Using the cloud for transformative financial services that turn on a dime

Published by Microsoft


We’ve all seen the message on bumper stickers, signs, and store windows: Support your local small business. But what might seem like a mere political statement is grounded in economic truths. Small businesses (SMBs) account for approximately 65 percent of gross domestic production worldwide and are the bellwether for economic health in virtually any economy. They are crucibles for innovation and entrepreneurship, providing specialized products and serving niche markets that larger companies overlook.

Yet, small businesses are often underserved, paying a disproportionate price for the information, products, and services they need to stay competitive. Covercy, which offers affordable and transparent financial services, wants to disrupt that status quo.

Covercy's desktop, tablet and mobile displays

Solving small business problems

A provider of online international cross-border payments, Covercy eliminates the hidden costs and fees associated with money transfers handled by banks. A conventional bank transfer requires three banks to complete: the sender, an intermediary, and a receiver. Instead, Covercy offers a peer-to-peer solution that uses fast and low-cost local payment networks. The company supports 25 currencies and a global customer base that includes mostly SMBs and individuals.

The company emerged from an experience that one of the founders had in an earlier business venture. “He discovered a problem in dealing with international, cross-currency transactions, including a lack of transparency both in getting the true mid-market rate for foreign exchange and in seeing which banks the transfer moved through,” explains Gonen Tiberg, Chief Technology Officer at Covercy. “And most importantly, it was not clear what fees would ultimately be charged.”

Tiberg points out that bank technology for transfers isn’t particularly user-friendly either. “It’s not always as up-to-date as you would find in consumer products in other industries,” he says. “All these inconveniences pointed to a pain in the market, whether you’re a small business or even a large one.”

However, large businesses have advantages that SMBs don’t. For example, they frequently have employees who specialize in financial management and forge relationships with banks. And when those relationships include millions of dollars in transfers, banks are more inclined to give larger customers more favorable rates than they do their SMB clients.

Covercy planned to level the playing field, but breaking away from the traditional banking model required an entirely different approach to facilitating transactions. Since the 1970s, banks have been connected by the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network. Covercy wanted to bypass the SWIFT network and its fees altogether by connecting directly to foreign exchange dealing rooms for the lowest possible rate, and by operating through local bank accounts worldwide…