Seven months after Goldfinch Partners and The Baupost Group announced they were purchasing Western Union Business Solutions (WUBS) for $910m, the deal has reached initial closing, with the company rebranded as standalone B2B global payments player Convera.
Those seven months have been busy ones. The company has had to gain regulatory approval from around 60 agencies, reach out to and engage with every one of WUBS’ bank partners and appoint a leadership team led by former global head of Amazon Pay, CEO Patrick Gauthier.
And despite a strong year that saw Convera grow its revenue by 20%, Gauthier sees significant opportunities to grow the company further.
“It’s successful, but it’s operating way below its potential,” he says.
“We saw an opportunity for growth if we were able to invest in the technology that is underpinning the capabilities that Convera has, as well as continue to lean forward into all of our go-to-market, and in particular our marketing activity.”
Now Convera is operating as a standalone organization, it is the largest non-bank fintech in B2B payments globally. But how does it see its place in the wider market, and what’s next for the company?
Convera: Making it more than just FX hedging and payments
Not all of Convera’s leadership is new hires – around half of the senior leadership team is from WUBS, which Gauthier describes as “super important”. However, there have been a number of new additions alongside Gauthier that have led many to assume the company plans to move away from FX hedging and focus on payments.
For example, Convera CTO Dharmesh Syal is a noted early innovator in distributed ledger technology, AI and the cloud, while chief transformation officer Jody Visser comes from a B2B payments background, including working with American Express. Chief commercial officer Drew Weinstein, meanwhile, has a strong track record at fintechs, including as CEO of Velo Payments.
However, Gauthier rejects this assumption, arguing that the company is not shifting to a pure payments play, but instead looking to enrich how it uses technology to meet its customers’ needs.
“The talent we brought in is really injecting a very strong competency in increasing the way technology plays a role in Convera,” says Gauthier.
“But at the same time, the integration of the existing management team is because we do see the current product portfolio as important.”
He argues that “payments and FX hedging are two sides of the same coin”.
“Our customers want to do business globally, and they don’t always want to do a spot payment – they need to be able to do things ahead of time,” he says.
“What we provide is the capacity to transact globally in a way that reduces the unknown. Our knowhow in hedging, risk management and compliance management is here to shelter our customers from the chaos in the world around them and allow them to have more confidence in how they can run their business and predict their cash flows.”
Convera’s revenue and EBITDA margin
Adapting to different customer needs
While Gauthier plans to retain WUBS’ balance of payments and FX hedging but enhance it with technology, Convera’s go-to-market strategy may see some changes.
The B2B payments space is highly fragmented, with many players opting to specialize in certain verticals. However Gauthier believes that while the language of need can be very different across different industries, there is more commonality than may initially appear.
“It’s fascinating how some common needs that customers have are expressed in very different languages,” he says, giving examples of several key clients across different verticals.
A consumer electronics manufacturer needed to be able to have clarity on the cost of overseas facilities; an NGO needed to be able to guarantee that money from corporate donors was properly used; a digital rights management company needed to ensure artists were paid what they owed; and a university needed to be able to provide peace of mind to international students paying for their education.
“All of these customers have different language to speak about the same thing, which is: make this less complicated for us,” says Gauthier, adding that in all cases clients needed tools to address not just the complexity but the unknowns.
With this in mind, catering to these different customer types will be a key goal for Convera.
“A big part of what we’re engaged in right now is defining how we will retool the company with a platform that allows us to serve a broad range of use cases,” he says.
This will cover three customer areas: B2B payments such as global trade; B2C payments such as global pensions and C2B payments such as education.
“There are some core engine aspects of the platform that apply to all of those, but there are some experience elements and integration components that are different,” he says.
“So we’re going to retool the company with a platform that is adaptable for all those use cases, and then service our clients according to those three big areas. After that, the verticals that we are in is really a function of our capacity to speak their language.”
Crypto’s place in payments
Regardless of vertical, B2B payments is, like much of the rest of cross-border payments, currently experiencing the rise of cryptocurrency as a potential new entrant in the space, both in terms of rails and as a creator of new market opportunities within the sector. However, Gauthier remains skeptical about its potential for Convera.
“As someone who has dealt a lot with retail payments, I am a cryptocurrency skeptic as far as it’s used for payments,” he says.
“At present the way it is presented is very difficult for the average person who’s not a technologist to really understand. It is also highly volatile, which is not exactly very helpful when it comes to commerce.”
However, he regards crypto as a class of assets rather than a currency, and here sees some potential for the business.
“Today it’s largely a speculative asset class, and speculation means volatility,” he says.
“If you’re in the hedging business, volatility is an area where you can provide service to your customers, so I’m certainly curious in exploring with our clients how they think of a future where possibly at times they have to interact with a party that’s providing them crypto assets of sorts.”
However, he does see more immediate potential for the company in distributed ledger technology (DLT), which he says “solves a bunch of problems”.
“I can foresee that in areas where we’re trying to get better compliance, better traceability, better identification and so on, the capacity to leverage a DLT driven solution is going to unlock some new capabilities.”
Nevertheless, crypto and its related technologies are less exciting for Gauthier than real-time payments, which he sees as the true innovation-driving technology.
“When you’re changing the settlement cycle in a way as dramatic as what real-time payments can do, it completely changes not just the flow of money and therefore the economics of a payment network, but also risk management,” he says.
“Real-time payments present a huge opportunity to modernize how payment networks operate. And this is an area where I see us leaning faster, harder, stronger than in the crypto world itself.”
The B2B global payments opportunity
Convera achieved payments volume of $170bn in 2021, but with such a fragmented market this accounts for significantly less than 1% of B2B cross-border payments, despite the company being the largest non-bank fintech in the industry. This makes it a challenging space to operate in, but for Gauthier it also represents a significant opportunity for transformation.
“This is what is exciting. I’ve been in payments for 20, 25 years, and a lot of the reinvention of payments has been on the retail payment side,” he says.
“On the B2B payment side, we’re only starting to see the beginning of the transformation here. So the opportunity is very, very material: it’s much bigger than retail payments.”
Having only been at the helm of Convera as a standalone business for around a month, Gauthier stresses that he “doesn’t have all the answers yet”. However, he is keen to highlight that the untapped potential of B2B was a key driver for him taking the position.
“This is what brought me here: I had been noodling on what to do about B2B for a little while,” he says.
“It’s a very large opportunity, it’s largely untapped. Then the opportunity with Convera came across my desk. And the more I advise the investors, the more I realized, ‘this is really interesting’.”
Bringing the Amazon mindset to Convera
As the former global head of payments at Amazon, Gauthier has brought some Amazon practices to the company, some of which have been inevitable as a result of natural conversions.
“One of the core tenants of the Amazon culture is the customer obsession, and it is very compatible with the culture of Convera,” he says.
“Convera has a very strong customer service mentality in place today, [but] we can do better, in particular in not just answering our customers’ needs, but anticipating them. That’s really what customer obsession is about.”
However, other aspects require more conscious additions, including Amazon’s deeply entrenched use of data, which Gauthier plans to “inject a lot of into Convera”.
“There’s a lot of data already in the business, but we’re absolutely going to crank it up, which is why as part of the transformation we’re creating an instrumentation team,” he says, adding that he also sees Amazon’s focus on insight over aesthetics as key to his approach to Convera.
“You’re solving business problems versus trying to fit things in a PowerPoint template,” he says. “I don’t have a lot of patience with PowerPoint.”
However, Gauthier stresses that he does not want to “Amazonify Convera”, but instead build on the team’s capabilities.
“There’s certain things in the Amazon culture that would not be a good fit for Convera, if for no other reason than Amazon is a million and a half people, [whereas] Convera is 2,000,” he says.
“But when the history of management is written a decade from now, this period of Amazon will be compared to the period at General Electric (GE) under Jack Welch, where GE developed a lot of management practices around Six Sigma.
“All of the manager leaders like me who have left Amazon deeply recognize that we have learned management practices that, when everything is said and done, enable a company to innovate at scale and durably solve customer problems unlike any others in the industry. That is the ambition that I have for Convera.”