Knowledge Circle podcasts

BNPL, Open Banking and Tackling Fraud: Expert Insights from Money20/20 USA

In the first of three episodes recorded at Money20/20 US, we caught up with a number of the speakers and attendees from the conference. We hope that through these short conversations we’ll be able to provide you with a real flavour and understanding of the key topics and issues relating to payments and FinTech discussed at the event. Our guests for this episode were:

1/ Aaron Wollner, CMO, Quontic Bank
2/ Jessica Turner, Executive Vice President, Global Open Banking and API, MasterCard
3/ Nelson Chu, Founder and CEO, Percent
4/ Julian Alcazar, Senior Payments Specialist, Federal Reserve Bank of Kansas City
5/ Nikita Aggarwal, Postdoctoral Fellow, UCLA School of Law
6/ Anusha Ramanujam, Global Head of Network/Alternative Payments Partnerships & Product Enablement, Square
7/ Sunil Madhu, CEO and Founder, Instnt



Russell Goldsmith 00:04

Welcome to a special episode of the csuite podcast that we’re recording in partnership with Banking Circle at Money20/20 US, taking place at the Venetian Hotel in Las Vegas We’re at the Banking Circle booth in the very busy expo part of the conference and I’m going to be chatting with a number of the speakers and attendees from the conference, and we hope that through these short conversations we’ll be able to provide you with a real flavour and understanding of the topics and issues being discussed here at the event. I’m joined by Aaron Wollner, CMO of Quontic Bank. Aaron, thanks so much for joining us. This one really intrigues me. Earlier this year, you launched the nation’s first wearable payment ring. How does that work? What’s the technology behind it?

Aaron Warner 00:56

Yeah, it’s a simple tap, right. And so I think that we’ve evolved the past couple of years from swiping to dipping to tapping, do we need another way to dip or tap? We thought we thought yes. And so we created this wearable device in the form of a ring. And so if you hover over a kiosk with this ring, you just paid. And so people love it. It’s super cool. And it’s been really well received.

Russell Goldsmith 01:22

That’s the next question. I wanted to ask you. You’re the CMO. How have you been marketing it? What’s been the real reaction?

Aaron Warner 01:28

So yeah, the cool part about the ring launch was that well, there’s one example that sort of demonstrates the success that we had found we didn’t plan for this initially. But a big part of the campaign was influencer content, right? So we, you know, put out a bunch of paid influencer-type content, very sleek, hit the mark, good stuff. What far outshined that was the user-generated content. So the early adopters, the first 1000 or so people that were walking around the US with a ring on their finger paying for stuff? They were filming it? And so the people, people behind the counter were like, what’s that people behind you in line? What’s that? And there’s a very organic conversation in coverage began to emerge on social platforms that again, far outshine the paid stuff. And as a marketer, that’s kind of the dream.

Russell Goldsmith 02:18

That’s great. Sticking with technology here, you’ve also recently opened a virtual bank in the metaverse. Why did you do that? And kind of what’s the experience that offers to customers?

Aaron Warner 02:28

Yeah. I’ll start with the latter part. It is not a full banking experience, because it can’t be yet, right? So the metaverse is still more conceptual than real. Decentraland is one of the two most popular platforms. So we set up shop, we bought two plots of land, we designed this incredible building that’s neoclassical. It’s got this concrete foundation with graffiti on it. It’s super cool. It fits us as a brand. And it is a bank, you can walk in and interact with it in different ways. One of the ways you can interact with it is through the ATM. If you go it’s up to the ATM and hit it, this bank vaults, the sort of secret bank vault opens up you can go into the back, where there’s this kind of this pool party scene, and there’s free NFTs. So it’s a cool interactive educational experience that we invited our customers to kind of enjoy. And really imagine with us. What could the future of banking be virtually in the metaverse? And so you can’t bank there today, but you will be able to in future.

Russell Goldsmith 03:25

You also talk about this idea of non-monogamous banking. Well, what do you mean by that?

Aaron Warner 03:30

Yes. We came up with a handful of phrases. I think that’s our favourite currently. Okay, the concept is this right? How many apps do you have on your phone for banks or financial services? A bunch, more than one for sure. Right. And so more than half the people in the United States have more than one banking relationship. We wanted to lean into that. I think that a lot of our competitors in the digital bank space, they want to have your wallet, be front of wallet, these sort of aggressive concepts, right? Forget all that. We’re okay being your side bank, we’re okay being in a non-monogamous relationship with you. Right, you can keep your Chase or Bank of America or Wells, because they play a role. We can do that too. But we’re not asking you to, you know, jump ship entirely. We have a bunch of really incredible accounts like high-yield savings that’s best in class. And so whatever account that we offer that’s sort of additive and fits your portfolio and your needs, come on board

Russell Goldsmith 04:26

How’s your customer base changed? You know, over time, and what does that say about the adoption of digital banking?

Aaron Warner 04:33

Older in a word. So, I think that tells us a lot. I think initially a few years ago, if you close your eyes and picture a digital bank customer, you probably have a picture of a younger sort of tech-first savvy type of person. That is certainly still the case, but our average bank customers are close to 50 now, and so what we’ve seen is this transition from it’s less about how tech savvy are you, because we’re all online. So an online bank is just not as intimidating as it was in, let’s say, 2015. And that’s great. Everybody wins, right? The bar has been lowered and more people are adopting. So we’re past that sort of initial stage on the curve. And so we love inviting people regardless of age and whatever. But overall, it’s really been interesting to see our customer base kind of grow older.

Russell Goldsmith 05:22

Final question for you. And I know, this is not the first time you’ve been to Money20/20 here in Vegas, but from this year, then what’s going to be your key takeaway?

Aaron Warner 05:31

Yeah, I think I’m really watching how folks talk about regulation. I think that without saying it, I think people are a little spooked. I think a lot of the fun innovative stuff that has cropped up over the past five years specifically, it’s now time for maybe Washington to pay more attention. And there’s a lot to be determined there. So I think that it’s not that the party’s over at all. It’s that what’s next. And I think there’s a little bit of anxiety around that. And there’s a little bit of a pattern that I see here.

Russell Goldsmith 05:59

Thank you so much for joining us. So joining me now is Jessica Turner, executive vice president, Global Open Banking and API at MasterCard. Jess, thanks so much for joining us.

Jessica Turner 06:09

Thank you for having me.

Russell Goldsmith 06:11

Now, you were speaking earlier today on a session titled ‘Open Banking and Beyond – Building the Future of Financial Services? How did that go? And what were the kind of key highlights from that?

Jessica Turner 06:20

I think it went really well, actually, it was exciting to see the amount of people interested in open banking, the key highlights are really about how we’re just getting started with open banking, how really is a transformational shift in the financial services world, but even bigger than that, it’s really a transformational shift in data overall. And the reason I believe that is because open banking is about permission-based data access. That really opens up a ton of different use cases. And so in this session, what I focused on was, where are we in the phase, which I think is in the innovation phase. And then how do we get the scalability and stability as an industry? Because if we do that well, there’s trust, there’s the right assets, the right programs, all boats rise, and that’s a real innovation happens. And that’s why I do believe it’s really a seismic change in the way we operate.

Russell Goldsmith 07:11

And is there any kind of specific way that you guys defined open banking at MasterCard?

Jessica Turner 07:15

So we define open banking at MasterCard, as consumer or small business permission-based data connections, data exchange for the use of third parties to be able to reference that data. There’s also open finance, which extends kind of beyond a traditional bank account. And then people often talk about open data. So open finance might be wealth, retirement, open data could be utility usage. And really, open banking is the start of how we continue to evolve into that way.

Russell Goldsmith 07:42

And I mean, you touched on just a second ago, but you know, we’re at this kind of early market phase at the moment, are there any kind of types of solutions or use cases that you’re seeing here?

Jessica Turner 07:53

It’s absolutely different by market. So in the US, the US is an unregulated market. Today, you’ll often people talk about open banking, and they think about the UK, with PSD2 and Europe. But the US has very much been focused on what are the commercial needs. And those have been around account opening. So making it really easy digitally to open an account end to end. About payments, being able to make different types of payments, including ACH, but with enhancements so that they go through better. And they have really just more viability overall. Lending is a remarkable use case, for consumers and small businesses, small businesses can allow access to their data, and then gets clean and categorized. And then lenders can look at that data. And they can make different decisions, really providing more capital and lending power out to consumers and small businesses. And the fourth one I would say is small business in general. So most of open banking has been focused on the consumer to date, we’re very focused on small business because having access to more lending opportunities, and easier onboarding was critical. And so those have really been the use cases, what you see in Europe and UK is it’s been very much more about data exchange, personal financial management, and payment. But just getting started, there’ll be far more innovations to come. But those are the use cases that are rising to the top now.

Russell Goldsmith 09:20

Just got one last question for you. I mean, you know, just taking a look around Money20/20 here, what’s been your key highlights so far?

Jessica Turner 09:27

The amount of people at Money20/20 is unbelievable. I’ve been coming to 2020 for a lot of years, and for a lot of different products during my time at MasterCard, but the energy is real. And people are really locked into tangible and meaningful solutions, whether that be through fraud or payments, different applications. But there’s so much excitement about open banking and data exchange at this session. That it’s just it’s very exciting. But the energy is remarkable.

Russell Goldsmith 09:58

That’s great. Thank you so much for joining us. So I’m joined here by Nelson Chu founder and CEO of alternative investments, platform Percent. Thanks so much for joining us, Nelson. Before we talk about your company, just explain what we mean by alternative investments.

Nelson Chu 10:13

So alternative investments is really something that doesn’t quite fit into the traditional 60:40 model that used to dominate all of your investment allocation strategies for the longest time, right. So not stocks, not bonds. And so it’s going to be things like IRA credit, which is what we play in, which you can talk about in a little bit. It could be collectables, it could be you know, anything of that sort that has come to the forefront, especially since COVID hit when people were looking to actually diversify well beyond the traditional investments, because there’s just more returns. And the 60:40 model, in many respects is kind of dead at this point.

Russell Goldsmith 10:44

Okay, so let’s hear a little bit more about Percent, and how are you helping in this whole kind of space?

Nelson Chu 10:49

Yeah, so private credit in particular is really interesting. It’s something that I would say most people have interacted with before, but they never actually realized it. So anything from taking out a student loan with Sofi, or doing Buy Now Pay Later with a firm, those are all technically private credit back when they were still private companies, obviously. And so in that instance, it powers so much of the global economy, and people just don’t recognize that actually is the case. So it’s powering different various types of loans that happen in the industry, whether it’s consumer loans, small business loans, equipment, leasing, factoring, invoices, litigation, finance, you name it, it all fits under the $7 trillion, private credit umbrella. And it all came to the forefront after the global financial crisis when the bank stopped doing this type of lending. So in this instance, private credit, operates almost exclusively off of Excel, phone calls and emails today, really, really archaic. And our job is to be able to kind of take that and create technology, workflow tools, and everything in this marketplace needs to be able to transact and do it in a much more efficient manner. We’ve done that over the course of the last three and a half years that we’ve been around doing these types of deals.

Russell Goldsmith 11:53

And you’ve already gone through Series A funding, is that right?

Nelson Chu 11:55

We’ve gone through Series A funding. And so it’s been a very exciting time for us. And we’re well positioned to take advantage of what’s going on next in the market over the next few years as a result.

Russell Goldsmith 12:03

And on that note, then, I mean, how big is the market for alternative investments?

Nelson Chu 12:08

Alternatives is massive, I can’t even begin to quantify it, but at least in our space, in particular, which is already massive for private credit is $7 trillion. And so enough to go around in that instance.

Russell Goldsmith 12:18

is there a particular type of business that this might be attractive to?

Nelson Chu 12:22

Yeah, so we have almost like three clients. In some respects, we have the borrowers who need the Deck Capital, we have the investors who want to earn a return by investing in these debt products. And we have what’s called underwriters who are responsible for sitting in between the borrowers and the investors to be able to create these products. And so all three sides are clients of ours using our technology to get more efficient, and do deals faster and better than they could before and more profitably. But in this instance, the ones that people would most readily recognize would be the borrowers who need that capital, the SoFis and Affirms of like five, six years ago before they turn public, and investors who can invest directly on our platform and earn a return right now, when the stock market isn’t really doing all that well. They’re still averaging this year, I think year to date, we’re recording this in October, and we’ve paid out about I’d say probably eight to 9% in returns to investors, so well above the S&P, which is down 16%. Give or take.

Russell Goldsmith 13:13

We hear a lot of talk about a potential recession, you know, potentially looming. What impact might that have on private credit?

Nelson Chu 13:20

Yeah, I think we might be in one depending on how you define it economically. But, ya know, so for private credit, it actually is one of the most recession-resilient asset classes and you follow the smart money, right? Blackstone, Apollo Aries, KKR, they’ve all been putting money into private credit, because they recognize that that is gonna be what survives and thrives during a recession, because it’s backed by assets, transactions still need to happen. There is no kind of liquidity freeze in that instance, right at the right price, there will be a price-taker enterprise and someone who will be willing to bite on it. So I like our chances. And I like what private credit can do. And I think investors are recognizing that there’s a lot of potential now more than ever, and a lot of asset classes had their heyday prior to this recession is definitely private credit. It’s time to shine.

Russell Goldsmith 14:02

One final question for you know, some what’s been your key takeaway so far from Money20/20?

Nelson Chu 14:06

Well, apparently, there’s not really a recession, given the amount of companies that are here and you know how busy it is. But I think it is going to be a very interesting time for a lot of these startups who are here to navigate a high-rate environment. I don’t think a lot of them have done it before. Most of these companies are sub-10 years old, give or take. And so we’ll see how that happens. And it will be on the founders, I think, to, you know, make hard decisions and see how they’re gonna be able to figure it out, turn profitable, because free money unfortunately is no longer here for the long term. So we’ll see how it goes.

Russell Goldsmith 14:34

Nelson Chu, thanks so much for joining us.

Nelson Chu 14:36

Thank you so much for having me.

Russell Goldsmith 14:38

So I’m now joined by Julian Alcazar, a senior payments specialist at the Federal Reserve Bank of Kansas City and Nikita Aggarwal, a postdoctoral fellow at the UCLA School of Law. Thank you both for joining us. Julian, you just moderated a session that Nikita was a part of alongside Catherine Atkins of Affirm. This was on ‘A new hope on credit, Buy Now, Pay Maybe’. What were the highlights from the conversation?

Julian Alcazar 15:04

We got a really good insight into how Affirm thinks of their role in the Buy Now, Pay Later space, how they approach their product and service with each consumer, and how they really then leaned into regulation. And so everything they do comes from that lens, which is great. That’s where we want. We want responsible innovators in the ecosystem. So I think that was one of the highlights for me. And then seeing a lot of my old colleagues from the CFPB and the Fed.

Russell Goldsmith 15:39

And Nikita, can you talk about the advantages and the risks associated with Buy now, Pay Later?

Nikita Aggarwal 15:45

Clearly, access to lower cost, credit has advantages in that enables consumers who otherwise were not able to, you know, fill a financial shortfall to do so at lower cost and smooth consumption. So there are obvious economic and social benefits to credit that is genuinely more affordable. And it’s true that many Buy now, Pay Later credit products are cheaper than higher-cost alternatives, like credit cards, in many cases, or payday lending or other forms of credit, then my concern is when that promise doesn’t really play out, right? And it, you know, we’ve seen in other markets that, for example, consumers can take on too much debt, credit can become unaffordable, and it might be that it’s it was unaffordable at the outset, or that it becomes unaffordable due to some sort of income shock that was not necessarily foreseeable. And so you know, when that happens, the people who are most vulnerable are those with the sort of thinnest kind of safety net, those with the least to fall back on. And so you know, lower income families. And so there’s just a concern that, that people may be getting into too much debt. And the concern is sort of particularly acute because of the nature of many of these Buy now, Pay Later products, the way they’re structured, and the way they’re designed. They’re designed, they’re structured to have no upfront interest, never. And they’re designed in these very, very fancy, savvy, digital apps, which makes it very easy to basically take out a loan and buy something without really paying the full price upfront. And you know, what decades of behavioural psychology has taught us and it’s pretty apt that we’re having this conversation in Vegas, is that design can be manipulative, right? Manipulation, by design, as it’s called. And so the concern would be that consumers who are not necessarily prone to sort of moderate, more deliberate thinking, who are less likely to think more deliberately, and might be more easily tricked into buying something with credit, even though they can’t afford it are the ones who stand to be harmed the most.

Russell Goldsmith 17:55

Very concerning, Julian, how important is the role of algorithm commerce in Buy now, Pay Later transactions?

Julian Alcazar 18:02

It is really important because there’s this, as Nikita mentioned, behavioural part to shopping, the algorithm itself can actually start nudging consumers into irresponsible spending. And instead of managing their debt more effectively, they start spiralling out. And so these nudges that used to be for good consumer behaviour, are now nudges towards irresponsible spending, overextending yourself buying more than you need, or the sense of stacking debt as well. That’s why this is so important.

Russell Goldsmith 18:42

And Nikita, you published a paper recently that explores the growth of Buy now, Pay Later, but specifically on social media, how concerned are you about that trend?

Nikita Aggarwal 18:52

So it’s not so much the growth on social media, but what social media platforms can tell us about Buy now, Pay Later. Yeah, so in the sense that, you know, Buy now, Pay Later is social media, but in we were looking at social media, content to understand consumers experiences with Buy now, Pay Later, and I should say that, you know, we focused on one platform, TikTok and one Buy now, Pay Later lender, Klarna. So it’s not really representative or doesn’t have all the whole industry, right? And it was a small sample that we looked at, but I think, you know, it was at least enough for us to think that not everything is rosy in this market. There are definitely consumers who are complaining about basically being unable to afford their Klarna loans, and also others who are sort of, you know, complaining, or at least on TikTok, voicing concerns that they didn’t realize that you know, this is going to catch up on them or that they’ve now got too many loans and that they’re getting all these notifications. They’re also complaints because of the nature of the structure of the arrangement where it’s sort of a tripartite arrangement between the merchant, lender, and the consumer, there’s a bunch of issues around what happens when you return a product, you don’t get the refund until the Buy now, Pay Later lender has been refunded by the merchants that puts, basically puts, the consumer in a holding pattern that can take a long time. So many complaints about that, consumers describing or system strategic behaviour, how they’re, for example, taking a prepaid card, which you can use, only filling it with enough of the first instalment. And then just you know, that it, and so that’s also worrying.

Russell Goldsmith 20:28

So interesting a platform like TikTok, which kind of you associate with fun and entertainment, yet can still have such an influence in this area.

Nikita Aggarwal 20:37

Well, TikTok is kind of just a way of being now writing for a particular demographic, especially so and we’re seeing you open the new listen to the news any day tick tock. Without fail TikTok is being mentioned it’s become it’s the new, it’s the main platform for creative expression, cultural expression, and for that demographic, Gen Z particularly. And so I think it’s only actually to be expected that we would find evidence of this generations experience with credit, credit, being a large part of, you know, the economy on TikTok.

Julian Alcazar 21:11

I feel that TikTok has now become that new public square, right? And what’s odd to me is that it used to be you go to your parents for financial advice, like, what should I do here? And then it used to be that I’m going to Google, what how should I get a credit card, but now it’s become, I’m gonna look it up on my TikTok app, I’m gonna look it up on YouTube, and get some influencers perspective on what I should do for my financial life, instead of going to pillars of authority. So places like the Consumer Financial Protection Bureau, the FDIC, the Fed, all that have consumer education tools. How do you unwrap to credit?

Russell Goldsmith 21:59

You recently published some research around data aggregation. Can you tell us a little bit more about that?

Julian Alcazar 22:04

Yeah, so data aggregators play this. They played this connective tissue as it relates to open banking. And data aggregators allow FinTech companies to connect with established financial institutions, which is excellent because it allows consumers a broader set of tools at their fingertips. However, there are dangers as it relates to data aggregation, because there’s still a practice of screen scraping, which is a very unsecure way of gathering consumer data. And it also bogs down a bank system, because the bank isn’t able to discern the difference between this is a consumer logging into their account, or this is a FinTech app, logging into their account. So that screen scraping is probably the most concerning to me. If we start shifting to a more structured API model, where there is set permissions, rules of the road of what information you can access, and for periods of time, I think that’s better. And that’s what certain data aggregators, and then industry lead efforts like FDX are starting to make happen for the industry and push it to this more equitable playing field.

Russell Goldsmith 23:28

I just got one last question for you both. What’s been your key takeaway so far from Money20/20 here?

Nikita Aggarwal 23:35

This is my first time Money20/20 And I haven’t been to Vegas in 20 years. So just it’s like, really overwhelming. Exciting, I think for the most part to see how many people are innovating in finance, and I’ve had conversations with people just with so much excitement, to do something new, and not necessarily in an entirely new space. There’s just a constant stream of enthusiasm. But then to couple that with the location where we’re in a casino, just for me is like so meta that I don’t really know how to describe it.

Julian Alcazar 24:10

So this is now my fifth Money20/20, and I am in my element.

Russell Goldsmith 24:18

In the comforts of the casino?

Julian Alcazar 24:20

A little bit of both [laughs]. Because the conversations, it’s a full contact sport, right? And it’s those conversations, those one on ones, where it’s just that one word, that one sentence, that gives you such insight that can change your perspective. An overarching theme that I’ve seen so far to between yesterday and today and throughout the conference, is that we all seem to be battling with how do we identify the consumer, what is identity, and how do we fight fraud. And so those two things seem in equilibrium. Because you should be able to fight fraud if you know who the consumer is. But fraudsters are also very intelligent. So they’re able to come up with new ways of fraud. And so that’s the overarching theme that I’m getting today.

Russell Goldsmith 25:14

Maybe we need a whole new podcast on that whole topic, just that alone. Julian Alcazar, Nikita Agarwal, thank you so much for joining us. I’m joined by Anusha Ramanujam, Global Head of Network / Alternative Payments Partnerships & Product Enablement at Square. Anusha, thanks so much for joining us. You spoke earlier with Vivin Ramamurthy from Uber, where you were exploring the use of alternative payment methods. Can you just give us an overview of what your conversation was?

Anusha Ramanujam 25:43

Absolutely. We just finished our session. We talked a little bit about why alternative payments are so important and what’s the need for them. And we also talked about while consumers are driving the increase in alternative payment methods, it’s really businesses and earners who are driving the increase in accelerated money movement and why that’s so important for cash flow management.

Russell Goldsmith 26:04

So you just touched on that, consumers shifting towards less traditional payments. We’re obviously seeing a rise in these alternative ways to pay. How is this space going to evolve do you think?

Anusha Ramanujam 26:15

I feel like alternative payments are not optional anymore. Hence the title of our session. So, everything about everything from bank transfers, pay with your bank, buy now, pay later in digital, mobile wallets, E invoices, QR codes, they’re all various ways of paying different from traditional card payment methods. And Square offers a variety of both traditional payment methods, but also increasingly alternative payment methods. Think about after-pay, cash app pay. And from an international perspective, we feel like APMs are even more popular because if there are forms of payment that are not card or not cash, those are winning with consumers even more. So, look at Paytm in India. It’s just taken off, QR codes and E-money in Japan, those have taken off. We operate in Japan, and we want to make sure that buyers do not have to think about what they’re paying with and for the sellers to never miss a sale, we offer a variety of alternative payment methods. ID, QP, Paypay as QR codes. So alternative payment methods, like I said, are not optional anymore. They’re here to stay and businesses would do really well to pay attention to this rise and offer more in alternate payment methods.

Russell Goldsmith 27:31

Do you think due to this growth, is that going to have an impact on small businesses?

Anusha Ramanujam 27:37

Absolutely. Over the last ten years or so, consumers have shifted away from swiping cards to payment methods that are more convenient. They’re more contactless. They’re more take money out of my bank account. So, I know, and I have control over that. So QR codes, there’s a study by 2025, roughly 29% of global phone users for context, that is 2.2 billion people, will be using QR codes as a mode of payment. So, businesses would do really well to pay attention to this rise in alternative payment methods for two reasons. One, so that they can offer flexibility, and two so that they can be relevant for all types of consumers.

Russell Goldsmith 28:23

How is Square working with small businesses in particular then?

Anusha Ramanujam 28:26

So small payments are the foundation of our ecosystem. They are the heart of commerce. We want to make sure that sellers never miss a sale. So, we want to make sure that we can offer them compelling services, compelling payment methods so that they never have to worry about missing a sale. And they don’t have to worry about telling their buyers like you can only pay it this way. We offer a variety of cash flow management techniques, everything from they can move their money their way with instant transfers. They have a home for all of their business finances with Square banking, with Square checking. They have a Square debit card. So, it’s all about making sure that they can access their funds instantly. They never have to miss a sale because they can offer a variety of alternative payment methods and ultimately, they can meet their consumers where they are.

Russell Goldsmith 29:12

Final question for you. What’s been your key takeaway so far from Money20/20?

Anusha Ramanujam 29:18

So I feel payments is a very integral part of so many aspects of our life. And I’m not saying this just because I’ve been in payments forever. I think if you have a growth mindset, payments is a field that will teach you something every single day and literally every single day. And this is for all companies, if you can find points of friction or drop off where there’s some sort of like a redirect where their consumers are falling off and try to embed relevant financial services as it makes sense into those payment experiences, so embedded finance is huge, embedded finance is here to stay, and it’s all about making sure that those friction points are removed and businesses are meeting this, and companies fintech’s are offering this both for sellers as well as for consumers. Alternative payments are not optional anymore. So that’s another takeaway.

Russell Goldsmith 30:08

Anusha Ramanujam thank you so much for joining us.

Anusha Ramanujam 30:09

Thank you for having me.

Russell Goldsmith 30:10

So I’m thrilled to be joined by Sunil Madhu, CEO and founder of Instnt. Sunil, first of all, welcome to the podcast. Let’s get a quick intro to the company.

Sunil Madhu 30:17

Sure. Instnt is basically a customer acceptance platform, it’s fully managed and basically it helps businesses sign up more good customers without friction or fraud loss.

Russell Goldsmith 30:29

And obviously, banking is one key area, but you’re across other industries as well, aren’t you?

Sunil Madhu 30:34

We are focusing on financial services primarily though, but we can be used in health care, education, federal and state government use cases anywhere where you need to accept a good customer and you don’t want to worry about having to deal with fraud.

Russell Goldsmith 30:47

Now, you guys have been very busy here. We’ve seen you everywhere around the conference.

Sunil Madhu 30:51

Kudos to our marketing department!

Russell Goldsmith 30:54

You launched Instnt Access. Tell us a little bit about that.

Sunil Madhu 30:58

That’s right. So, the Instnt platform allows businesses to sign up and onboard new customers. And we’ve been helping a lot of financial institutions since we launched two years ago. Credit unions, banks, fintechs, sign up good customers. And we’ve typically helped improve signups by 150% every quarter over quarter. Now we listen to our customers, and they said, can you help us solve this other problem about friction? Often within financial institutions and other businesses that are selling multiple products, you’ve got to sign in and sign-up multiple times for each of these products. As an example, when you go to a bank and open up a new bank account, you have to sign up. Six weeks later, you want to get a credit card from the same bank. Guess what you have to do? Sign up again. And when you get a loan, you have to sign up again. Now, this is because each of these different lines of business have their own risk and compliance processes for the products they sell. That’s one of the reasons for it. And the other is they are all operating in silos. So, we decided it would be nice if we could eliminate the need to do those multiple sign ups and sign ons. Wouldn’t be great if businesses could put their products and services within one click off the customer. So that’s why we created Instnt Access. It’s an overlay technology. It’s a line of code that you can literally add on any website or mobile app. And it’s based on an open, interoperable standard called verifiable credentials. What it means is when I go through that initial sign up and my information is verified, KYC checked and fraud checked, and I’ve been given the rubber stamp, the green stamp to enter, our system issues the user a pass called a verifiable credential. It’s an open standard ratified by the W3C last year. And this credential is cryptographically secure, and it’s signed with a key pair that’s generated for you, the user. That key pair exists in an embedded wallet component in any mobile app the business has. So, in essence, a pass is generated containing all of the personal information that I supplied to that business, signing up for that product that was verified and accepted and approved. All of that information of mine is signed in encrypted with my own keys, and the business seamlessly pushes that into my wallet, residing on my mobile device without me having to do anything special. What’s being accomplished right there is something called decentralization. The financial institution took the step of not storing my information anymore but giving me control of that information in the form of a verifiable credential, which is like a pass. And it has an expiration date in it. And it has the proof that whoever receives that pass can use to verify that it’s in fact my data that I’m presenting. And that data has been validated and KYC checked by the issuer and verifier, which in this case is Instnt. And that’s because when we issue you that pass the key that was used to sign that pass, the public portion of that key is escrowed by us and a public blockchain. We use IBM’s blockchain for this called Hyperledger Open, so anyone can go to the Hyperledger blockchain, pull my key there and say, was that key used by Sunil to sign this document? Or it looks like it has, so it has to be Sunil’s data. Now with that pass, you can then go to any other product or service from that business or any other business that supports verifiable credentials. And instead of going through the whole signup process all over again and getting treated differently from different institutions for different products and have a consistent user interface, all I have to do is scan a QR code or click a link. When I do that, my wallet app wakes up magically and says, hey, this website is asking me for your name and email. You’re familiar with the Facebook log in and Google login, except that this comes with a trust binding with it. So, I say I click yes for consent and magically the next thing I see on the website or mobile app is I’m inside the app. I’ve not had to sign up all over again. And the best part is because the solution is built on top of our platform. We do indemnification for fraud losses. We’re the only vendor in the whole world that allow you to shift loss liability for fraud from your business to us. So, you have not only the assurance that the person is who they say they are and they’re fraud-free and so on. But if any fraud were to happen, you’re protected against the liability. And meanwhile, you made the whole experience for the customer frictionless. That’s baking your cake and eating it.

Russell Goldsmith 35:42

How long has this taken to bring to market?

Sunil Madhu 35:44

The standards taken several years to get ratified. It was ratified last year. We’ve been working over the last year and a half with our existing customers to fine-tune it, and we decided to give users an actual go at it to get a feel for how this technology works by playing a little game. It’s like a treasure hunt game. Follow the bunny and unlock events.

Russell Goldsmith 36:03

Yeh, that’s what you’ve been doing here at the event, haven’t you?

Sunil Madhu 36:06

That’s right. So, at Money 20/20, we decided to allow people to download an app that we created for the game using our toolkit. And the idea was they registered to the app with their name and email and phone number. They get this verifiable credential pass, which then unlocks a bunch of different things that are exclusively going on in Money20/20. And so far, we’ve had hundreds of people actually sign up and use it. The statistics are awesome, and we’ve had people going to different events and showing passes and the bunnies are a huge hit. So that’s a plus.

Russell Goldsmith 36:33

Tremendous. If our listeners want to find out more about all this, where do they go?

Sunil Madhu 36:36

They go to There’s no a, the joke is that we onboard customers so fast we drop the A.

Russell Goldsmith 36:46

Listen, Sunil, so now we’ve been asking everyone this final question – what’s been your key takeaway from Money20/20?

Sunil Madhu 36:52

Money20/20 is a great place to meet customers, partners, do deals on the floor, so there’s a lot of productivity that happens in this event, all crunched into three days.

Russell Goldsmith 37:02

Sunil Madhu, thank you so much for joining us.

Sunil Madhu 37:04

Thank you so much for having me.


Russell Goldsmith 37:06

Well, that’s it for this episode of The Knowledge Circle podcast from Money20/20 USA. Thanks again to all my guests who took the time to chat with me. If you enjoyed the conversation, please do follow, like and share on your podcast platform of choice. Hope you can join us on the next episode, but until then, thanks for listening and goodbye.

Our team want to hear how you are moving global finance

Talk to us about solutions for your business

Contact us