In the second of three episodes recorded at Money20/20 US, we caught up with a number of the speakers and attendees from the conference. Topics include what’s next for crypto, the benefits of embedded finance, and the digital identity crisis.
Our guests for this episode were:
1/ Matt Oppenheimer, CEO and co-founder, Remitly
2/ Leslie Gillin, Chief Growth Officer, Pagaya
3/ Dave Birch, Global Ambassador, Consult Hyperion
4/ Jess Houlgrave, Head of Crypto strategy, Checkout.com
5/ Simon Taylor, Head of Content Strategy, Sardine
6/ Ginny Chappell, EVP Product Marketing, Moov Financial
7/ Jan Altersten, CEO of Riverty
Transcript
Russell Goldsmith
Welcome to the Knowledge Circle podcast from Banking Circle. My name is Russell Goldsmith and this is the second of three special episodes recorded on our booth in the busy expo at Money20/20 USA that took place at the Venetian Hotel in Las Vegas. I caught up with a number of the speakers and attendees from the conference to provide a real flavor and understanding of the topics and issues being discussed at the event. And in this episode, I spoke to guests from Remitly, Pagaya, Consult Hyperion, checkout.com, Sardine, Moov Financial, and Riverty. So I’m thrilled to welcome Matt Oppenheimer, CEO and co founder of Remitly. Matt, thanks so much for joining us, because I know you’re just about to jump on the stage, you’re going to be talking about whether crypto and digital currencies will render the remittance business obsolete. Tell us a little bit about what you’re gonna be talking about. And also, do you think that’s actually going to happen?
Matt Oppenheimer
I’m excited about the panel, Russell, and excited about this podcast. I think crypto is a space we follow very closely. I think the punchline is it’s unlikely to make remittances obsolete. And I’ll be talking up on stage when we talk about crypto, it’s rooting in what pain points our customers actually faced, what drives cost in remittances, and then figuring out how crypto can be applied to potentially help drive down the costs, potentially as a partner to us in certain circumstances, but I think unlikely to make remittances obsolete.
Russell Goldsmith
So tell us the main benefits of digital over traditional remittance.
Matt Oppenheimer
Once you do understand the costs of remittances, you see that a lot of costs are via physical brick-and-mortar cash in and with our app and broader digital remittances, what you can do is link a bank account or debit card across over 150 countries now and then send money back to, our customers, send money back to their loved ones within minutes to billions of bank accounts, hundreds of millions of mobile wallets, hundreds of thousands of cash pickup locations. And because so much more of it is digitized, as you can guess, that takes money out of the system. And it also creates a much more convenient and seamless experience for our customers.
Russell Goldsmith
Do you think crypto can replace conventional money transfers?
Matt Oppenheimer
I think crypto is a space we followed again since really even before founding the company when Bitcoin came out in 2008. So, I think it’s been a common refrain of crypto making remittances obsolete or disrupting remittances, but I think it’s unlikely. I think there are areas where we can partner potentially and we have partnered with some crypto companies, Meta and their Novi product, Coinbase, a couple of partnerships we’ve done and that can help accelerate digitization. But I think it’s unlikely to make remittances obsolete because like a lot of financial services, there’s a lot of complexity, there’s regulation, there’s trust, and we’re just not seeing the customer demand for it right now, given that it doesn’t solve some of those problems.
Russell Goldsmith
Let’s learn a little bit more about Remitly. You’re sending money now through over 150 countries. What are the challenges with setting up each of those countries and how do you go about doing that?
Matt Oppenheimer
What we often say is remittances are very much global, obviously in nature, but customers are very local. And so, we’ve designed our product across thousands of corridors. And when I say corridor, it could be US, Mexico, it could be UK, Kenya, but it’s between two countries as a corridor. Each one of those corridors has different costs for us of getting funds from customers, disbursing funds for customers, and the speed of that payment collection and disbursement varies. And so how that’s done has to be done on a very local level. And the pricing, the merchandising, the packaging, all of that is much more complex than meets the eye, and that’s just on the surface because then on a global level, you’ve got to solve the risk, the compliance, the fraud, the fund’s disbursement, all of the complexity that is inherent with international payments. And so, what we’re really proud of is not only have we solved some of those foundational elements, but then we’ve localized the product across those 150 countries that we serve.
Russell Goldsmith
Matt, in the middle of a very busy Money20/20, what’s been your key takeaway this year?
Matt Oppenheimer
Key takeaway is every year at Money20/20 is so different and last year I saw a lot about Defi, a lot, about crypto. This year it feels like there’s a lot of focus on IDV, identity verification, a lot of focus on compliance. Excited about the themes this year and it’s humbling to say what’s going to be the theme next year.
Russell Goldsmith
Matt Oppenheimer, thank you so much for joining us and good luck with your talk.
Matt Oppenheimer
Thanks Russell.
Russell Goldsmith
I’m now joined by Leslie Gillin, Chief Growth Officer at Pagaya. Leslie, thanks so much for joining us.
Leslie Gillin
Absolutely. It’s great to be here.
Russell Goldsmith
Should we start with a quick introduction to the company?
Leslie Gillin
So Pagaya is a B2B2C, fintech company. Think of us as a network between our institutional investors and our bank partners, and lending partners. And our job is to bring capital to the table in our AI capability to be able to find more consumers, whether they’re deepening existing customer relationships with a partner like SoFi or Ally and actually bringing like 20 to 30% more people into the mainstream economy with the ability for them to choose the products that they’re looking for.
Russell Goldsmith
I know that financial inclusion is a big part of your mission at the company. Does making that part of the business model. Does it help or hurt success for you?
Leslie Gillin
It absolutely helps. First of all, it’s just like diversity and inclusion. When you have a more diverse company, you have a more profitable company, it’s really no different. We are a for profit company. We started as an asset management company in 2016. We basically are able to bring more underserved people into the mainstream economy because they’re getting missed today with FICO scores and underwriting platforms that are just old and aren’t up to speed. And so, we’re able to actually find many more people that are creditworthy and actually bring them into the mainstream economy. So, it really goes hand in hand. We aren’t a non for profit. We’re a profit-making company. We just went public in June, and we are profitable. One of the few SPACs that actually made it across the finish line and went public. But no, we see it very much going hand in hand because there are a lot of people who deserve credit that just aren’t getting it today because they’re getting missed in the traditional underwriting platforms.
Russell Goldsmith
So just can you get into a little bit more detail then on how your technology actually achieves that, how you give those consumers with lower credit scores, access to finance?
Leslie Gillin
So think of our advanced models that we have, and we have a strategic partnership with TransUnion and also work with Experian. We have all FCRA, which is compliant data, bank compliant data, think about the FICO score. There are thousands of variables behind a FICO score. So, what our AI is able to do is we have 20 years of production data so that we can actually, instead of a bank or a lending institution leveraging a FICO score and maybe a few variables, we just have a lot more information in real-time to be able to find people who today are getting missed. So, we basically are leveraging a lot more of that data. We have over 16 million data points in training and our AI platform and we’re able to work with our partners who basically are unable to approve them, and they send a decline through an API. And in milliseconds we can come back to them with a recommendation to approve and then giving them a line and the pricing that really matches the pricing that the company was already marketing. So, it’s a completely frictionless experience for the customer as well. And so, we’re just able to enable our partners to say yes more. So, we are very much behind the scenes. We are again a business-to-business company and so we enable our partners to be able to say yes to their consumers and really enable them to have more choice and access to lending that they came to apply in the first place.
Russell Goldsmith
I was going to ask about that limiting the risk, because that all leads to that doesn’t it?
Leslie Gillin
So we have over 260 researchers and obviously a lot of data points that we’re paying a lot attention day and day out, just like they do in banks and other institutions from an underwriting perspective. But we just have many more data points. And because we’re not relying just on the data, we have over 260 humans that are paying attention to trends and making sure that we can find all those people who deserve credit. But we’re also managing the risk as well because we owe the investors who are on the other side of our network a return on assets. So, our technology is using the data, understanding that consumer in the moment who was declined by that institution and we’re able to bring pre-funded capital, which is another interesting part of our business model, we actually have institutional investors, pension funds, and private bank clients, we pre-fund the investor, and that way, our technology is solving for a return on asset for our investors and then saying yes, helping our partners say yes to consumers and literally were increasing on average 25% to 30% incremental originations for auto loans, personal loans, credit card buy now, pay later. So, it’s really exciting. There’s so much opportunity.
Russell Goldsmith
Lots of technology is involved there. In terms of other current trends within the fintech space, is there anything that stood out for you at the moment?
Leslie Gillin
I think what is, and we’re right in the heart of this is that there’s so much technology that can help with social change, whether it’s health care or whether it’s obviously financial services and enabling people to get seen more and just being able to leverage that data. And the cool thing is, if you think about all these institutions and new fintech companies, there’s so much lending opportunity out there. What’s exciting is that everything that’s happening today is further enabling people to have choices and access. And so, to me, that’s really exciting. I spent 31 years working for very large financial institutions and made the switch over to FinTech because I got so excited about the model and there’s many, many good people that work in banks every day. But because of the infrastructure, backend infrastructure and acquisitions, and the inability to really see a complete customer, they try really hard, but you just miss. And we’re finding literally one out of four people who are good creditworthy customers that are getting missed. Actually, are performance, is market average performance. From a pricing perspective, they were being declined. But actually,even the way they perform on the back end is right in line with market averages. So, we’re bringing more people in with the same pricing, mainstream pricing, and they’re performing really well.
Russell Goldsmith
I think it’s great what you’re doing. Just listening to how you’re describing it. I think it’s fantastic. I’ve got one final question for you here at Money20/20, What’s been your key takeaway so far from the event?
Leslie Gillin
That everybody is very hungry to do business. There’s so much opportunity. It’s very exciting to be at this time, obviously, there’s a lot of challenges, but any time that there are challenges, there’s opportunity that breeds from that and there’s so much collaboration and people are here to do business and grow. And so, it’s very exciting. I will walk out of here learning 30 things that I didn’t know 72 hours ago. And that’s why it’s exciting to be here.
Russell Goldsmith
Leslie Gillin, thank you so much for joining us.
Leslie Gillin
Thanks for having me, Russell.
Russell Goldsmith
So I’m joined by Dave Birch, Global Ambassador for Consult Hyperion. Dave, thanks so much for joining us.
Dave Birch
Glad to be here, Russell.
Russell Goldsmith
So, quick one line on your company.
Dave Birch
We’re a specialist electronic transactions consultancy. So we advise some of the larger players on how to use new technologies.
Russell Goldsmith
That was a quick line. Very good. Right. Your session yesterday explored the digital identity crisis? What were the key points that were raised?
Dave Birch
Yeah. So, the Money20/20 people had a really interesting idea, which was that sometimes you need to look to the edges for innovation. And so, they said, you know, like, who has the problem handling cash? Well, it’s the cannabis guys, so let’s get them. And so, they decided to have a session looking at gambling, adult services, cannabis, that kind of thing to look at, look at what opportunities were there, but also to look at what innovations are coming from that direction, it was a really interesting session, and they were kind enough to ask me to do the keynote. And I said, look, a lot of the things that we see as being payment problems are in reality, identity problems, if you know who everybody is, payments are really quite easy. And so, if we really want to make headway in some of these areas, actually we need to deal with the identity crisis rather than muck about with Dogecoin or whatever. So that was the idea of the session.
Russell Goldsmith
Something I want to focus on and that’s digital and verification infrastructure. Can you just explain a little bit more?
Dave Birch
The idea is in we’re not only in those sectors, but in the wider economy, we should be moving away from using people’s personally identifiable information as part of transactions. And the simplest example everybody uses, of course, is there’s a world of difference between me finding out whether you’re over 18 or not and me finding out your date of birth or your age. So verifiable credentials are the idea that you use modern cryptographic techniques to prove things about data but not share the data. And in some of those more sensitive areas, you can see why that’s really important. But actually, you see the number of data breaches and hacks going on all the time. It would be better for everybody if companies weren’t storing people’s personal information. It’s a kind of toxic waste. So, you know, if I send you my passport to prove that I’m over 18, sooner or later you’re going to get hacked and that passport data is going to be stolen. If I send you a cryptographic proof that I’m over 18 that you can verify, then we’re good.
Russell Goldsmith
What do you think is going to happen then, if banks don’t confront the digital identity crisis?
Dave Birch
Well, I mean, I have a fervent hope that eventually banks will get their act together and cooperate to solve this. I do think that would be the best solution. But I think it’s got to the point now where if they don’t, you have other big players who could step into that market to, I mean, it could be the big retailers or the big media companies or maybe specialists in that area. But I personally, as a consumer, feel more comfortable if it was a regulated financial institution that was storing my personal information safely and then distributing the proofs that I need to people that I’m going to interact with online.
Russell Goldsmith
Just coming back to your session from yesterday, which was part of the Legal to Legal summit. You talked about cannabis and gambling. Was there any particular highlight for you from some of the other talks?
Dave Birch
I thought was interesting to me as why I made that point about Dogecoin earlier on, I thought there’d be more talk about using cryptocurrencies in that area. But actually, what a lot of people are looking at is account to account. I mean, they’re looking at how can we use I mean, in the European context, how can we use SEPA credit transfer or faster payments or coming soon in the US Fed now. So actually, a lot of people were looking at if I know who you are, and I can use open banking to instruct a transfer from your account, we solve an awful lot of problems. And so yeah, it was interesting to me, a lot of people were talking about account to account.
Russell Goldsmith
Sure. And, listening to all these things that you’re talking about, we’re seeing less and less cash being used. Do you think we’ll get to a point one day where there will be no physical cash? Everything is digital.
Dave Birch
But I’m very fond of saying that a cashless society isn’t a society in which there’s literally no cash. You’re always going to want to pin something on the bride’s dress at a wedding. But a cashless society is a society in which cash is irrelevant. And actually, we’re not too far away from that in some ways, which is not an excuse for not doing something about it and having a strategy. But I haven’t used cash since I’ve been here. I mean, I will tonight in the casino, but you know what I mean? Like for an awful lot of people, cash, it just isn’t part of their daily lives anymore.
Russell Goldsmith
Don’t use too much of it! Before I let you go outside of the session that you were in yesterday, what’s been your key takeaway from Money20/20 this year?
Dave Birch
My key takeaway is they should rename it Identity20/20. Because you look around, you look at all the stands. What are you looking at? You know, Socure, Carta, Jumia. I mean, just from where I’m standing here, you know, you’re looking at people that are trying to deal with the real problem. And the real problem is identity.
Russell Goldsmith
That’s a great, great point to finish on. Dave Birch, thank you so much for joining us.
Dave Birch
Thanks very much, Russell.
Russell Goldsmith
I’m now joined by Jess Houlgrave, Head of Crypto strategy at Checkout.com. Jess, thanks so much for joining us.
Jess Houlgrave
Thank you for having me.
Russell Goldsmith
Now you were speaking at the conference on a talk that focused on the growth of crypto within payments. Tell us a little bit about what you spoke about and what were the key highlights?
Jess Houlgrave
So I think crypto has long been promised as this thing that can support payments, right? Even within the Bitcoin whitepaper, we had the notion of pure peer-to-peer payment transactions. And so, the industry for a while has been asking what’s happening there? So yesterday was a panel that was really focused on, yes, it’s the promise, but like what’s really happening out there. And for me, I think there’s a couple of different things. Like we touched a little bit on B2B payments. At checkout.com, we’ve got a nascent Stablecoin settlement product so we can settle our merchants using stablecoins. Great example there of the like efficiency gains that you can get by using crypto rails. We touched a bit on the panel about crypto acceptance, like people actually paying for goods and services with cryptocurrency. One thing that I’m super excited about is crypto pay-outs for creators, gig economy workers, cross-border transactions. So, there’s all these different areas that crypto can and I think will one day be used in payments. It’s just about sort of how it’s emerging and what those trends are today.
Russell Goldsmith
Good engagement from the audience?
Jess Houlgrave
Great engagement from the audience. My co-panellist was a woman called May Zabaneh from PayPal. She’s building all their crypto product. She’s awesome. Hugh, who was moderating the panel from CNBC. So, it was a lively conversation and a great audience. I mean, the energy here this week is just awesome.
Russell Goldsmith
Now, there has been some recent volatility in the crypto space. What’s your thoughts on that?
Jess Houlgrave
Look, I think I’ve been in crypto for a while, so I’ve seen these things come and go. And for me, the key difference actually in this crypto winter is that the institutions who are thinking about this are thinking about it in a much more sophisticated way than they were before. Before we had a lot of conversation between crypto as an asset, as an investable asset versus the technology that underlies it. And today those conversations are really focused on the technology use cases. And that means that despite the fact that it is crypto winter, everybody still like thinking about what they can build. They’re really excited about the future. I think there’s so many crypto people here at Money20/20, but that’s testament to the fact that people believe in this space and that there’s still like great work being built. So, the price of Bitcoin might be a bit low right now, but like, does that matter? No, I think for now it’s like focus. This is when the kind of good work gets done. So, I’m okay about that.
Russell Goldsmith
Let’s focus on the future then. Any particular trends that you’re seeing and how do you actually see the whole sector evolving?
Jess Houlgrave
So I think one of the great things about crypto is that it comes from a place of like this open-source mentality. And we see that because there’s so many different partnerships that are emerging in this space that allow people to build and innovate really quickly. So, I think having that breadth of collaboration within the industry I think is something that’s definitely going to persist through 2023. And what that means is that people can focus on what they’re good at, partner with people to support their innovation and like actually get some products to market. So, I think on the payment side, we’ll start seeing more crypto products in market from ourselves, also from our friends at other places. And these are great experiments to see what the future might hold. From a market perspective, if I knew, I’d probably be sat on a beach somewhere. No one knows when the market will come back. But I think people believe that it will. And so that’s something that we’re focused on. We work with a lot of exchanges in this space. So, we’re really focused right now on just helping them to make sure they got the right payment stack so that when the market comes back, they can take advantage of that. So, I’m optimistic for 2023. I also think we’re going to get more regulatory clarity on some aspects next year, and I think that will help innovation, too.
Russell Goldsmith
And tell us a little bit about your Demystifying Crypto report.
Jess Houlgrave
Demystifying Crypto is a report that we put out earlier this year that did a whole survey. We surveyed 30,000 consumers, 3,000 different merchants to just get a general feel for how they were thinking about crypto, crypto within payments other use cases, NFTs. It was really broad and comprehensive, and it showed up some really interesting things. I think for me what it showed was that again, coming back to this idea of sophistication, a lot of merchants had a really sophisticated understanding of crypto and what it could do for their business, 67% of CFOs said it was going to drastically transform their business model. And I think that that’s right. So, it’s really interesting to see some of these stats emerging. We’re about to kick off another one so that we can give people another view for next year. So that’ll be interesting. We’ve just done a mini one, so rather than every year we’re going to do some mini surveys a bit more frequently and we’ve just done that and that’s been really interesting too. And my favourite stat from that one is, as a preview is that in the US in February, about 20% of the consumers that we surveyed said that they would be interested in being paid their salary in crypto. And in this survey, it’s 46%. So, it’s like this, is real. People are genuinely thinking about this, which is super interesting. A lot lower in the UK, interestingly. So, it also shows us these geographic differences in terms of adoption and how people are thinking about it. I find this data stuff really interesting.
Russell Goldsmith
Where can listeners grab those reports? I guess on the website?
Jess Houlgrave
So you can download Demystifying Crypto from Checkout.com website. The new pulse is coming out in a little while, so that will also be on the website when it’s ready and on our Twitter and stuff like that.
Russell Goldsmith
Just a couple more questions for you, Jess. You’ve recently announced your Stablecoin settlement solution. Tell us a little bit more about that.
Jess Houlgrave
So at Checkout, we process for a lot of crypto exchanges, platforms on and off ramps were really a widespread provider in the space. And what we do is the fiat component. So, we allow those merchants to accept card and alternative payment methods. So just like when you as a consumer, you go onto a store and you buy a pair of shoes with your debit card, you go into an exchange, and you can buy crypto with your debit card. Now, in a normal settlement flow, what happens is that we aggregate all of those funds from Visa and MasterCard and other payment providers, and then we settle them to the merchant every day using a bank transfer. Stablecoin settlement is like just looking at that leg of the transaction and instead of making a bank transfer, what we do is we send you Stablecoins. Now very small, but actually when you think about the effect that that has on the business. It’s really impactful. And it’s impactful for two reasons. Number one, we can do that on the weekends, and we can do that on bank holidays. And so, we’re no longer constrained by the 9 to 5 banking hours that we all find very painful. But we can sell you whenever you want. And the impact of that is that that unlocks a lot of liquidity for our merchants. So instead of having to wait until Monday or Tuesday to get those funds, you get them much quicker. You get them on Saturday, Sunday, on bank holiday Monday. And that means that that can then roll into your business. So big liquidity advantage in terms of that Stablecoin supplement product. Also on the operational side, it just removes this leg of operations that you have to do to change fiat into crypto to put it back into your business model. So, two key drivers and we’ve seen a lot of adoption from our crypto merchants. We recently hit the billion dollars settled mark, lots of new activities going on there. So great mini, but first product in the crypto native space for checkout and it’s working well.
Russell Goldsmith
I’m loving your passion for what you do.
Jess Houlgrave
I love it. I have the best job in the world.
Russell Goldsmith
Final question for you. What’s been your key takeaway from Money20/20 this year?
Jess Houlgrave
I think that my key takeaway has been that people are taking this very seriously now.
Russell Goldsmith
In terms of crypto?
Jess Houlgrave
The crypto side, yeah, I’m always everything is gonna be crypto is the I had so many requests for meetings from companies that I, I would never have thought that they’re really starting to think about this stuff. And then the meetings that I’ve taken, the questions haven’t been like, Oh, we’re just thinking about web three and crypto payments. They’re like, this is what we want to do, and like, how should we be doing it? And how should we be thinking about it, and we’ve got 30 people working on these projects internally. And so it’s, for me, it’s just like, really cool to see some of this actually happening. And I think that a lot of that’s happening behind the scenes at the moment, but we’ll start seeing the benefits of that in the next 1218 24 months. And then that will also trickle down to different consumer models, innovative business models that like we haven’t been able to do before, new ways of engaging with consumers from like NF T’s and different branding perspective. So I’ve got a lot of energy from this week has been awesome.
Russell Goldsmith
Sounds very positive. Jess Houlgrave, thank you so much for joining us.
Jess Houlgrave
Thank you.
Russell Goldsmith
I’m now joined by Simon Taylor, Head of Content Strategy at Sardine. Simon, I know you’ve had a very busy morning already. You’re part of a session with FTX’s Brett Harrison. You were discussing the future of crypto and Web3. How did that go?
Simon Taylor
It went really well actually. He’s now the former president of FTX, so it was interesting to hear from somebody who’s left that business. So, as you are probably aware, FTX is a very large crypto exchange who’s been acquiring lots of other companies lately. And it was interesting to get his perspective on, with the crypto market being down, with people being generally a bit less excited about web3, some of the hype dying away, why was he leaving and what was next for him. And I think his answer was really telling, which is when everybody else is fearful, be greedy, and when everybody else is greedy, be fearful. Like actually now is a really good time to be looking at this space because the tourists have gone. So, I thought that was an interesting perspective. And we covered everything from compliance to regulation to the future of the industry, DeFi, Stablecoins, you name it. It was a wide-ranging conversation and very fun.
Russell Goldsmith
Interesting, obviously, in this environment. Are consumers ready for these services?
Simon Taylor
Define these services. Are consumers ready for crypto? Well, it depends on what the value proposition is. If the value proposition is speculative asset, that may go up. Always, people like to gamble; but if the value is, you may have seen Reddit launched their NFT collection and there are over 3 million users of that NFT collection. That’s a really incredible adoption. But the average price is about $10. So, what we’re starting to see now is we’re flipping from the speculative games bubbles phase into this sort of utility phase. So ultimately, are you ready for it? Well, does it solve a problem for you? Is it good? Were consumers ready for Facebook and Instagram? Yes, they were. And they adopted it. And ultimately, the consumer will prove to adopt what they like and ignore what they’re doing.
Russell Goldsmith
But there is some debate that, people will see this as potentially a fad, and whether or not it’s going to replace traditional financial institutions. What’s your take on that?
Simon Taylor
I don’t think the goal should ever be to replace traditional financial institutions. The mobile phone hasn’t replaced telcos. It’s changed their business dramatically. And I think a new technology changes your business dramatically. And what people often try and do is make a thing that looks a bit like it. If you remember, the telco industry reacted to Apple and Google entering the phone market by trying to do their own version of voice-over IP. But now we all use Zoom and so the telco companies are there in the background and they’ve had to upgrade their infrastructure to be able to be a part of that and they continue to be very successful businesses. The same is true for banks. The goal is not to replace them. The goal is to meaningfully build new infrastructure that can solve problems for the world in different ways. And one of the things we talked about with Bret was, for example, Stablecoins this is a naughty word to some regulators, and a naughty word to some bankers. But if you’re in the global South, if you’re in Brazil, if you’re in Africa, the ability to hold and transact in dollars is really exciting, and really powerful. And they can move money in and out so that we see this really meaningfully being another avenue for remittances and for cross-border trade at the consumer level for low-value payments. I think the answer to that could be yes.
Russell Goldsmith
Tell us a little bit about Sardine.
Simon Taylor
Sardine is the world’s best fraud team you hire as an API. Customers would include FTX, Brex, Moon pay, Wire and even Metamask. We do several things. So, when I talk about a fraud team, I’m really thinking about everything from helping companies KYCing and on-board customers. So, we provide all Fixof the software solutions that allow somebody to be able to accept a digital identity. We’ll also check for fraud in the digital identity. Then, once the customer’s onboarded, we look for things like account funding fraud. So, I’m a neo bank. I’ve launched a new account. When that money is coming into the account, we’re making sure that that’s coming from legitimate sources and we’re doing all of the transaction monitoring, all of the case management that sits around that and sits there. And so that’s available to their internal fraud teams. And then lastly, we also do card issuing fraud. So, when somebody’s spending at the point of sale and we’re looking at everything from the device, the user’s behaviour, all of those signals to be able to pull together the best fraud prevention and detection in the world. And then that’s one part of the business. The second part of the business is the instant fiat to crypto or instant NFT checkout. So, you’re probably familiar with the US market, ACH is a two-day delay. We will allow the user of Metamask for instance or the Brave wallet to instantly send money from their bank account via ACH to receive crypto and that will happen immediately. Instead of a two-day delay. What we’ve seen with cards is that there’s about a 50% decline rate. So, you have a coin toss as to whether or not the transaction is going to go through. But with ACH and with our fraud prevention technology, we’re able to get that to much more likely a 95% approval rate. And that’s why we’re seeing a lot of energy and excitement around the product.
Russell Goldsmith
Now, I mentioned you had a busy morning as well as your session. This is not the first podcast you’ve done. Tell us about the interview that you’ve just come from.
Simon Taylor
Yeah, I was on the Deciphered podcast, which was with the Bain guys and they were phenomenal. We talked about everything. We talked about the macro environment and how that’s going to impact consumer fintech in particular, and how that changed the market. Interest rates have risen. For a time, that means that the banks are doing quite well. Their net interest margins have raised the amount they’re paying savers versus the amount they’re charging in loans has changed. But it’s not that simple because they’re also not necessarily signing as many mortgages as they used to be. So, there are less customers coming through the door for lending products. On the consumer fintech side, there are some of the big valuations and big multiples that we sold are a little bit harder to justify in this market. And maybe they have to take a down round. Maybe they have to start thinking about their costs. Maybe they have to start thinking about unit economics, which is just good business fundamentals and probably should have always been the case but is now starting to really come back to reality. So, it was a really great conversation.
Russell Goldsmith
Simon, final question for you. Key takeaway from Money20/20 this year?
Simon Taylor
When everybody else is fearful, be greedy. I’ve never been more excited by some of the young fintech companies I’m seeing. Never, ever. It’s absolutely insane. There was a great competition called America’s Got Access the Money20/20 folks organized and businesses building to compete with payday lenders, businesses building to really sustainably lend to the subprime sector in ways, I always say lending is easy. Getting paid back is hard. This is really thoughtful in terms of like, how do I use communities? How do I use credibility in societies to start to think about different ways of underwriting?
Russell Goldsmith
Simon Taylor, thank you so much for joining us.
Simon Taylor
Thanks for having me.
Russell Goldsmith
Joining me now is Ginny Chappell, EVP Product Marketing at Moov Financial. Ginny, welcome to the podcast.
Ginny Chappell
Thanks for having me.
Russell Goldsmith
Now, you sat down earlier today for a session with Christopher Waller. He is from the Federal Reserve. What was your reaction when you were told that you’re going to be interviewing him here?
Ginny Chappell
It is honestly a top honour of my career to be able to meet him, talk to him and ask him all the burning questions. Just kidding. I can only cover so much in the 20-minute session, but obviously have been on this journey for 18 years in the industry. But certainly, in the last 7 to 10 years, very focused on faster payments. And with what the Fed is doing now, it’s really ground-breaking. So, and he doesn’t honestly do interviews like it was his first Money20/20. And so just incredible that during this truly a blackout period for them to go out and do public speaking, that he would give us the time to really talk about payments. During this sort of truly a blackout period for them to go out and do public speaking, that he would give us the time to really talk about payments.
Russell Goldsmith
Well, I’m going to challenge you now because you said you could only talk about so much in 20 minutes. I’m now going to ask you to summarize. Just give us the highlights of the overview of what you discussed with him.
Ginny Chappell
They’re coming out with a service that is really going to enable real-time payments in the United States. And of course, we’ve struggled over the last several years to get a ubiquitous network in place. And I think it’s coming to fruition with speed finally. So, I’m cautiously optimistic, for all of the fintech’s and the financial institutions out there that have been investing in all kinds of different technologies to modernize our payments infrastructure. And so, the Fed is just uniquely positioned now, I think, to make that available and create a whole host of new capabilities and use cases that are going to empower small businesses and consumers in really exciting ways. And so, he talked quite a bit about that and did share, where they are. And of course, they came out with a white paper, which I encourage everybody to read into just recently. And so yeah, he kept it brief but, and didn’t get into any of the juicy details of monetary policy. But it was just an honour to get to talk to him and for him to come out and talk to the whole industry.
Russell Goldsmith
There is a period of economic uncertainty. Did he share any plans to get out of that at all?
Ginny Chappell
We didn’t go there. But I think. We connected in the sense that he had a really distinguished career even before in academia, before taking on this role in the last couple of years and is doing an incredible job of driving progress, we connected in the sense that he was faculty at Indiana University, which is where I went to school. So, just really cool for industry to come together with policy makers. And we’re starting to see that more. And so, I think that the conversation and the engagement for the private sector. Meeting with policymakers I think is an exciting shift that’s really starting to happen. There are events like DC FinTech Week a couple of weeks ago that was put on and these types of interviews taking place where it’s not just fintech’s right in the dialog, I think it’s important and I was honoured to be a part of it.
Russell Goldsmith
Let’s bring it back to Moov. On your website, I’ve seen the statement, ‘Every company will become a fintech’. What’s your interpretation of that quote?
Ginny Chappell
I believe that was one of the themes last year from one of our board members, Angela Strange, from A16z. I think we’re seeing a massive shift in growth for software companies that are looking to really embed and make invisible the payments in commerce experience. And so, lots of companies are looking at how do we make this easier? And that’s certainly part of our mission. How do we make just literally move money, right? The name says it. How do we make it easier to move money for tech companies and software companies and ultimately the end users and consumers that, they just want to make payments and receive payments and they want to have card and, real time bank rails, everything all available in one. And that’s really part of our mission. Commerce is unavoidable now and we’re all in our mobile apps we’re all online. And I think that shift in that growth is something that payments needs to catch up to.
Russell Goldsmith
Final question for you, Ginny. Obviously, you’ve had a great morning doing your interview, but any other key highlights, any key takeaways for you from Money20/20?
Ginny Chappell
This is an incredible conference. I think I said earlier, it’s like the Superbowl for payments nerds. I haven’t done the full walk around, it’s incredible what’s happening with the shift to digital payments. I think that’s been a theme I’ve been seeing, and it just continues to become true. I’ve been trying to kill the check for, I think, most of my career. It hasn’t happened. We’re still not there. But I think it’s exciting to see all of the new technologies and even just cloud and open source and things that our company is focused on, and the industry is focused on, this convergence of banking and financial services and technology modernization. So, I think that’s really what’s happening across the board. And there is this new emergence, I think, of better tools for compliance and fraud and risk management, all really important things that have just been lumped into the banking sector that are really starting to come, I think, a realization of how important those things are for fintech’s and technology companies to partner in and leverage that. So, lots of interesting new technologies and new capabilities around that to create safety and security in the ecosystem.
Russell Goldsmith
That’s a great summary. Ginny Chappel, thank you so much for joining us.
Ginny Chappell
Thank you.
Russell Goldsmith
So joining me now, we’ve got Jan Altersten, CEO of Riverty. Jan, thanks so much for joining us. Shall we start with a quick introduction to your business?
Jan Altersten
I’m happy to be here on the conversation Russell. Riverty is a fintech focusing on the consumer where we take on the accountability for the entire transactional cycle around the consumers from credit check into whatever payment method, buy now pay later, into the collection piece should that be necessary. And we do this in various life areas in the ecosystems that matters to consumers. And when you say fintech, you might think of a small start-up. We’re not. We’re a company with a 40-year-old history and we’re 5,000 employees active in 13 countries. And we used to be known under another brand about financial solutions, but we just rebranded into Riverty.
Russell Goldsmith
I want to ask you about that. Can you talk about any of the merchants that you provide the services for?
Jan Altersten
There is an array of merchants, some of them you can mention, others not.
Russell Goldsmith
It’s often the way, isn’t it!
Jan Altersten
ASOS is a big one that we’re working together with. Best Secret is another one you might know, the car provider Lynk & Co, that has made their point out of having subscriptions on the car. You can really buy it upfront or servicing them as well. And there is a lot of others. So clearly if you’re a company our size, you would have the entire range of clients from the big multinational brands all the way to the small start-ups establishing themselves.
Russell Goldsmith
Now, you touched on it just a second ago. You’ve gone through a rebrand, keen to find out a little bit more about that. Talk us through that. There was a number of different companies or brands involved before.
Jan Altersten
We had an array of brands. Corporate brands, product brands, company brands, you name it, and we concluded that most of this was for historic reasons, either from M&A so that we were running a specific product and as if direction and we have reached the end of the road with running these businesses in separate streams. So, we decided to really focus, not just under one umbrella, but on the one brand showing who we are and where we’re headed with this consumer-centric approach. So, this is why we wanted to project our vision into one brand. So, one company, one team, one brand where we were a bit more fragmented before.
Russell Goldsmith
You just mentioned this buy now pay later, something that you’re obviously very involved in. I get the feeling you’ve got some opinions on that.
Jan Altersten
Yeah, I certainly do. So, Buy now Pay later is for sure a big part of our business, but it’s not the only part of our business and we make a point out of that. I mentioned in the beginning of our conversation here that, for instance, debt collection is also something we do, and I think that’s something we don’t talk enough about, that when there is buy now, pay later, when there’s a gap between the transaction and the actual payment, there will be some people defaulting with their payments and that will lead to debt collection. And in our case, we have said to you to be a good B&PL provider, you just cannot shy away from that topic, and you need to take on the full accountability for the entire transactional cycle around the consumer. This is when you can talk about sustainable finance being human-centric, etc., to help people back into the ecosystems that matters to them and make sure this is within your control, this is within your area of responsibility, and within your area of action. And I think that’s a discussion, a conversation we really should have a bit more intensely now, especially with the macro environment. We have a lot of consumers facing difficult times, in essence, I think Buy now, Pay later is a beautiful tool in so many ways. But to not admit that there are flip sides is just not productive. It’s just not constructive.
Russell Goldsmith
Another area that you’re focusing on is embedded finance. Some interesting case studies that you can share in there as well?
Jan Altersten
Yeah, I mentioned in the beginning of our conversation as well that we’re working with Lynk & Co this car manufacturer that sells more of a service. You do not buy your car up front, you buy a subscription on a car, which in itself for sure is a modern business model. But then they also concluded that this is really not enough to build a truly sustainable business model. So, they said, why don’t we add a marketplace where those subscribers can offer the car they are subscribing to towards other consumers to not only reduce the cost but also increase the usage of that car. And as and I think this is truly beautiful. Most of the cars are standing still 90% of the time. Why don’t you make them available for more people? That’s a really sustainable approach. And we are helping them to facilitate the payments beneath all of this, the payments in the marketplace, etc. And those are typically modern business applications that we are deeply investigating and exploring. On top of that, I could mention parking and other area within the mobility where we’re going quite heavily into the automatic number plate recognition connected to the payment, meaning you as a consumer, you do not need to produce an app or swipe your card in a machine or anything. You just drive into a garage with no bars and then you drive out and we will aggregate those transactions, connect that to your car via the number plate and invoice you by the end of the month. That’s another embedded finance activity we’re quite enthusiastic about.
Russell Goldsmith
That’s a great example. Jan, I’ve got one final question for you. And we’ve been asking everyone this in terms of their key takeaways from Money20/20. You’ve probably had more time to have a wander around and see what’s going on because you haven’t been speaking here and you don’t have a booth here. So, I’m going to get you to give us your big takeaway from what you’ve seen wandering around the Expo and listening to all the various different talks.
Jan Altersten
I really enjoyed the sustainable finance conversations that are going on, both from the big stage as well as in some of the breakout sessions. I think that seems to be a big thing. Another observation I made walking around here is how big this E-Identification is becoming to ensure that you know who you’re doing business with. There are such an array of companies trying to solve that problem, and I think that’s another big topic this year. And the third reflection is that crypto is not as hot as it used to be.
Russell Goldsmith
Interesting. Some of our other guests may have a different opinion.
Jan Altersten
I think they do. There is a lot of buzz, but if you ask for the actual use cases and if you try to drill a bit deeper under the surface, it becomes more of a discussion of infrastructure than crypto use cases. And you also see that it’s still more of an asset than a payment method. And I think that’s very interesting.
Russell Goldsmith
We’ll have to pick that up on another conversation. For now, Jan Altersten, thank you so much for joining us.
Jan Altersten
It was a pleasure. Thank you.