Examining the Outcomes of OFX in 2020, in Conversation with CEO Skander Malcolm

In a recent discussion, Skander Malcolm, CEO of OFX, highlighted the importance of cash accumulation for companies in uncertain revenue periods. This focus on free cash flow is a trend expected to continue among businesses moving forward.

Looking at the fintech sector specifically, Malcolm anticipates a shift in business models for fintechs in 2021, with a focus on retaining customers rather than gaining them.

While no specific details about a potential merger involving OFX have been revealed, Malcolm expects continued partnerships and investments in the fintech sector. Particularly, he sees growth in customer-centric platforms and embedded finance, with significant merger and acquisition activity expected as market conditions improve towards 2026.

Last week, OFX published its full-year results, showing a 6% increase in net operating profit. Interestingly, the underlying operating expense grew at a slower pace, increasing by only 5% year on year.

OFX serves a diverse range of customer segments, including higher-value consumers, corporates, and e-commerce players. The company's strategy, as Malcolm explained, is driving growth in key metrics, although the specific growth figures were not detailed in the discussion.

Improving the payment infrastructure and payment engines allowed OFX to reduce the cost of USD transfers, leading to a 24% increase in North American revenue during the year. This growth is a testament to OFX's strong investment in its North America operations, which the company views as future drivers of growth.

The conversation also touched upon the impact of the recent Covid-19 pandemic. OFX saw a 17% increase in digital revenue due to an 80% rise in customer calls during uncertain times. Ecommerce is another fast-growing area for OFX, with the company planning to focus on customers who value service in this segment.

Malcolm emphasised that the key to success is to continue being highly engaged with clients and to make informed decisions based on data analysis. He also noted that OFX's strong financial position, with no debt and a cash pile, positions the company well to navigate the challenging year ahead.

As a seasoned CEO, Malcolm has been at the helm of OFX since February 2017. His strategic leadership and focus on customer-centric initiatives are expected to drive further consolidation within the fintech sector in the coming years.