There is a growing global market for cross-border payments, in which new companies are taking business away from traditional banks and foreign exchange brokers who lack the resources to cope with increasing compliance requirements. Finseta (Aim: FIN) is a good example of one such company. It provides multi-currency accounts for businesses and high net-worth individuals (HNWIs) all over the world. The firm removes the complexity of international payments by managing currency risk, payment and electronic account services. Finseta has a market value of £22 million and achieved a turnover of £9.65 million in 2023, up fourfold from 2021.
How Finseta is leaving a worldwide footprint
Finseta does not compete in the low-value, high-volume retail market, but instead provides bespoke services to corporate and HNWI customers making high-value compliance intensive transactions. The company serves 1,400 customers in more than 150 countries and with more than 58 currencies. It offers accounts in at least 35 different currencies and provides four main advantages over traditional banks. These are: first, one-to-one personalised service; second, reduced paperwork; third, speed (witness a turnaround time of less than 24 hours) and, fourth, cost (the service is up to 5% cheaper than high-street banks’ offerings).
Finseta was formed in 2010 and was listed on Aim in 2021. It has a low-risk business model since it does not engage in speculative currency trades nor trade from its own balance sheet. Payments are facilitated through counterparty relationships with only limited use of Finseta’s balance sheet, and this leads to low working capital intensity, a high return on capital and high cash conversion. Finseta invests in its regulatory and compliance capabilities, which are important for its customers, and its diversified business is not reliant on particular currency pairs or payment corridors. Its highly scalable technology platform facilitates future growth and innovation.
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Finseta is expanding internationally and into new markets to position itself for sustainable long-term growth. In January 2024, the firm signed a deal with Mastercard to launch a corporate card scheme. The company will now be able to launch commercial cards co-branded with and supported by Mastercard for the group’s corporate customers. The card is expected to be launched in the next few weeks and will offer customers an additional payment route, which should be particularly useful in managing business expenses flexibly.
Finseta has grown both organically and through bolt-on acquisitions. It was known as Cornerstone FS in 2021 when it was first listed on Aim. In 2022 both Capital Currencies and Pangea FX were acquired and the company’s name was changed to Finseta in April 2024. International expansion began with the opening of a new Asia office in August 2021 followed by an office in the United Arab Emirates in September 2021. Authorisation to operate in Canada was granted in April 2024. In June 2024 Finseta received £150,000 cash for selling, to a non-competing business, its non-trading subsidiary Capital Currencies.
Given this international expansion and the 2022 acquisitions, it is not surprising that revenue rose 38% from 2020 to 2021 and then more than doubled between 2021 and 2022. It then doubled again the next year to reach £9.65 million. The pre-tax loss grew from £1.4 million in 2020 to £5.6 million in 2022 as the company expanded internationally, but the doubling of sales from 2022 to 2023 enabled it to declare its first pre-tax profit of £1.3 million and first positive cash flow in 2023. In reporting the company’s 2023 results, CEO James Hickman said that the strong trading momentum of 2023 had been sustained in 2024, so the company expects continuing growth this year.
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