18 - High-value payments need a different approach. David Hunter, HY10

For most people, making a payment is simple. But for ultra-high-net-worth individuals, the opposite is often true.

In this episode of tell.talks, Rob speaks with David Hunter, CEO of HY10, about why traditional transaction banking struggles to meet the needs of affluent clients, despite decades of innovation across financial services.

Together they explore:

• Why wealth can actually create more payment friction
• The gap between traditional private banking and modern fintech
• Managing complex, high-value and cross-border payments
• Where automation should end and human judgement should begin
• How relationship-led service is becoming a competitive advantage

An insightful conversation on customer experience, payments innovation and what the wider fintech industry can learn from serving one of its most demanding customer segments.

Transcript

SPEAKER_01 0:06

Welcome to Tel Talks, where we speak to the people shaping today's digital economy. Today we're joined by David Hunter. Well, David, you've had a very, very colourful career, and I've known you for a number of years, and I'm I'm grateful to have known you for all these years and consider you a very good friend of mine now. For those who might not know you, tell us a bit about your background and how you ended up working with ultra high net worth clients, of which I'm not one.

SPEAKER_00 0:33

Not yet. Yeah, sure. So I've uh been around in the uh payments industry for 25 years plus, um maybe a big plus, I don't know. Um but yeah, no, I've been I've been involved uh in in payments um since the origins really of uh electronic money uh and the uh first e-money directive. Um I've um variously run um five uh e-money institutions um uh from the first one, which is a which is a small one, which was a subsidiary of British Telecom, through to Click and Buy, Paysafe Card, UCash, um and now now Heighten. And I came across this uh as a tight founding group for for this business now back in uh 2023, so yeah, about three years ago, and um it struck me as a a really interesting um you know crossroads of uh of of capability um where we could see an underserved segment of the of the of the market. Um and so yeah, and that's how I got got gradually roped into doing this as part of the co-founding team, and as a consequence, now focus 100% on this business as CEO, and I don't do any other non-exact or advisory roles at all. Uh so that's all a past chapter. I might go back to that in the future at some point, but for now, this is where my absolute dedication is.

SPEAKER_01 2:04

What have you learned uh from working with these uh ultra high net worth clients that most people in payments probably wouldn't expect?

SPEAKER_00 2:12

Yeah, so I think that's uh a really good question, actually, because it's is what's emerged is quite a paradox, actually, is something that I don't think people would would expect. I think they'd be quite surprised to hear this. Because if you think about uh customers, you know, with significant wealth, um, you know, they're typically the the most coveted customers in in pretty much any walk of uh life or business endeavour. Um, you know, wealthy customers are highly coveted and and and are provided excellent service. Um and you know, that actually is also true somewhat in in financial services. But what we found is it's absolutely not the case in in payment services uh when it comes to um serving ultra-high net worth individuals. Um, you know, wealth makes things harder, not easier, uh, strangely. Um so yeah, and that's been uh uh uh you know something that we've um not stumbled across, but certainly um I've been found it increasingly uh and uniformly sort of reiterated through every conversation we have with members of our target audience. Uh the pain and friction and frustrations they feel in their basic transaction banking requirements because of the complexity, their complexity, their lifestyle complexity, and the size and value of payments, etc. etc. So the the that that's I think the the thing that will may surprise some of some of the audience here that uh um you know the the the the the more wealthy you are the harder it is uh to have good service in payments.

SPEAKER_01 3:55

So just touching on that for a second, would you would you say then that for ultra-high net worth transaction banking's effectively broken? Like what what what is it?

SPEAKER_00 4:06

I think I would actually characterize it like that. Um traditionally ultra-high net worth individuals have been served by private banks, for example, um, because typically um retail mass market banking products just don't have the um the the the bandwidth you know and and the limits to to meet the the the spending demands of of customers. Private banks, you know, um and this might be slightly unfair, but I can certainly uh see this across you know multiple institutions. Um they're they're a bit archaic, a bit of you know, in in yesterday's world, um, you know, user experiences from from the the 90s or the noughties, maybe. Um and but they but they're very effective in one regard, right? They actually are very good at uh managing uh wealthy clients' investments, so the assets under management is a is really a strong point for them. Um but the actual when it comes to the transaction banking side, and this is quite often the case that a private bank is a bolt-on to a wider retail bank, uh, and because of the economies of scale, especially in cards, for example, or transaction banking, uh, you know, a lot of the transaction monitoring limits might be based on the mass market products of the bank, not on the ultra-high net worth individual limits that you know you can imagine characterises that segment. So that that's that's uh it's certainly not working um for uh this customer segment uh from traditional private banks. Add to that, there's a huge, huge intergenerational transfer of wealth going on at the moment. Uh anything from 80 trillion to $124 trillion, depending on which reports you read. And the younger generation of wealth are understandably much more digitally savvy. They're much more uh mobile, um have um you know, live multi-jurisdictional lives, if you like, which add to complexity and to transaction monetary and onboarding, etc. etc. So, you know, when it comes to established private wealth, the institutions they serve them well for as it's under management, not anywhere near so well under the WIP for payment services, transaction banking and spend. And then the other side of things, you look at the fintechs, um, which you know have been really good at sort of biting into uh into you know established banks with uh revenues and and customer bases because they do things in a slick, systemized way, uh using technology to really uh drive their their business and numbers, but that necessarily um means that the values are lower uh in their limits and less complex. Um so um so you know ultra ultra high net words that work uh or use try to use fintech products all say the same thing. A lot of them use them, but they're only good up to about 5k spend or something like this, and then they start to become, you know, get declines and things like that. So so again, you know, where do where do where do these customers go? They're really they're really sort of hemmed in by what the market's offering.

SPEAKER_01 7:30

So it's the it's it's the it's the juncture of g giving great user experience, but also having um having the traditional services that they they still want and love.

SPEAKER_00 7:44

Abs Absolutely right. And and that's where we've we think we found a real sweet spot. It seems to be evident through the uh experiences we're giving our clients and and how um you know one in four of our clients is referred by another, um, which I think is you know quite a powerful uh story in itself.

SPEAKER_01 8:02

Give it give us uh an example of a complex payment scenario that shows where traditional models start to struggle.

SPEAKER_00 8:09

Yeah, and by the way, they they don't it doesn't take much. I mean, you know, when it i i if if you like uh even if it's a simple um uh bank transfer, if it's if it's seven figures, um as you may or may not know, uh but I guess the the clearest nearest thing we get to a six-figure transaction in in uh uh uh would be perhaps a a house purchase or something like this. It's it's a highly complex uh transaction. Now I imagine that um you know it's cross-border multi-currency, uh, it has um uh you know sort of lawyers working for the family, you know, based in one jurisdiction, uh uh EAs in somewhere else, it's getting close to the weekend. There's so many things, so many moving parts um in especially in international payments.

SPEAKER_01 8:59

Um I think it sounds like it's more of a a project than a than a transaction. So what what is that what does that mean in practice?

SPEAKER_00 9:07

Yeah, so um yeah, this is a phrase we find really. I mean, it's a bit of a I guess a marketing phrase, but it it really but it's actually really important, right? And that is uh as I sort of just started to touch on there, um, you know, payments we c are you know very often, especially live payments, have uh uh an extremely significant outcome uh related to them. You know, the transaction itself is possibly the last meter or the last mile of something really, really uh big and important. So we don't treat transactions just as a digital ledger movement or a uh you know transaction in itself. We work very closely with our clients to really understand the context. And again, coming back to this, you know, this one-to-one relationship management allows us to do that. So when we do lifestyle booking, especially significant cost ones, we will actually build in uh double check-in with the with the client when they're going to be able to do that.

SPEAKER_01 10:05

They're likely to be travelled, they're likely to be in this region, country, currency.

SPEAKER_00 10:11

So they can all be pre-programmed into our transaction monitoring. Uh and so that not there's not even a frustration of the first attempt failing, let alone any further attempts.

SPEAKER_01 10:21

But but but the nice thing there is you've still got that that human judgment, which does matter at some point, right? There's always going to be some level of a limit that's gonna be hit by I suspect where where where you're positioning and angling is the likelihood of of uh you know those embarrassing scenarios where you're tapping your well it wouldn't ever be a tap of a car by, but when you're inserting your card to make a payment, they're much less likely to happen.

SPEAKER_00 10:47

In my view, the simpler way of think about it is um use technology to eliminate you know unnecessary frictions, just things that that just shouldn't get in the way. Um, and they are things like limits and transparency and things like this. Um they use human judgment where it where where necessary frictions need that experience, that nuance. Uh and you know, so the two come together, really, and they're really important, both of them.

SPEAKER_01 11:16

Nice. There's often talk about high-touch service. What does that actually look like when it's done well?

SPEAKER_00 11:23

When we originally sort of were developing the business model, we you know, we uh the value proposition really was that that combination of of you know payment accounts, multi-currency payment accounts, card, uh exclusive card product with with high high value limits, uh, and the lifestyle team, which is there to support the customer through anything they might need, actually, you know, like a like a high-end concierge service. But the point is is that um we we make that an absolute cornerstone of our of our of our of our business model. So the lifestyle manager is they they work in the same sort of context as the as the member. We will do you know pretty much anything we can to be of support and assistance uh for our our members. Uh and that could be you know the frustrating little ones like booking the finest table at the finest restaurant with no with normally has a waiting list of three months, or through to you know a highly complex uh travel itinerary. Um so but so yeah, so you know, high touch, over overuse phrase, what really matters is is you know keep on delighting your customers so they use the service more. That's when that's the proof point.

SPEAKER_01 12:40

And they talk as well, right? Because I think you said um lots of your customers have come word of mouth.

SPEAKER_00 12:46

Yeah.

SPEAKER_01 12:46

They'll be talking to each other because they're rubbing shoulders in the case.

SPEAKER_00 12:49

Yeah, again, it's like quite I mean, obviously it's fantastic, we love it. As I say, you know, one in four at the moment of our clients coming through are from recommendations, and that's that's actually increasing, right? So who knows where that could get to.

SPEAKER_01 13:00

Amazing. Finally, if you could pass the mic to someone else in FinTech who you think's got an interesting perspective on the industry, who would you recommend we speak to?

SPEAKER_00 13:11

It's a great question. I I I don't think uh I don't think I'd name any names, but uh in in keeping with one of the themes we've touched upon today, uh I talked about the sort of um sort of this huge transfer of wealth uh to the next generation. And um, you know, perhaps we should be thinking about doing something similar with uh a transfer of uh voice to the next generation in our industry uh and give the microphone to some of the uppercoming talent under 30 um that probably have a fantastic perspective um rather than old grey guys like me. Us us well, I'm putting you in the young bracket then. I wish.

SPEAKER_01 13:55

Well uh thanks for listening to today's episode of Tell Talks. Um, thank you, David, for coming on board. Really enjoyed the chat. Stay tuned for more conversations coming soon. Great stuff. Sure, Rob. Thank you. Thank you.