Fintalk #3. Think outside the bank

Welcome to Fintalk, this is our third episode of our webinar series where we talk about all things FinTech related. Today we have a guest who comes from a very strong product background so I'm hoping we get into some nice product talk.
Mykhailo Glodian
Mykhailo Glodian
Head of Growth @ MeaPay
Fintalk #3. Think outside the bank

What is ZTL?

Trung:
Right. And just to recap, something which you mentioned earlier. Yeah, is that we are focusing on payments, and trying to be a payment platform for a b2b segment.

Utilizing the PSD2 regulation which is the payment service directive, which basically just legislator forces traditional banks to open up their payment information or account information with third-party vendors such as players like ZTL and many others. And we believe that payment services in the b2b sector is quite not that very frictionless or seamless.

Christoffer:
It can be very hard to do transactions.

Trung:
So we wanted to improve that and that’s why the customer’s experience is very  important to us by doing this and that real, then providing a payment service, and estimation, through PSD2 and make it very frictionless, seamless, and also bank independent  right? You don’t need… I love the quote from Bill Gates saying:  “banking is necessary, banks are not”, right?

So, yeah, it’s very interesting to see that.

Christoffer:
So you’re one of these bank killers.

Trung:
I will say we will challenge them you know, and then hence me. We do this by building API blocks. And I think that will often be the future to take services, products differently and how we can provide those products, not just in a traditional way where you say – oh we need to have this channel, this channel or that channel but what can you do with the same thing through API. And I think that’s a very interesting perspective. And that’s why I also set out with building those building blocks to provide you with better payments through accounting systems.

Christoffer:
Who is the target audience for this?

Trung:
Well the target audience is basically the SME segments

Christoffer:
Which are currently massively underserved by corporate banks.

Trung:
Right yes, right and then they are of course, maybe having expectation that payments should happen quickly, you know, they have a high expectation, it should happen fast available 24/7

Christoffer:
Of course, people that are not in our industry that run an SME that are making an international transaction. In today’s day and age where you know you can send digitally any information immediately everything is instant, to accept that an international transfer or payment can take 2-3-4-5 days it’s a little bit hard to wrap your head around. So how are you resolving that for them?

Trung:
Well, just imagine that if you have a from a corporate perspective, you have several invoices of that you’re paying domestic and international payments. So what  we doing here, what we’re providing is that when you do work in your accounting system, which is basically your daily work. Yeah. Right then, we don’t need to go for an online bank to do that payments

Christoffer:
You can do it directly from the accounting software?

Trung:
Right directly from the account system, okay well with the invoice you could do the domestic payments, right, and combined international payments or just international payments, what is good is that when you do that, we will be the payments engine behind, which is going to initiate this PSD2 compliance rule. And basically, if you have an account in DNB or Nordea it doesn’t matter it’s the bank independent, right? Yeah, we will then, based on your decision we initialize that payments.

Christoffer:
And finance managers everywhere rejoice.

Trung:
So basically that we just will go and do the payment for you. The other part which is going to be very exciting is that we also have, we are having, what I call concession with the FSA payments and we have to do the onboarding, and I see like onboarding a customer today especially the corporate is very in sometimes very difficult consume.

What is the Biggest Hurdle Standing in the Way of Financial Innovation?

Christoffer:
The compliance part of onboarding a customer the KYC, KYB requirements are a massive hurdle, particularly for sole proprietorship and the micro-segment of SMEs that can be the documentation requirements there, can be it can be a big hurdle right?

Trung:
And we believe that yes compliance is important that we can do it much more smoothly. Okay, so what we do is that when we do onboarding to utilize our products, you have to do that onboarding, it takes about 3-4-5 minutes

Christoffer:
How do you get the onboarding process down  to something so quick?

Trung:
Well, it’s about asking the question, you need to ask and the question that you don’t need to ask.

Christoffer:
Is that something to do with your, with your risk appetite that you’re willing to ask fewer questions and mitigating the risk by a revenue stream that compensate for the cost of that risk or do you have like an amazing UX, UI that enables it to be quick, or is it that you figured out questions that sort of circumvent the compliance side of it?

Trung:
I think that last one and the second one, which is you have a UX, UI, right, but also you have to think about which type of question you need to ask, and just ask a lot of questions because you feel it’s important to have that information.

Christoffer:
Yeah, you have to weigh the opportunity cost of the information that you gather against the cost of the burden you put on the customer by asking that sort of thing.

What is the Biggest Hurdle Standing in the Way of Financial Innovation?

Focusing on Customer Experience or Staying on Compliance?

Trung:
It’s all always about customer experience and what they need from a compliance perspective hence I think we have found our niche in that way.

Christoffer:
Do you think that the banking sector overall has sort of ove- focused on being, you know, wearing the suspenders and the belt and the seatbelt and the helmet and safety go, like, have we over focused on, on 100% compliance and lost customers in that process.

Trung:
I would just start saying that compliance is important.

Christoffer:
Of course, of course. Compliance is awesome.

Trung:
Yeah, right we can streamline that much more, make it much easier and you know and lighter, you will call it, and much more from a customer experience perspective. Right, I do understand we have to ask a few questions that you’ll get from a customer experience, how can we make it easier. And I think a few banks have a long way to go there because you are so afraid of breaching things that you’re asking. Maybe unnecessary questions so you will do it much more difficult and complex. And that’s why I want to go back to that, that focus, while we’re doing that, is that because you do fill out the onboarding which is very easy, and by three, four minutes. If everything goes through, of course,  you can already utilise our products and services.

What is an Effective Onboarding Process?

Christoffer:
That’s amazing. How did you develop your onboarding process like how did you design it and what were the sort of legal decisions, vis-a-vis the risk and liability you have by taking those choices on the questions you ask and what was the design UX perspective and how did those two come together to create such a frictionless and quick signup?

Trung:
Well, I think it’s well we’ve worked pretty well with our legal department, and compliance, which gave us a very good idea of how you can approach this and utilise that compliments to help us like, are we breaching anything now or are we asking the right question now, combined with the technology which you’re saying today is that not a paper where you sign manually you can do this paper digital, and then we’ll use what we know and you just use your bank id to sign.

Christoffer:
We had a guest on the show the other week who was working in the Pakistani market and he said, a lot of the banks in Pakistan’s version of going digital is putting this form the need to fill in by hand, putting them on PDF, and uploading. That’s it.

Trung:
And this is 2021, wow, that still occurs.  And that’s why I think the combination of that UX, everything is digitized – documents, and …

How can Bank Infrastructure Support App Development?

Christoffer:
Just to dig a little bit more into that. Are you saying that this works in this market because in Norway we have this unified identity system through bank ID that allows us to identify the users against the registered ID number and then sign it,  would this work in infrastructure or a country where that wasn’t in place?

Trung:
Well, that’s a very good question, I think. Well, it has to be looked upon differently but I will definitely say that it definitely helped usher in Norway, you know, and I believe Norway, is very in the forefront when it comes to digitalization and authentication, but also what I notice is that the government has very good also digital infrastructure right tax paper, it’s all digital.

Christoffer:
I pay my taxes by SMS

Trung:
Right, right, if you’ve got to the US or other countries. I think we are very lucky to have that type of infrastructure.

Christoffer:
But do you think that that means that Fintechs have to wait for the regulator’s or the government to implement infrastructure that allows for identification to be digital before we can really unleash this type of transactional services in, in other markets?

Trung:
I think that you know, And I don’t know very well, different options you have in other markets and digital signing is definitely something that helps us a lot, but I think that, which I haven’t looked into very much, I think there are other software solutions. I don’t think it stops us from doing things this way, we just need to figure out differently, and always have that customer experience in your mind of can we do things differently, even though we don’t have a bank, meaning that tiny technology.

Christoffer:
Are you guys looking at expanding into other markets, Or am I asking questions I shouldn’t sort on camera?

Trung:
We have a high ambition, and I love when our CEO saying that we want to be the European leading within the b2b payment companies. Right, and of course that means that you have to go outside of Norway, we have to look into the UK or Sweden or the European markets. That’s how I mention it. But, yeah, and I believe we touch upon that, that onboarding which is simplifying and we’re getting a greater customer experience and, but I think what also is unique is that when you do international payments today. When you do that, you get the exchange rate, right away, which is very good because then you know Oh, I actually paid that much for that currencies.

Christoffer:
You would think that would be a standard thing but it’s not.

Trung:
If you use other banks, you don’t get that you don’t know. Okay, how much am I actually paying for.

Christoffer:
You’ll find out later. It’s not very customer-focused.

Trung:
Right. I believe this is really our way of focusing on customer experience and then we can differentiate us.

Digitalization and authentication

How will the Banking Industry Change in the Next 5 to 10 Years

Christoffer:
So if we look at the sort of long term perspective on this, how do you think transactional banking services are going to evolve over the next couple of years like what does it look like in five years 10 years two years from now?

Trung:
Well, it’s definitely going to evolve, and just look at the market. I think one of the report I was reading and I think it was one or two years back and think, there were the Global Transaction Banking was generating revenue like $1 trillion revenue yielding, it’s a huge market, right?

I guess it’s gonna be increasing. Yeah, we’ll assume so. And also I noticed that a lot of in that survey, a lot of companies. From an IT and technology perspective is investing $100 million, which is a lot of money, and I guess, through that investment and experiment, experimenting and developing things will happen a lot in that global transaction.

Christoffer:
And how do you think that the legacy banks who obviously have no infrastructure and positions to defend are going to defend their hold on the current corporate payments and remittance market?

Trung:
I think the best way to defend it is to take out a customer’s needs and experience. And it’s very important thing, but also try to redefine your services and products, because in the future, I believe, there are some things which is going to challenge the current banks, is that you have …

Yeah, I think, through transaction banking you will get access to a lot of information, a lot of information, so how do you do like technologies such as advanced analytics and AI or machine learning to create a better customer experience.

Christoffer:
And to predict customer wants before they’ve even purposefully expressed them right?

Trung:
Right, so how do you tackle that part? I think also that we need to focus on partnership, which I believe is going to be very important going forward to defend your position, I don’t think you’re able to do this alone in the future.

How will Banking Technology Change Over the Next 20 Years?

Christoffer:
But I think if we fast forward that even more, let’s say, 20-30 years from now, and not just in the payments and remittance space but where do you think, or what do you think is the role of traditional sort of legacy banks, and what do they look like 20-30 years from now, A the ones that are adopting what do they look like and B, what happened to the ones that sort of stuck to their traditional business model in your opinion 20-30 years from now?

Trung:
That’s a very good question. Right answer but I do have some reflection around on is that I think you’re gonna have banks which is relevant when they understand customer needs, and then they also think beyond banking. Right? I think those banks which is legacy banks which is not that relevant in the future might be just the infrastructure, or even, you know, that will happen after your acquisition, I guess, right?

But I believe those who can think, much more from a customer’s perspective regarding what type of services then need to move forward it’s going back, I noticed a bank in just a few minutes at the north bank in Singapore. And you talked about mortgage loan you talk about deposits. But a lot of people were talking about, if you look from 360 degree from a customer. Why would they need on a mortgage loan, because they want a house, but they also have needs regarding family, and  cars, but also when you buy a house, you probably need to know insurance.

Christoffer:
Yeah it’s a segmentation that exists within the bank but not in the customers mindset, right.

Trung:
So if you are bank, if you look back 360 degrees from the back. How can you be more relevant rather than pushing mortgage loan or … ?

Christoffer:
Pushing your product right rather than creating solutions

Trung:
For what that bill was very cool concept was that okay, we give you a voice now, we’ve noticed that you buy a house, but we can also help you with, wash, cleaning the house

Christoffer:
Value added services of all kind

Trung:
…Transporting things from your old house, to your new house.

Christoffer:
So it sounds like you’re saying that the future of retail banking is a lot more solutions oriented customer focus.

The next question I have is traditional banking has sort of been divided into retail banks, and, and commercial corporate banks and the corporate banks generally have served you know the the multinational the large corporations, and there’s a gap there where the SMEs are underbanked or very poorly serviced by banks, how do you think that’s going to evolve going forward?

Trung:
I think that’s gonna change definitely, because again the customer expectation is not going to be reduced. It’s going to, actually, they’re going to expect a much more smoother solution they gonna expect that digital solution, self services, things that work, things that happen much more quicker. So the expectation is going to be much more higher, and I believe, the bank has to follow that, how will they are able to rapidly change their services to what their customers need.

Christoffer:
Do think this is a space in banking that is going to be.. Let me rephrase it, because it’s a statement rather than a question. I think that this is a space where I think Fintechs can really take over a lot more, because the traditional banks have not really focused on this segment. They haven’t really delivered value there. And the opportunity is huge right like I mean, micro SMEs represents what 50% of world GDP 60-70% of employment, 90% of the business population, and are completely underserved because the solutions that the traditional banks have offered haven’t really catered to them, and if, if the fintechs who are more agile and faster can find the solutions to cater to this population, I think that’s really where the traditional banks are going to be outperformed by the fintechs.

Trung:
That’s why I believe that those banks which is going to be relevant in the future is to look into also partially, right? They acknowledge that this is an area of good at. Why do we partner with Fintechs that so others can basically take that position? So I believe that’s very …

What does the Future of Fintech Look Like?

Christoffer:
Do you think is going to be like, buy up of Fintechs into banks and these fat cats getting bigger and sort of acquiring Fintechs so do you think there’s going to be like a paradigm shift at some point where the Fintech start becoming so big, so big that they actually buyout or outcompete the banks?

Trung:
I think it’s gonna be both. I think it’s gonna be some acquisition of the Fintechs, but there are some Fintechs that is going to beat that but that is not to just, I’ll give you a very cool example right from a Fintech perspective you heard about Cloudera right so they are huge right there market calculator is now, I think was 380 billion.

Christoffer:
Wow. There’s a lot of money and by all pay later, that is…

Trung:
…willing to pay. Yeah market cap right. And if you look at that market cap from Canada and you look into the one of the biggest market Norway to have a market cap of about 300 billion. And that’s a huge, that’s an interesting perspective. How can Fintech get that market cap that is just existing, much more less than one of these traditional banks existing 100 years, right? With all the employees, so for us. So I think there will be something like that. Will be..

Christoffer:
You know the few giants.

Trung:
Will probably not, but there will be some Fintechs that will be interesting.

The Future of the Digital Economy

Christoffer:
Let’s move away from the sort of banking and the future of banks, a little bit and talk about more the future of commerce, the future of the digital economy. What do you think on sort of a global level, and the role of caches or the existence of cash is like in 10 years and when do you think cash might cease to exist, if ever?

Trung:
That’s a good question because, you know, cash has been existing for many years. Right, yeah. And I believe, cash is still gonna exists in the future, probably in some countries, and in some countries that might be a cashless society might be, but there are pros and cons with cash, right, the pros, which I see still in some gift generation is that they don’t want to be in a digital world and get very traceable, what are you spending money on, and some doesn’t want that they like cash right oh yeah.

Christoffer:
Digital currencies to be untraceable. Yeah, there’s always going to be a market for drugs and prostitution, whatever they are of course, if you look at some of the advanced Scandinavian markets now where you know cash transactions are less than 10% of all transactions, it’s, it’s generally for stuff that you don’t want to be taxed or that isn’t legal right that the use case for cash.

Trung:
It’s still going to be that type of market. But I believe that some countries might go into a social, you know, an hour cashless society. I believe some countries might still have that cash as an option.

Christoffer:
And do you think a central bank would support that the cash it generates is primarily a tool that is used for legal activities?

Trung:
I’m not sure. I think, like I said, the role of the central bank is going to be very interesting, moving into the future, right, right.

Christoffer:
What is the role of a central bank 50 years from our generation from now?

Trung:
Yeah, they, the forces that can change is, of course, how rapidly you get the central bank goal is changing the market. Because you need to have a new knowledge, to get cyber security right to get there. When you have digital assets you have a lot of data of how you work with our state authorities within GDPR…

Christoffer:
And as people get less reliant on on cash and the transactions are purely digital, There is a lots of reliance to adhere to your local currency and you’re doing additional transactions in foreign currencies or in digital currencies, which are not controlled by central banks I mean, they, how are they going to have influence by setting the interest rates and?

Digital Euro

Trung:
It is an interesting perspective on that. And I know the European Central Bank is experimenting, experimenting with a digital Euro.

Christoffer:
Okay, I did not know

Trung:
I think they are looking at I think that’s from last year actually, and how that will impact and scenarios, they’re trying to define, which I think is interesting, right, because then you go into a digital currency which you are talking about.

So, definitely the role is gonna change, but I think that it’s gonna be related to a topic which I’ve talked about which is like, you still need to have the data to have a much more bigger has a central bank role in there, right, also how do you increase your competence in central bank. When it comes all these changes with digital currencies, You talk about blockchain you talk about, AI and things like that. And I think, the way they have to think is like and how do they change quickly around to create an environment

Christoffer:
That can maintain their relevance,

Trung:
Right, in that world where things are changing very quickly. So, yeah, it will still be very interesting.

More Hills to Climb

Christoffer:
It’s an exciting time, that’s for sure. Yes, let’s let’s zoom a little back in less lesson to the future, your, you have a very strong product background your your product person. What do you think are like the main hills to climb or fights to fight in product development in the Fintech services that are aimed at SMEs. Now, what are like your pet peeves, what are the things you see that like – how come this hasn’t been solved or this hasn’t been done better?

Trung:
It’s a good question, I think, I think, again, you know, you have to look come up from a customer perspective, and try to solve

Christoffer:
That in itself right there’s something that’s almost religious. Think about the customer.

Trung:
Yes, but you know I talk about this a lot. I met a few startup companies, a few FinTechs and that so cool to talk about the technology, Experiment with the AI, and that’s cool but how do you actually try to solve a problem?

Christoffer:
How is this good for the customer, what is the benefit?

Trung:
And also, how do we commercialise this? How about all these things. And when I talk about customer experience people laugh, of course you have to think about customer experience but I still meet a lot of startups, which is not, right? Yes, I have to repeat that all the time because that’s where a starting point is very important.

Christoffer:
I’ve seen that in a few starts up as well that you’re thinking about the customer experience, but you’re not involving any customers, right, you’re making a lot of assumptions about what you think the customer wants, but this this customer focus also means actually involving the customer in your in your product design and your product delivery. Right?

Trung:
Right. Also, think about products that it’s a scalable, are you solving a problem for just a few people or is actually a very big marketplace problem, and things like that, I think it’s going to be important to ask yourself.

Christoffer:

Where do you stand on that, on the sort of prioritisation between solving a little problem for a million people or a big problem for 400 people liked it, it’s the old saying, is it better to get the product that a million people like our product that 1000 people love, right? Where do you stand on sort of, obviously, the basis of a million people love your product but in your development where do you focus on your MVP, do you tried to get the really hardcore users to love your product you do sacrifice that in exchange for higher utilisation rates and more adoption?

Trung:
Right, I think, from a corporate perspective I think it’s important to the last point which you’re referring to number. Millions adoption but get some MVP out that it actually gives you the feedback that this is something customer willing to pay for and this is really solving a problem for it, and then add on that. When you test more because it’s very differently product development experience, that out of mine experience versus business, the corporate test very differently from the retail and consumer because then you’re so used to, let’s test this with 100,000. Let’s test it with a million to get feedback. But I believe you’ll get a few big customer in the corporate segment in a really solid problem. A lot of corporate in that era will eventually joining.

Christoffer:
It is a different type of problem solving.

Trung:
So I think it’s important to have that knowledge, because it’s your, your, could get very blind saying that, well let’s solve this for a million, right, which is not necessarily the truth, and also that when it comes to corporate that if you even don’t have solving it 400 or 1000 and it’s a scalable, you actually really the finding that you’re solving for many, many, many corporates.

Christoffer:
I think that’s a good closing line. Do you have any, any final words before we close it off? I think we’ve covered a lot about the future there which I thought was exciting in SME segments, any, any final remarks?

Trung:
Think it’s, you know, my final remarks is that I believe in you know, innovation and encouraging intrapreneurship and fintechs and hope we get more of that. And of course the end of the day is giving a customer, the better experience that’s the end of the day, right, you do that you will succeed. Right, that’s my.

Christoffer:
Wise words there. Thank you guys for watching thank you so much for for joining, joining me here today. I will be back shortly with another episode where we go more into the nitty gritty of the FinTech world for you fellow nerds out there that think this is interesting. Thank you so much. Thank you. Cheers and bye.

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