Laurent Descout, founder and CEO at Neo, talks about businesses’ need for a truly global account, with both automation and financing embedded.
Global Finance: Why does corporate banking need a new type of bank?
Laurent Descout: Payments and FX [foreign exchange] in treasury management is ripe for reform. Working with traditional banks typically involves complex and slow processes when opening accounts, managing multiple currencies and executing FX hedging strategies—all of which have a detrimental impact on businesses. With treasurers having to place tight controls on cash management, they can’t afford to contend with high rates, added complexity and a lack of transparency. The answer is to reduce their reliance on traditional banks and seek an alternative approach.
GF: What’s the profile of your client base?
Descout: We work with more than 200 corporate clients across more than 20 countries, and in 2021, we processed some €1.5 billion [$1.7 billion] in transactions. While we cover a large range of industries, we are very active in the asset management space. We hold accounts for more than 50 funds or investment firms or vehicles. We also have a growing presence with other payment services firms that are looking to plug a foreign exchange component into their clearing offering.
GF: What are some of the biggest corporate pain points Neo looks to solve?
Descout: Opening an international bank account is a difficult, long and painful process; the transactions themselves can add further days. Businesses need to collect monies from across the world in multiple currencies. Often, they end up having to manage different accounts for each country or currency, which becomes a complex task. They are also losing out on cost. With cross-border payments, many banks don’t just charge the exchange rate and the FX margin; they also inflate the overall price. Added to this, the lack of connectivity is becoming an increasing issue, with treasurers demanding more insight into their cash. They want to know that their account is smart, automated and connected to their treasury management systems.
GF: In corporate banking, companies often give their business to banks in return for credit? How can Neo compete with that?
Descout: Unfortunately, this is still very true. The good old, “I give your firm credit, so let me price you high on FX” is still a reality, and despite ethical concerns, most banks keep playing this game. It forces us to invent better solutions and look for the clients who value automation above financing—most digital unicorns, for example, have no credit needs. But beyond this, we are looking into plugging financing products straight into our platform so that clients end up finding a truly global account with both automation and financing embedded. When this comes out, I think banks will have their kind of “Kodak moment.”
GF: What is your competitive differentiator from traditional cash management banks?
Descout: Neo is offering a new approach: a single platform where treasurers can gather all currencies and access all their information in one location, from anywhere and on any device.
We then attach full transparency, low fees and a rapid setup process. Our multicurrency accounts can be available within days, so businesses can be up and running quickly whenever they have a new requirement. Added to this, we deliver a comprehensive analytics layer to keep treasurers informed of their FX exposure. We help them execute hedging strategies on the market and then monitor their performance.
GF: How can Neo compete with banks that spend billions annually on tech?
Descout: Banks probably spend 99% of their IT budget on updating old legacy platforms or simply trying to link all the ones they have together. Most banks run on dozens of platforms, which barely communicate with one another. Many times, few people in the bank have the global picture of their firm. But even when they have a great product, their appetite to offer it to a large client base keeps decreasing. Clients need a simple, price efficient, but most of all available global solution. Corporate banks are slow on each single point.