The Power of Partnering with a Big Bank
With Guillaume Massis, 1POINT6’s CEO.
Hi everyone!
Today, I’m sharing learnings from my discussion with Guillaume Massis. Guillaume is the CEO of 1POINT6, a French payment company that partners with BNP Paribas.
In this edition, you’ll dive into:
The rise of the marketplace sector.
The role of a payment service provider.
Partnerships between banks and fintechs.
Enjoy!
1.6... Does that ring a bell?
1.6 is often associated with the golden ratio, a concept that links harmony and mathematics, though I won’t bore you with the details. In simple terms, it represents a harmonious proportion between different parts of an object or an image, such as the façade of the Parthenon in Athens.
But 1POINT6 is also the name of the French fintech company you'll learn about today, representing the six features it offers.
A carefully chosen company name.
The Payment Solution for Platforms
1POINT6 was founded in 2023 through a partnership between 321 Founded, a French startup studio, and BNP Paribas, one of Europe’s largest banks.
The company focuses on payments. Its mission is to manage transactions for marketplaces and online businesses. The fintech handles the entire payment process (cash in and cash out) and the associated cycle. We’ll dive into this shortly.
1POINT6 has positioned itself in a very interesting niche: marketplaces.
The marketplace sector is incredibly active and diverse, encompassing C2C (like eBay or Etsy), B2C (such as Amazon), and more recently, B2B (think Upwork). For example, Etsy had 9 million sellers in 2023 across 234 countries - 1.5 million more than in 2022. Managing all this requires significant capability.
This justifies 1POINT6's presence in this highly competitive and well-structured market. The raison d'être of 1POINT6 stems from the combination of two elements : on the one hand, the clear interest in a deep and promising market, and on the other, the need to stand out in a highly competitive environment.
It is no surprise that managing payments for marketplaces is a highly regulated market. Current regulations require marketplaces to work with authorized providers, such as payment institutions or electronic money institutions, to handle these transactions. This is known as third-party payment processing.
Let's delve into this topic a bit more.
Managing Payments… and More
The role of a payment service provider for marketplaces goes beyond just managing cash flow (cash in and cash out). When a marketplace invites stores to operate on its platform, the first step is onboarding them. This onboarding process involves ensuring that the sellers are legitimate businesses with authentic products, known as KYC (Know Your Customer).
How does it work?
The provider (1POINT6) verifies the authenticity and financial health of the company selling its products on the marketplace. It requests a range of financial and legal information about the company and analyses this data using specific databases. The ultimate goal is to ensure that the company is compliant and that the ultimate beneficial owners are properly identified.
The key challenge of KYC is to have a thorough process while offering a seamless, digitized service.
We have greatly optimized the information acquisition process. By automating much of the onboarding process through a fast and efficient digital interface, we make the experience much smoother for sellers. This is a major asset for a marketplace’s attractiveness. Instead of a process that could take weeks, our solution allows it to operate almost instantly.
Once the seller is able to operate on the platform, the provider begins managing payments:
Ensures everything is compliant.
Handles payment acquisition (cash in).
Transfers the payment to a segregated account.
Allows the marketplace to visualize everything on a dashboard.
Redistributes the money to the seller and the marketplace (cash out).
All of this is done through an API that integrates the entire system.
This is a bit of the basic journey and challenges of a marketplace. But as it grows, more customized solutions become necessary.
As the platform expands, banking and compliance issues increase in complexity. Modular platforms are needed to address these challenges. For instance, you might face specific issues with KYC or reconciliation. This is where modular platforms like 1POINT6 become essential.
The challenge of entering the large marketplace sector is building credibility.
Why Partner with a Big Bank?
As mentioned at the beginning, 1POINT6 is a project co-created with BNP Paribas and the startup studio 321 Founded.
Partnerships between banks and fintechs are a major topic in the ecosystem, with each party reaping benefits.
By collaborating with fintechs, banks can quickly adopt innovative technologies without having to develop them in-house. This is a significant advantage given how slow banks can be (for various reasons) while the finance sector evolves rapidly.
Simultaneously, fintechs that partner with banks gain access to the banks' extensive customer base. Collaborating with established financial institutions helps fintechs build credibility, especially with large clients, and provides access to certain bank infrastructures when necessary.
I discussed this topic with Guillaume, and two major benefits stood out.
The first benefit relates to compliance and process issues.
We currently operate as agents of BNP Paribas. BNP Paribas delegates compliance responsibilities to us, enabling us to manage payment activities. When we onboard sellers for our clients, we follow BNP Paribas's compliance process, which either approves or disapproves the sellers.
This arrangement lays a strong foundation for eventually operating independently. 1POINT6 is in the process of obtaining its electronic money institution licence and plans to use BNP Paribas’s expertise to establish robust processes once the responsibility is fully transferred to them.
The second benefit pertains to business development.
Guillaume has extensive experience in business development and go-to-market strategies. Before starting 1POINT6, he served as the Chief Sales Officer of Intuit in France for two years.
Currently, the fintech is operational and has several clients, particularly in the B2C sector. The goal now is to target larger marketplaces interested in specific modules, leveraging BNP Paribas's go-to-market strength.
One crucial element is our credibility in supporting large clients. BNP Paribas’s backing facilitates discussions with major marketplaces on significant issues. We are likely to assist these major players very soon because they face unique banking and compliance challenges that we can address. And these involve large volumes right from the start.
If you’ve been following my recent interviews, the collaboration between fintechs and banks has been a recurring theme.
Among the advice shared in this newsletter by my guests, I’d like to emphasize the importance of engaging with banks and corporations early on when you’re a fintech.
It’s the best way to establish initial relationships, diversify your business model, build credibility, and then potentially consider acquisition.