Fluctuations in foreign exchange markets can significantly impact on a business's profits. However, hedging against this risk can be confusing and expensive – particularly for SMEs.

Kantox, a peer-to-peer (P2P) platform for business foreign exchange, matches companies who want to buy and sell foreign currency, allowing them to bypass expensive bank and broker fees.

An example: you are a company located in Europe, importing goods from China and paying your Chinese provider in US Dollars. In the Kantox marketplace, you can find another company, located in Europe, exporting goods to the US who has US Dollars to sell in exchange of your Euros.

Since launching in 2011, Kantox says it now trades in over 25 currencies across 50 countries and has provided customers with up to 80% discounts on their foreign exchange trades. We talk to Kantox CEO Philippe Gelis to find out more.

TechRadar Pro: Why did you set up your business – what problem were you trying to solve?

Philippe Gelis: At Deloitte, Antonio and I had a Spanish client who exported cava (the Spanish champagne) to the US. The company had a lot of FX and was paying huge spread on each trade. We tried to help them negotiating with their bank but it was really tough, so we decided to look for an alternative solution, simple, transparent and efficient.

TRP: Who are your target customers?

PG: We now have over 500 business clients using Kantox. Our customers are mainly SMEs, with revenues ranging from around £5-200 million, but we also have mid-cap clients with revenues in excess of £1 billion. Our customers are spread across a variety of sectors, from tourism to cosmetics, media, consulting, engineering, technology, fashion and transport.

TRP: What has been your biggest success to date?

PG: To have established so many clients in such a short space of time is a real achievement. When we first launched in 2011 we had just 12 clients. Getting those first few clients to on-board was the real challenge.

Asking them to question traditional banking systems and see our business as not only a genuine alternative system, but one which is preferable, required a paradigm shift. The fact that we are now enabling our clients to trade millions every day and save our clients significant sums of money is probably our biggest success.

TRP: What have been the key milestones in financing your company?

PG: Winning a start-up contest in 2011, which came with a €25,000 prize was a sign that people believed in our company and my partner and I finally decided it was time to quit our jobs.

After going on to gain €150,000 from family and friends in the same year, we concentrated on becoming regulated, which enabled the business to really kick-off. Following a €1 million investment in the Summer of 2012, we were then able to create a team and start scaling.

Just this month we secured a €6.4 million investment. We're constantly working to provide the best service possible to our customers, so we're using this money to further develop our technology and consolidate our position in Europe.

TRP: Where do you see your company in five years' time?


PG: As a company we want to remain free – we don't want to be part of a bank or bigger institution – we want to offer our customers the same level of innovation by being free. In five years' time I would also consider listing the business.

TRP: Where would you like to see your industry in five years' time?

PG: I would like to see more start-ups providing alternatives to banking services and for these to be taken seriously - not just in FX, but across the whole range of banking sectors, including lending, payments and retail banking. As alternative offerings grow, so will customer confidence in the industry.

Five years ago the idea of truly challenging the established banking system was almost unthinkable. Now people are finally starting to associate alternative finance options with more choice, better clarity and lower fees. With changing customer ideology, plus access to innovative technologies, the idea of truly challenging and indeed changing the industry is starting to become a reality.

Nonetheless, the FinTech industry is still in its infancy – in five years' time I'd like to see alternative finance solutions representing at least 10-20% of the market.