This is the first episode of the #FintechInterview, a new format launched by Bocconi Students Fintech Society where we will be interviewing leading fintech managers & entrepreneurs.
Today, Donato Vadruccio is on stage to open the series. He will give us some insights into his professional life and his startup PayDo, that he founded in 2016, as well as some thoughts on the payment markets of today.
Hi Donato, it’s nice to have you here. Can we start talking a little bit about your career path?
Thank you for having me. Sure, I started my career working for Arditi Galati, a local bank in Puglia, which is where I come from. I entered Mediolanum bank in 2001, where I ultimately became manager of the Banking Services Division. I spent most of my life covering different positions in the banking sector and, therefore, I became very well acquainted with the banking mechanisms such as how to maintain a good relationship with customers
So, after so many years spent working inside banks, why did you decide to launch a startup and become an entrepreneur?
I’ve always taken care of the payment aspect of banks and, over time, I started to think of providing a payment service that could be versatile and focused on the user experience. This is how the idea Plick was born. It had to be easy to use and based on the already existing accounts held by customers at their bank, thereby avoiding reliance on external circuits (e.g. downloading an app). This is very similar to how the check works: the payee can collect the check in his/her own bank directly, even if the payer’s account is held at a different bank. The same concept applies to Plick.
After a preliminary check by the regulatory authority, as well as after having received some initial interest by third parties, it was relatively smooth to develop this reality. We found some partners eager to invest, which showed us there were already people trusting our project, even when it was just an idea. In the end, also thanks to the help of PwC, the project took off, as they built our platform in record time; very unusual for a startup.
What challenges did you face during this passage from banking sector to startup and what suggestions would you give to young students and graduates willing to launch their own startup?
Once the project was set up, I decided to leave Mediolanum in order to fully dedicate all my energies to Plick. At the time, I had many years of experience behind me, together with my training at SDA Bocconi. This provided me with the necessary competences and knowledge for handling the governance of a company and properly managing all aspects of a project — attention to cashflows, search for new investors, compliance with regulations, etc.
Students who decide to launch a startup and who may not possess enough experience, must first have a clear and solid idea in mind. However, the mere idea is insufficient to build a successful startup. They should present this idea to someone in order to obtain an objective external opinion and validation. In addition, it is crucial to find some partners that can fill the gap in experience, by providing support and knowledge. In general, it is very important for an entrepreneur to be flexible and to be able to compare quickly what was planned with what is learnt and experienced in practice.
Thank you, Donato, for your valuable advice and for sharing your experience. Now we have some questions about your product. What is the advantage of Plick with respect to other digital payment apps and services?
First of all, Plick doesn’t rely on a circuit. This implies that everyone (businesses and individuals) in the SEPA can use Plick, no matter their original platform. Secondly, while other services are standardized, Plick is very flexible and highly customizable. We can provide a financial service tailored on the necessity of our client, e.g. there may be different purposes — purchase of cars, real estate — and different objects of the transfer — not only money but also documents, security codes, etc.
We were born as a substitute of the check, but we quickly realized that Plick was much more than that. It provides a great added value to bank transfers in general, since the payer simply needs the phone number or the email address of the beneficiary who, in turn, will only be required to insert his or her own IBAN during the first transaction. Moreover, Plick is also extremely easy to use when it comes to reimbursement. All in all, it is a highly versatile service.
How important have partnerships been up to now and how much will they be in the future?
They are fundamental to our development, and they also represent the core of open banking in general. I consider Plick as an open banking “from theory to practice”, meaning that we can connect banks to clients that want to become more digitalized on the payment side. For instance, we put in contact UniCredit with a2a, and Crédit Agricole with Agos through Plick. We do not want to compete with banks. On the contrary, we help banks in their digital transformation path, offering new tools to final clients. As a matter of fact, companies do not want services that are created by banks alone, but services that are tailored on their necessities. That’s where we intervene with our fully customizable offer.
How much time does it take to transfer the payment and where do revenues come from?
It follows the timing of a traditional bank transfer according to the Payment Services Directive (PSD): the payment is credited the following working day from the moment the Plick is accepted and it cannot be blocked nor revoked in the meanwhile — just like credit cards.
As for the revenues, we receive a lump sum commission from the adhering banks as a set-up fee, plus an annual fee including a 24/7 active call center, and a small fee per each transaction.
Most physical contacts and relationships have been limited over the past period. Did this provide an opportunity for digitalization in the payment sector?
The digital transformation was certainly boosted by the current situation. For instance, we noticed an increase in Plick utilization on the consumer side, together with a reduction of the average transaction amount, due to new categories of goods and services that were starting to be paid digitally during the lockdown. Although all restraints to physical contacts have inevitably slowed down our ongoing negotiations, they also provided great opportunities to expand our network of partner companies, arising from the need for digital payments to replace checks.
Can you tell us a bit more about the importance of Plick abroad?
Foreign countries already have a number of services and apps which only have local applications, namely they are only available on national circuits. Plick has the potential to intervene allowing local payment services to reach internationalization by simply integrating our platform, thereby favoring transnational payments. As a matter of fact, Plick by itself already permits payments across the whole SEPA area. As for partnering with foreign banks, Plick is only present in Spain through Banco Mediolanum, but we are also in contact with other Spanish banks for further potential partnerships.
What are the aspects of Plick that you want to work more on in the future?
We want to shorten onboarding times for banks (i.e. the time it takes to integrate Plick within the bank). In the future we want to simplify and speed up this process and increase the number of banks in pipeline. We also plan to integrate vouchers for people that do not yet own a bank account and receive a Plick. The voucher could have a variety of purposes, even Christmas gifts that companies may decide to give to their employees.
Thank you, Donato, for the time dedicated to the interview, it has been very insightful!
Bocconi Students Fintech Society