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10 Dec 2018

AUSTRALIAN FINANCIAL REVIEW – August 22-23 2009


It has just signed a contract with South Korea’s largest foreign exchange financial institution, the Korean Exchange Bank (KEB), which has about 60 per cent market share with about 100,000 business customers.

 

The chief executive and founder of Pure Commerce, Daniel Lavecky, says the Korean deal is the first of what it hopes will be a number with major Asian financial institutions.

Its dynamic currency conversion product means customers such as KEB can access on-demand payment solutions. A customer can see what the cost of an item is in their own currency.

“So an Australian in a hotel in Seoul can see what something costs in Australian Dollars. That’s very important as the Korean won is a difficult currency to convert,” he says.

But the currency converter can handle many more currencies that just Australia’s. Indeed the breadth of the currencies covered was one of the major selling points in the Korean deal.

Lavecky says there was little interest from Australian Banks when the business began in 1997 but they now take more notice. He links the Australian financial institutions early reticence to their traditional practice of building rather than buying technology.

Foreign banks have taken a different view, especially as many of them have reeled from the global financial crisis. Less regulation also played a part.

“In Europe banks will be able to compete across the continent so they are looking for easy wins.” He says. “In Asia some banks aren’t big enough to develop their own technology. Or there are banks which have had their capital expenditure or operating budget cut in half but still want to grow market share.”

Lavecky has a good grasp of bank strategy. Before he started Pure Commerce in 1997, he worked as a product manager at Commonwealth Bank of Australia and he says he always knew he wanted to run his own business. “My experience with the Commonwealth was in the transactions area, so that’s where we concentrated.”

It was the time the internet was beginning to play a major role in banking. Lavecky says the web’s beauty was it made the location of suppliers less important. Banks could rent the services they wanted, such as the currency converter or its internet payment gateway system.

Its clients either rebranded or co-branded the services but Lavecky says they were outsourced services that ran on Pure Commerce rather than the banks’ data centres. Pure Commerce owned by Lavecky with some staff and investors, maintains the services.

The new operation in Korea is fully funded, he says. If other opportunities arise it may seek  to raise capital but there are no current plans for that.

“Our cash flow is strong and we’ve been profitable for year.”

A senior trade commissioner in Seoul, Martin Walsh, says South Korean government and regulatory officials think highly of the Australian financial services system.

“ South Korea went through the financial crisis of 1997-98 and they knew they needed to change. They like Australian systems because there is good regulation and transparency.”

Australia and New Zealand Banking Group and Macquarie Bank operated in the country, which also lifted the profile of Australian financial institutions.

For small and medium-sized enterprises, he says there are lessons from Pure Commerce’s success.

After Austrade introduced Pure Commerce to a KEB executive, Walsh says, “importantly they didn’t wait long before following up that show of interest; it’s no use sitting in Australia for six months. Koreans are prepared to make decisions quickly.”

“They would have been impressed that Pure Commerce sent a Korean-speaking manager and opened an office in Seoul,” He says.