Open Finance Community payment challenge: OneStep Financial

Open Finance
02/11/2022 interview
David Putts OneStep Financial Founder & CEO

Qorus and Capgemini have identified the leading fintech companies for the payment challenges they organize for the Open Finance Community. One of them is OneStep Financial, and its founder and CEO David Putts tells us more about it.


About OneStep Financial

OneStep’s mission is to leverage DLT Cash, a patented new form of distributed ledger-based fiat currency, to streamline both monetary and information flows in corporate incentive and contingent payments. One of our pilot clients pays over $500 million globally in trade incentives to small retail stores and incurs more than 15% in operational and fraud costs for such micro-disbursements. We have three pilot clients enjoying 25% to 50% savings, with higher levels of control and programmability to payments. The company is led by leaders in the Digital Pound Foundation. We are based in the UK with operations in Poland. 

What business problem do you solve? Why is it important to your clients? 

The problem is that a transaction involves more than just the payment alone. This is especially true in the $5.8 billion global loyalty management market (Markets & Markets, 2021). The operational cost to identify who needs to be paid, why they should be paid, what amount, and how they should be paid is 90% of the cost of a transaction. Worse, for an incentive payment, you only have such information in the moment the beneficiary completes a task – and you want the payment to be instant to achieve behavioural change. And beyond the operational cost, incentive payment fraud is enormous. Recent covid frauds running into billions of dollars are a great example, and instruments such as pre-paid cards and checks allow easy fraud attacks. A solution is needed to simultaneously streamline the entire transaction end-to-end (including all the data flows), and include new levels of controls. We need a secure delivery vs. payment system for micropayments. In short, we need a DLT Cash system.

Can you briefly describe your product or solution and in which countries do you operate?

Our Corporate Incentives Management System exploits the capabilities of a DLT Cash e-money platform. A client has a Corporate Account with the capabilities to easily program thousands of small payouts with validity dates and task triggers. They directly control the funds, so successful transactions are real-time and peer-to-peer, and any failed transactions never leave their account, eliminating charge backs and reconciliations. On the side of a beneficiary, they have an Engagement Panel used to capture tasks, trigger identity checks, and capture use of proceeds information. Information flows are peer-to-peer as well as monetary flows, with any information required by a bank to be accessible to that bank. Once the streamlined transaction is completed, DLT Cash is fiat currency. It is decrypted and reconciled with a client's pre-funded account. There is no need for the friction of a tradable assets, thus eliminating the high cost and regulatory risk of stable coins.

What is your core value proposition? What are the unique features you offer to your customers? 

Our CVP includes (a) operational cost savings in the range of 25% to 50% end-to-end, (b) increased controls, resulting in lower frauds and better audit trails, and best of all, (c) better engagement with the end beneficiary. As the solution relies on fiat currency, it is fully fungible and interoperable. The funds can be withdrawn at an ATM, transferred to their bank account, or loaded on a virtual payment card on their smart phone. The beneficiary doesn't even perceive that DLT is in the background. A dollar is a dollar, and a pound is a pound. The product is still in beta stage, but over time, a no-code version with greater parameterization will be available.

Our clients pay for the use of the platform, so there is a flat fixed fee and a modest variable fee that grows with usage. Our product is integrated with a local bank, which manages the pre-funding of the DLT Cash account in the form of a client money escrow account, and we offer the product through e-money licenses which we hold.

Providing that your solution has already been implemented in financial institutions, which companies have already adopted this solution?

We have two global FMCG companies using the solution for trade merchandising incentives paid to managers working in small retail shops for stocking their product. Also, we have an insurance company using the system to pay partial refunds on auto insurance premiums, e.g., when a car is sold in the middle of a month and the remaining two weeks of premium must be refunded.

Can you describe in a few words one of these collaborations. (What was the objective? What were the main challenges? What results did your client obtain thanks to the implementation of your solution?)

A global tobacco company wanted to cut the operational costs of distributing trade merchandising incentives via pre-paid cards to 14,000 small shops. Such incentives require the use of their sales force, who spent as much as 30% of their time dealing with such cards, rather than selling. The goal was to save 20% and streamline the process. We exceeded this goal, with more than 25% savings and we eliminated the need for the sales force to have to deal with card distribution. Better yet, the company can manage their funds directly, whereas in the old process, they would transfer money to a pre-paid card company and relinquish control over the funds with that transfer. A lot of people say that streamlining goals could be achieved with traditional technology, but those people do not fully understand or recognize the importance of strong governance over the control of funds. With our system, the client can program the validity date on every payout and change that validity date as they see fit. They can change the rules on every campaign. And they can trace whether a beneficiary has received and redeemed their funds.

What is your business model and how easy is it to duplicate to additional geographies? 

Our clients pay for the use of the platform, so there is a flat fixed fee and a modest variable fee that grows with usage. Our product is integrated with a local bank, which manages the pre-funding of the DLT Cash account in the form of a client money escrow account, and we offer the product through e-money licenses which we hold. The entire platform is API-based. So, any bank in any geography can use the platform to create a product offering for their clients. European regulations on e-money are often more rigorous than regulations in other markets, and so clients can benefit from the most robust set of processes and procedures. We can adapt from a more rigorous market to a less rigorous one with ease.

Where do you see your fintech company in five years? What impact or difference are you trying to achieve for financial institutions in your portfolio?

We plan to rebrand the company in 2023 and to invest in new user experiences and no-code solutions for parameterization. With a major product upgrade, we expect growth to be rapid. Our focus will be to use partnerships heavily to grow our geographies and to expand into other use cases. We seek partnerships with banks in other jurisdictions, and with consulting and business development firms who seek to serve their own clients with our product, and enjoy their own revenue growth. For financial institutions, the basic product offers huge possibilities. At the core, this product is based on a business and individual account with a peer-to-peer payment capability. This could be used for a range of other products in areas such as capital markets (sale of assets in deliver-vs-payment flows), lending (completion of conditions), and even financial inclusions, where this could be a low-cost wallet solution.

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