focussed bank and payment services provider in the UK, today stated that it will pursue a banking licence in the UK, thereby clearly separating AS LHV’s current business activities in Estonia and in the United Kingdom.

LHV believes that a dedicated bank in the UK, which will focus on providing banking services to international payment intermediaries, will better serve the needs of their international fintech clients in the long term.

The New Bank will be established as a 100% subsidiary of the Group and will be headquartered in London, with substantial growth targeted for the coming years. Separated  business activities will simplify compliance with regulatory and supervisory requirements and allow better overview over both entities. The domestic operation remains focussed on Estonian retail customers and the UK based bank will continue to cater to financial intermediaries, selling services mainly to  large business clients, such as other financial institutions, corporations and start-ups.

LHV has been operating in the United Kingdom since the beginning of 2018, when the bank received a license to establish a UK branch. The Company currently provides banking infrastructure to more than 130 rapidly growing fintech, payments, and virtual assets companies predominantly offering settlement services such as accounts, payments, card payments, currency conversion and other similar services.

The Company’s customers make more than 13 million payments a year with annualised gross-processed payment volume exceeding GBP 45 billion. This business line has become profitable as according to the newly updated financial plan, servicing the segment will generate approximately GBP 4.4 million in net profit this year.

LHV is consistently working to add new innovative services and widening access to our payments infrastructure. As a direct member of both instant euro and pound payment settlement systems, LHV is in a unique position to offer customers real-time payments in both major currencies in Europe. Being at the vanguard of banking service providers the Company has attracted unicorns like TransferWise, Coinbase, Trustly, Paysafe and Airwallex as clients. Today LHV processes 8% of total the SEPA real-time transaction volume.

Andres Kitter, Head of LHV’s UK Operations, said,LHV is committed to further developing our existing business in the UK and we believe that a clear separation between its retail operations and London based banking services division will benefit our fintech clients, therefore we have decided to found a new bank in the UK that will have a singular focus of servicing them. Thanks to our impressive offering we have become the preferred banking partner for fintechs, quadrupling our client number since 2018, and we have faith that this move will guarantee our continued success in catering to the needs of the global fintech companies.

“We understand that this process won’t happen overnight and it might take some time until the successful conclusion of the process. During this period we continue with the existing framework and there will be no impact to LHV’s current and future clients. Furthermore, we remain committed to enhancing our current offering as well as delivering new products and service to our clients. I look forward to updating you with our progress in due course.”

This, should it come to fruition, represents another potential channel for FX brokers, who will have the option of using a licensed bank in the UK as a payment processor, something which FX industry executives would relish, and something which some industry leaders have been planning for a long time.

Two particular examples of firms looking to provide a specific service to the FX industry are Zenus Bank, operated and founded by FX industry senior figure Mushegh Tovmasyan, and the efforts by Husam Al Kurdi of Squared Financial to acquire a bank in order to provide custodial services to FX brokers.

All in all, it’s good to see professional and high quality licensed banking solutions being established for this purpose .


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