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Spotify’s Bergqvist on innovation and the problems banks need to solve

One of the most talked-about sessions at this year's EuroFinance International Treasury & Cash Management conference wasn't the discussion with Greece's former Finance Minister Yanis Varoufakis, but a presentation given on day 1 by the group treasurer of Spotify.

Johan Bergqvist was on stage to accept EuroFinance's international treasury award for excellence, which was awarded to Spotify's treasury in recognition of its innovation and use of fintech.

Bergqvist began by explaining that group treasury at the Swedish music streaming company, which began as a startup in 2006, is a lean operation that is growing as the company expands. They are currently handling half a billion transactions a year and Bergqvist emphasised the need for efficiency in processing this volume of payments. He said they are using a Cloud-based solution “because it allows you to scale and leverage new developments for immediate software updates”.

Unusual approach to bank RfPs

Spotify is unafraid of using new technology and doing things differently. When it needed to consolidate its banking partnerships, the obvious route would have been to issue a request for proposals (RfP) to a selection of banks, assess their answers and then select a few. Instead, Bergqvist invited several pre-selected banks to meet him and his team in person, spending half a day discussion potential creative solutions. Bergqvist said this was fare more productive than spending time filling in forms and trying to evaluate the answers. It speeded up the RfP process and Bergqvist and his team were happy with the result.

Treasury evolution

Since Spotify launched its service in 2008, its membership has grown from one million paying subscribers across Europe in March 2011, to more than 100 million (40 million of which are paying subscribers). In 2011 it was valued at $1 billion and is now valued at $8.53 billion. It's a growing company and Bergqvist said that the treasury team is growing in parallel. Some of the prerequisites for a member of the team are an ability to think with first principles and an ability to perform. He explains that a lot of what they do is new, so treasury team members also need to be able to handle 'chaos'.

Questioning the status quo

Spotify is in the habit of questioning everything, not just how we listen to music but also, in terms of treasury, how we transact and interact with financial institutions. Bergqvist asked: “Why do international payments need to take two days? Monetary value should take seconds to transfer anywhere in the world.”

He added: “I really really hate KYC processes, it puts so much friction into the equation.” He also made a direct plea to banks to stop bundling payments, asking them to make the process easier by using virtual banks accounts for each vendor.

Bergqvist's speech was peppered with soundbites, here are a few:

  • “If you feel like you're in control, you're probably going too slow.”
  • “You comfort zone is your worst enemy.”
  • “Banks can't be as agile as fintechs but corporates won't choose to use processes that have more friction. This is a problem banks need to solve.”

CTMfile take: This was the session that everyone was talking about on the first day of EuroFinance in Vienna. It was great to see a (relatively) young group treasurer with so much energy, enthusiasm and insight.

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