Issue 03 - 2020 MAGAZINE

When challenger banks become gaming-friendly

Using technology, data and gaming can connect more people—forming a niche within the payments landscape

For years, gaming has been a popular form of entertainment and it is now best known for creating new opportunities within the global financial ecosystem. Last year, the global video gaming industry was valued at $151.06 billion and they are expected to grow a compound annual growth rate of 12.9 percent from 2020 to 2027. In May, the world’s 2.7 billion gamers were anticipated to spend $159.3 billion on games in 2020 and surpass $200 billion by 2023, according to the Global Games Market Report published by Newzoo. This anticipated growth trajectory coupled with the coronavirus pandemic has enabled them to make meaningful shifts from physical games to online games, which further necessitates a seamless financial payment system. 


At present, there are a host of financial services providers who are seeking a fascinating route to leverage gaming in their offerings. Case in point is Xace which has become the first FCA-licenced specialist payment and account provider in Europe for gaming and cryptocurrency industries. With the new development, accounts are being offered for GBP and EUR through its custom web banking platform. Xace prides itself on becoming the first digital banking platform designed for those emerging markets. In practice, the company develops digital bank accounts and allows cryptocurrency or gaming operators to send and receive payments without the need for traditional banks. It was developed by a team of experts who have previously worked in the financial services industry specialising in gaming and cryptocurrency over the last six years. Statistically, more than thousand gaming businesses and players are seeking accounts with Xace. 


It is interesting to note that financial services companies are tapping into unconventional domains like gaming to evolve the industry and business at large. In a way, it also allows them to differentiate their offerings and gain competitive advantage among new and existing lenders in the global financial landscape. It is now planning to foray into other European markets and will subsequently make significant headways in lowering barriers within the financial and gaming industries. Founder and Xace CEO David Hodkinson discusses with Global Business Outlook the company’s vision in becoming the go-to financial services provider for operators and customers in gaming and cryptocurrency markets.


What is the value proposition that Xace offers to significantly differentiate itself from industry competitors?

We set out to solve a very targeted industry problem through our own experiences within the gaming and cryptocurrency industries. As chartered accountants, our niche clients were in a constant state of battle when it came to bank accounts and transactions, even though they were licenced and compliant entities across Europe. This was costing significant time and money for so many companies with even institutions who were publicly considered as cryptocurrency and gaming friendly, regularly closing accounts or rejecting compliant applications. With Xace, we set out to win the battle for these industries through experience, understanding and delivering a compliant solution the regulators would be happy with. When you take on a challenge like this, you face barriers every step of the way but it only makes you deliver a better product and service as a result. 


Can you elaborate on the company’s digital banking services designed for emerging markets such as gaming and cryptocurrency? 

Xace is a proprietary suite of account and payment products for GBP and EUR, enabling businesses and individuals who are working or trading with cryptocurrency or running or playing online gaming platforms across the European Economic Area to store and use their money. Unlike traditional banks and financial institutions, we understand that gaming and cryptocurrency can be licenced, regulated and compliant and we are not shying away from those responsibilities, in order for our customers to continue to provide their much needed and demanded services.


Given the growth potential of the gaming industry, how important was it for Xace to become the first specialist payment and account provider in Europe offering FCA licenced solutions specifically for the industry?

Well first we simply had to solve the challenges that gaming companies are facing in Europe, while many are starting to integrate alternative payment methods such as bitcoin with their access to bank accounts only going to reduce. We have always known that if we created a solution that enables licenced and compliant gaming platforms to manage their money, then we would be a successful business in a short space of time. The growth opportunities for gaming as a whole only goes to demonstrate that this challenge has been one worth taking and we are now in a position to be there to support companies with whatever direction gaming takes them in.


What are the implications of Xace-Visa partnership for customers while managing their payments in both GBP and Euros? 

Through our virtual debit card issuer, Xace customers will be able to create and manage debit cards at will, to be used in any situation they may need over the global Visa network. Virtual debit cards are growing in popularity within the gaming industry as players seek additional ways of remaining safe, while being used with a gaming friendly account ensures the payments are less likely to be blocked or rejected. The Visa network makes it possible for Xace to be functional on almost every payment gateway there is and it’s going to be a very popular feature when we launch it in the coming weeks.


What are the challenges that you are anticipating in the near future in terms of achieving the company’s goals?

Our biggest hurdles have hopefully already been faced, creating a payment institution for these industries is nothing short of difficult. Our growth has been rapid, with no marketing spend as yet and no launch of our marketing strategy, so really it will come down to how we navigate growth as an organisation that will bring the biggest challenges moving forward. We embrace the challenges bought by regulators, while technical integrations will always be an ongoing process but we have a very tight knit team and we’re all in it together.


Are there any challenges that esports would face in the near future and how could Xace solve these problems?

We are huge fans of the growth of esports. We have worked alongside some of the global stars and teams who make up the foundations of where esports has got to today and it’s really been quite a journey to see it unfold the way it has. We have already seen where some of the challenges are going to come from and it really comes down to how financial institutions understand the business of esports. As fans begin to put finances in and alternative payments are received, such as crypto and tokens, the banks become anxious as it’s new to them. Then it’s a question of do they want to understand it or is it cheaper and quicker to just move them on or not accept accounts in the first place, which is a likely situation. At Xace, we know the industry, we know and understand the types of payments involved and we know how to get compliance right to support businesses and players.


Esports first gained popularity in Asian countries such as South Korea. Does Xace have any plans to set up offices in APac or anywhere outside Europe in the future?

Our motto is never say never and our plans are big, but right now we are 100 percent focused on our goals in the UK and the European Economic Area.


Can you discuss more on Xace’s plans for the next five years?

First up we are due to launch our Malta office in the coming weeks. The team at Xace have worked a lot with Maltese companies in the past and this has been a target market for us since the outset. We have big plans for the region. Outside of that we are committed to delivering the best products and experiences we can for our customers, while continuing to grow the business. We will keep our cards close to our chests on our core plans, but 2021 will see a lot of developments for Xace and we are looking forward to it.

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