Brite pay-by-bank operates across 27 markets: Lena Hackelöer, Founder & CEO at Brite Payments

0:00Lena Hackelöer:Hello and welcome to the Scaling Europe show presented by Deal. This episode is sponsored by SurrealDB, the multimodal database for AI agents. Omni, the AI analytics platform trusted by growing companies like Perplexity and Symbesia and VentureComet, the platform that gives startups and scale-ups real-time equity tracking, daily business insights and automated management information. Thank you for joining me. Please like, comment and subscribe.

0:33Lena Hackelöer:Hello and welcome back to Scaling Europe show. I'm Seb Johnson. Today I am joined by the founder and CEO of Bright. Lena, Lena, thank you for joining me today. How are you doing? I'm great. Thanks so much for having me. It's great to have you. You've been one of the continent's leading fintechs, but maybe for those who don't know, can you give a bit of an overview of what you've built since, I think 2019, the company was founded? Yeah, yeah. 2019, we launched 2020. Yeah. So Bright Payment is a provider of Pay by Bank payment methods across Europe. We're based in Stockholm, Sweden. And what we basically allow is for people to use their bank account as a payment method at the checkout.

1:07And we do that across 27 markets now. So we've been expanding quite heavily and are fully focused on just this, nothing else. We operate our own instant payment network. And yeah, we're hoping that Pay by Bank is going to be a staple in European checkouts.

1:21Lena Hackelöer:And how has Pay by Bank changed since you kind of launched the product in 2020? and how has Bright Payments changed to adapt to the evolving ecosystem? First and foremost, I would say it's getting more convenient to use PayByBank because the infrastructure is maturing. So we're based on open banking APIs as a standard. So we're open banking first, which means that that has come a long way over the past five years. I would say banks used to treat this sort of as a necessary evil. Now we see them investing a bit more, So it's a lot easier to pay by bank nowadays as a consumer, which obviously then helps merchant pickup.

1:58And as a business, we've been able to benefit a lot from improvements and instant processing across Europe, which means that the vast majority of payments flows within just a few seconds. And that's great for everybody. It's great for consumers. If you get a refund, you can get that within just a few seconds and bright. Good for merchants. They get their money much, much faster and makes it more efficient. And that's something we've been able to benefit from.

2:20Lena Hackelöer:Amazing. when you launched this company, it was sort of the age of fintech. You know, 2020, 2021, we saw a bunch of fintech unicorns. That was the sector that was really interesting, really exciting. Now AI is dominating all conversations, funding rounds. Was it like building fintech now in the age of AI? Yeah, we've become maybe a bit of a stepchild in the ecosystem, right? As fintechs. Yeah. We used to be the favorite kid and now it's all about AI. No, that is true. But I would say, actually, this is typically quite sick of hell. Um, even just before I got started, there were lots of people that were saying like, oh, fintech is so mature, payments have been done.

2:57There was a focus for a while on like insure tech as an example, rec tech. So I think that's sort of, it's a little bit up and down. Um, generally speaking, I'd like to think that whenever there are still like problems to solve in any part of the ecosystem, there's also potential to, to grow, build a business and to get funds for it. So, um, we're not too bothered right now. but we're obviously looking at AI and we're seeing all the money flowing there and it's exciting.

3:24Lena Hackelöer:Yeah, have you been trying to leverage AI for the business? I mean, a lot of companies now are trying to talk about AI and how it's transforming their own business internally even if they're not an AI company. Are you trying to use the tools available to change the kind of internal infrastructure of right payments? Absolutely. I think anybody who doesn't is going to have a huge problem in a fairly short amount of time, I would say. I mean, we're first and foremost a tech business which the biggest leverage basically for us then is to use AI in our development and to speed up the pace at which we build product and ship product.

3:54And that's the biggest focus right now for us. And I think it's the same for most businesses. And then, of course, we have a wide number of applications across the business that we're exploring, tools, basically making everybody more efficient. And I'm personally fairly convinced that if we don't catch up as a business or if any business doesn't catch up, they're going to have a huge issue also attracting technical talent for down the road.

4:14Lena Hackelöer:So we have to focus on it. Yeah, I mean, the best of the best talent is deep in AI tools. I want to touch your view on the overall category. Pay by bank has grown exponentially, but at the same time, because the ecosystem has matured and the focus has moved to AI, there's less capital around. And there's far fewer players, I would say, in this space than there were four or five years ago. what's it what's it been like building in this place where you've seen people in this ecosystem maybe competitors maybe kind of you know partners dying out or kind of pivoting while you've kind of gone from strength to strength it seems um i think we had an assumption at the very beginning and that was that sort of we would try to grow in line with how quickly the market develops and i think what we've seen in the market is and it's hard by the way uh we've seen in the market is that there's been some players that have tried to pre-end market development and basically maybe have overinvested for a period of time in anticipation of faster growth.

5:08We certainly have moments like that as well, but I think we've been fortunate that we've done that perhaps in a quite controlled way, which means we've been able to adapt sort of when things are picking up or when they're slowing down. And what's quite sort of particular about pay by bank is obviously it is cannibalizing legacy payment methods such as card processing, and not everybody who is part of the processing chain in payments is necessarily happy about that. So there are sort of, you know, A lot of actors sort of get around the same table and make sure that there's a benefit for everybody involved.

5:37And that in some areas takes more time. It takes more time in certain geographies, for sure. We see a couple of hotspots across Europe where a paper bank is already like very heavily used. Certainly the UK is one of them. Nordics is another one. The Baltics is another one. Whilst other geographies are still picking up. And depending on where you're based and where your home turf is, there's a provider in this space. I think you'll have sort of more traction or less traction.

6:00Lena Hackelöer:Oh, that's really interesting. So you think you've had an advantage sort of building from Stockholm, given that there is like a reasonably high adoption in the region? Oh, yeah, for sure. Absolutely. I mean, pay by bank in Sweden is really, really common. It's really common across the Nordics. And that means that we've been able to get customers on our home markets straight away, which is, I think, not necessarily the same for every provider across Europe that has maybe had to expand faster into other markets. And that's always more difficult, more complex, takes more time. So that's been an advantage for us for sure.

6:31And that's the reason why, you know, I'm both German and Swedish, but I'm born and raised in Germany. So I often get the question, why did you build a business in Sweden, not in Germany? Why didn't you do this in Berlin? And this is one of the reasons, actually, that sort of there was already strong preference for the category.

6:46Lena Hackelöer:And how did you think about international expansion then? Because, you know, with the payments network, you often need to be in a bunch of markets all at once to sort of make the most of the network effect. So how did you think about where to expand and how did that work? So the first couple of markets that we launched were the ones where we knew there was already demand for the category. So basically, we launched in Sweden first, and we went across the Nordics. Then we went to the Netherlands, which also has a preference. There's a local brand ideal that everybody knows. So those were the first couple of steps.

7:15But then we very quickly met an assumption that, or we know as a matter of fact, that the majority of the volume in any given market is being sort of processed by the big players that are typically in the largest markets in Europe. And for e-com, for example, that would be Germany, France, and the UK. So our assumption was that if we want to get and process big volumes, we need to cover those markets fairly quickly to make sure that we can actually cater to these merchants, or else they're not going to want to work with us. they're going to work with a different provider. And that's something that we see has proven to be true.

7:49We see a lot of large merchants that say, listen, this is super interesting, but we're going to need you to cover these markets because we don't want to have separate providers. If we're going to go for a pay-by-bank, we need one provider for all markets. And so now we're there. And that's why we cover so many markets quite quickly to be able to provide or to cater to those merchants, basically.

8:07Lena Hackelöer:And are you happy with where you're alive at the moment? Do you see that? Are there any markets that you're thinking, actually maybe we do need to expand in the next couple of years or are you thinking right now it's no longer about expansion but maybe saturation in those markets? No for sure I think we've done a pretty sort of heavy sort of market expansion crunch over the past couple of years we're set to launch on the UK really soon that's the final market that's sort of on our roadmap right now and we're certainly going to launch more markets but it's going to be more driven by our existing customer base more so than on the hypothesis that we have to have this market coverage to become you know a leading player in the segment um so we're going to be focusing more on the depth of the product going deeper into the different markets making sure that we grow the category alongside other providers in each market um rather than just launching one market after you get there for sure and i always think it's interesting when i speak to founders or businesses that are trying to they're trying to change the market itself right it's not just about um capturing market share it's like actually how do we get the ecosystem to use the type of technology that we're building in how do you think about that is it is it a case of like convincing uh you know an individual client by by client or do you try and do more market education about the benefits of paying by bank to try and get every even if they don't go with you even if they go with one of your competitors but to try and get the whole ecosystem using this new technology and definitely there is an educational aspect to what we're building.

9:33Absolutely. I mean, we've gone, and this is very much, again, dependent on the market, but we've gone from sort of broader education around what is pay by bank? Why should I as a merchant be offering it to, okay, why is Bright potentially the best choice for you as a merchant in that category? And to sort of different markets are on different trajectories. But like part of the complexity of building pay by bank as a new category in Europe is that we face what I would call like a number of stacked unknowns. And that's usually what I try to explain sort of to our team or even our investors. And I basically say, look, we're establishing a new category in a new market under a new brand, basically, in new verticals, exploring new use cases at new price points all at the same time.

10:16So that is part of the complexity for sure.

10:19Lena Hackelöer:That's super interesting. Yeah. There's a lot to manage there. And I guess, like, what is your pitch? You know, like, why should, you know, why should merchants be thinking about pay by bank and why should they be specifically thinking about Bright? Basically what we say, and that I think is the main pain point that we're addressing, is that if you're a merchant today in Europe, processing payments is really expensive. It's complex, it's expensive. Payments is a local game. You have different preferences for every single market. And what we're facing right now is a situation where, especially for example in physical econ, merchants are really, really stuck between a rock and a hard place.

10:53On the one hand side, you have a lot of competition coming in from Asia that is like really pressuring your price point. On the other hand side, you have the big platforms that are taking a bigger and bigger part of the cake. And you're basically trying to survive right in the middle of it, right? So most basically providers that I speak to say that sort of e-commerce isn't growing right now in Europe. And that is a really, really good sort of basis for us to come in and say, okay, let us help you make your payment processing at least more efficient, simplify, giving you one category of payment that you can use all across Europe.

11:24that is really easy to use. There's no sign-up required. You don't need to download anything. Basically, anybody in Europe that has a bank account can go ahead and use Payback Bank straight away. So it's extremely accessible and more efficient. And ultimately, that's basically what we convince. First, we convince merchants. And then merchants are incentivized to make sure that they are quite pedagogic around how they explain to their consumers to make sure that the payment method is actually getting used at the checkout. Because if that part doesn't work, then, well, you really have nothing as a payment provider.

11:53Lena Hackelöer:But I guess at that point, they're motivated to get their customers on board anyway, right? Because that's how they see the benefits. That's the beauty of PaybyBank. There's a natural incentive for merchants to make sure that sort of they front the payment method to web consumers. And that is a huge part. Anybody who's been in payments for a long time will tell you that's a huge part of basically consumer choice at checkout is how you position it. You may not have the answer to this, but what level of sort of market infiltration do you think PaybyBank is at versus how big it could get? I would say that we're still, you know, we're still fairly early.

12:27If I were to say sort of, you know, on a chart of quantify this, we may be at like 15, 20 % of the potential. There is so much more to come still. And some markets are like super, super early. Southern Europe certainly is not that far ahead. Some basically exceptions perhaps with strong local champions in markets like Spain, for example. Northern Europe has been faster on the scale. Certainly we've come along. But if I were to give you an average, I would probably say like we're at the status bar somewhere along 15 to 20 percent.

12:56Lena Hackelöer:Interesting. I want to talk a bit about your journey and how you're viewing the market, because I know that you raised, I think, the biggest Series A for FinTech. And then you've also have always been thinking about profitability from a very early stage. And we kind of have a very different market dynamic to the one that we were in when you kind of launched. Back then there were big raises, growth at all costs. now it's much more okay how can you grow sustainably how can you show strong unit economics have you been thinking about adjusting or transitioning from the world of 2020 2021 where there was lots more cash available for kind of hyper growth mentality to this new ai dominated world where companies are going from zero to 100 million in eight months but they still have to show good unit economics and and it's harder i guess for fintechs to get the attention or the funding than it was five years ago?

13:45Actually, so yeah, so 2021 wasn't that easy either necessarily, I would say, or certainly 2022 wasn't. And the way that we've been thinking about this is basically that for me, it's always super important to stay in control and to make sure that we have all options open. I sort of as a founder, I never want to end up with my back against the wall and just have to go out and find money right, right now because I have to, but rather I want to make sure that I can sort of determine the right point in time as to when we do our next fundraise. So what happened with us is that we actually decided to go profitable in 2022 because we felt there was a lot of insecurity in the market that year.

14:20And then in 2023, when we raised our Series A, all of a sudden that was, and we didn't anticipate this, so this wasn't part of some kind of genius plan. All of a sudden that became really, really interesting for investors, which is not something that we saw coming. So we're really quite surprised as to how well our series A went and how quickly we were able to close it. And we're having similar thoughts right now in light of basically the funding environment with all the focus on AI, where basically I've been saying to the team here at Bryce, look guys, it doesn't matter if we are the best account-to-account provider on the planet, just hypothetically speaking, if everybody's investing into AI, basically, then that's not going to land us our next round necessarily.

15:06So, that's sort of how we're thinking about profitability versus investments and sort of when is a good time that we want to make sure that we stay in control. And yeah, so far it's been working nicely for us.

15:17Lena Hackelöer:Has any of the other market dynamics impacted you or the business? You know, we're seeing a lot of noise about sovereignty and, you know, choosing European options, European alternatives. Is that something you're thinking about? Does that impact the business at all? It's certainly positive that there is now a sort of a dialogue around homegrown European payment methods. And I think that it's warranted to have a conversation around that. And we are a purely European alternative. We have no dependencies outside of Europe. Our instant payment network sort of operates on top of the European banking landscape.

15:51So we're completely independent. We use any partners for processing. and that is definitely a helpful conversation with merchants who are more and more nervous about the geopolitical situation in the world. But at the end of the day, I think it's the best product that wins. But it helps certainly to get some more attention on the pay by bank as a category, not just for us, but for anybody else in the space. So it's a nice dialogue to be part of.

16:15Lena Hackelöer:Okay, great. And how are you thinking about Sweden and Stockholm generally? I mean, it feels like the region has had this amazing moment over the last couple of years where we're seeing amazing companies come out, I guess primarily at the AI, within AI, but even companies like Lassie, I spoke to the founder recently, and there seems to be just like amazing companies coming out of Sweden all the time, early stage, late stage, AI, non-AI. What's it like building in that ecosystem? It's so buzzy. There is so much going on right now. It's super, super exciting. And there is a lot of founders that come sort of from the first generation of fintech, myself included, but many, many others.

16:52So what you're seeing right now is, I think, sort of the positive effects of having done a good job, allowing sort of fintech to flourish in Sweden. And now we're seeing sort of second and third generation founders start their own businesses, bringing, you know, keeping the talent. And Stockholm has so much fintech talent. That's like one of the biggest, I think, plus that we have here in the country is there are so many people that have done it before, which really wasn't the case like 15 years ago. When I got my start on fintech, there wasn't really nobody that had, you know, a decade of experience building a payment business.

17:22and I think that's something that we can benefit from now and I really hope that this is going to continue.

17:27Lena Hackelöer:And what are your predictions for what's coming next for Stockholm in Sweden? I mean, you had an amazing year last year. You're right, you've got this amazing fintech history. What do you think is going to, what's going to be the thing in five years? Are you expecting more fintechs, a return, more AI? Is it going to be deep tech and, you know, we've got some great institutions. What do you think? That's a good question. I mean, generally speaking, everything that is AI is still relatively early stage, right? I mean, they've just started, I mean, it's moving so fast. So it feels like everything's so far along.

17:54But if you look at the timeline of the age of some of these businesses, most of them are barely two years old. So I think that sort of we're just at the beginning of everything that is AI. And, you know, there are two where you just touched upon sovereignty. I mean, that is also a question, right? We saw what was happening in the States more recently with basically the different providers they have there and they're getting entangled with the government. I mean, having homegrown European AI solutions, I think, is a really interesting proposition as well. So I think AI definitely is going to continue to be the focus for the time being.

18:27That's my prediction because we're just at the beginning, really.

18:29Lena Hackelöer:Yeah, yeah. It still feels, I guess, very early and still very hot. And what about the future of Bright? You know, when you look to the next year, next two years, what is it that you want to achieve? So right now we're growing in the different markets that we've launched more recently. So our focus is definitely go to market in all the different markets that we're in. And some of them are really large. Germany is one such example, where there is so much potential and we're only just getting started. So that's going to be our focus. There's also what's exciting is just because of the infrastructure has been maturing.

19:00There's more products that we can launch that help sort of as additional use cases for merchants and then solve problems. Data solutions is one such as Gampo, where we can actually give data to merchants that help basically make their business easier. So we're super really focused on that for the time being. And I think that's going to be, you know, it's going to be interesting to see where things pick up the most over the next couple of years. Because we've seen some markets pushing ahead, now others are coming. So we're quite happy that we can cover so many different geographies so we can be at the post and see what's taking off.

19:33Lena Hackelöer:Amazing. Well, thank you so much for joining me, Lennon. You're heading out one of the most exciting fintech companies across Europe. It's great to see you growing and progressing. I'm going to be sure to keep watching. Thank you.