Hidden away in the entrepreneurial lessons taught in business schools, books and across the internet is a blindingly simple premise to building a successful company now and 100 years ago: solve a problem and solve it well. Despite rapid technological advances in the past century, it’s still those fully grasping this premise who rise to the top.
Look no further than the founders of Modulr, whose three-year CAGR growth of 430.39 per cent secures it second place in the inaugural Accelerate50 awards by Dun & Bradstreet. Though the payments and banking-as-a-service API (application programming interface) platform* has brought excellent innovation to the market, it is its founders’ understanding of a problem that has driven its rapid ascent over the last five years.
The idea was born in 2015 in light of direct experiences felt in the payments sector by chief executive Myles Stephenson and his fellow founders, some of whom had previously built CorporatePay, which was sold to US payment processing firm WEX in 2012. Through that journey, they faced significant challenges in getting access to transactional banking services, both from a contract relationship standpoint and interacting with technology.
“It was almost impossible,” says Stephenson. “At times, there was a closed door for accessing the services and, even if we could get through that door, we couldn’t build what we wanted in the way we wanted, requiring a lot of workarounds. It was clearly broken and we realised if we were having problems, knowing payments as we did, it must be even worse for the broader market. We knew it was a problem we could solve.”
The weight of the problem was complemented by the scale of the opportunity. Having pioneered virtual cards that enable companies to pay suppliers in the travel industry at CorporatePay, supported by APIs, tokenisation and reconciliation controls, Stephenson and his colleagues noticed growing demand among clients to replicate the experience for the broader banking and commercial transaction market, which is five times the size of the consumer market, yet had lagged behind when it came to innovation.
“They were asking us to do the same for bank-to-bank payments, account payments and international payments,” Stephenson adds. “We thought that sounds like a good idea, particularly when we saw, even in sectors and clients with the most adoption of those services, we were typically only serving 20 per cent or less of their payment volume, much less in other industries. We were leaving 80 per cent of the opportunity on the table and probably up to 95 per cent of the opportunity in other industries.”
To resolve the widespread frustration across sectors, Modulr got to work in 2015 creating a digital alternative to commercial and wholesale transaction banking, providing digital businesses with a scalable and efficient payments infrastructure. Partners of Modulr, meanwhile, are given the ability to embed payments, rather than resell third-party solutions, so they can offer sector-specific innovative solutions, ultimately improving their customer experience and scaling their own propositions.
Modulr’s platform delivers automated payouts and simplified pay-ins, and its API integrates accounts into any platform, so businesses can easily launch new payment services. In just five years, it has processed £50-billion worth of payments through its platform on behalf of customers and partners, ranging from other fast-growth startups, such as Revolut and iwoca, which have been able to scale faster thanks to Modulr’s infrastructure, to established enterprises like Sage, and recently signed QuickBooks, allowing smaller business and accounting users to pay out on time 24/7, while improving visibility and eliminating manual processes.
Having focused predominantly on the UK so far, targeting different market verticals, Modulr is now looking to further accelerate its growth in three measured steps. The first is leveraging the rapid acceleration of digital transformation across multiple sectors to spread its services even further in the UK. The second, having spent considerable time last year getting regulated in Ireland, is to expand into Europe. Finally, there is a significant opportunity to take its in-demand solution further afield.
“We believe every software company can become a payment company by embedding our services in it,” says Stephenson. “You can apply it to so many markets. As industries continue to digitally transform, the opportunity to embed payments opens up. It used to be that businesses would just go to their bank for payments, but we see a bold world where they connect their software directly into payment rails and financial services. There are still so many areas that are untouched, but we’re seeing a global shift towards embedded payments really start to emerge.”
Anybody can start a business, but really scaling the company is far more challenging. Modulr has achieved this rarity and faster than nearly every other UK startup over the last three years, by constantly referring back to the problems its customers face and the solutions they require to fuel growth. Though such insights are now principally powered by data, Modulr’s mission to enable companies to experience payments how they want is fuelled by the painpoints its founders felt running digital businesses in the past.
“It goes full cycle back to why we started the business, which is to provide the flexibility and opportunity to integrate payments into customer journeys and flows, so people can do things in a really frictionless way,” Stephenson concludes.
“We see that continuing to grow and evolve as customer experiences continue to change. We were fortunate enough to experience our customers’ painpoints directly and know how to build a unique solution, and we’re dedicated to advancing that even further. There are still many cases where it doesn’t happen, so we will continue to improve the payments experience to ensure money flows efficiently through businesses and the economy.”