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The second of three episodes recorded at Fintech Talents, that we produced in partnership with Andaria, experts in scalable embedded finance solutions.
The event took place at The Brewery, London in November where we recorded a series of interviews from Andaria’s booth with a number of the speakers and attendees. Our guests for this episode were:
1/ Briony Krikorian-Slade, Payments, Innovation and Resilience, UK Finance
2/ Surash Patel, VP EMEA, TeleSign
3/ Kurt Azzopardi, CTO, Andaria
4/ Valentina Kristensen, Director, Growth and Communications, OakNorth
5/ Victor Mithouard, VP of Growth, Numeral
6/ Dastan Shukanyev, Senior Payments Technology and Strategy, Marks and Spencer
Briony Krikorian-Slade, Payments, Innovation and Resilience, UK Finance
Briony began by talking about the session she chaired around digital identity, which included guests from IDVerse, Lloyds and Glovo, a delivery app business which is active in 25 countries. They discussed use cases for digital ID such as anti-money laundering and know your customer purposes, onboarding customers, fraud monitoring and compliance. They discussed what the future might look like and how digital ID can be a key enabler for open banking and open finance, where you need a single source of digital ID. The panel also looked at how digital ID can help to promote financial inclusion.
Briony talked about how the UK compared to other countries in the uptake of digital ID. India, for example, has seen a huge uptake of their UPI instant payment system, whereas the UK is a long way from having a centralized digital ID – it has one ID for public services and a separate market for commercial ID, with about 40 commercial providers.
Briony explained that UK Finance primarily represents banking and fintech and financial services and a lot of their members are starting to embed with an individual commercial provider. But what their members really want is an interoperable system so they are not limited to one partner. She said that everyone on the panel was keen on seeing the Department for Science, Innovation and Technology pushing forward use cases that would promote a reusable ID.
Briony then moved on to speak about the second panel she chaired around buy now, pay later (BNPL). She sees different BNPL models for different sectors. She went on to speak about how BNPL interacts with embedded finance and made the distinction that BNPL is basically deferred credit, whereas embedded finance just means you don’t see the provider behind the retailer. Some retailers like Samsung are combining both and customers love it. Some on the panel even suggested that there are clearer repayment terms around BNPL than there are, for example, behind credit cards. Briony believes it is important to keep an eye on this area as it’s still primarily an unregulated sector.
Briony finished by talking about the Future Payments review. Joe Garner, former CEO of Nationwide, was asked to do this review by the Chancellor in the summer. UK Finance have submitted a very extensive data evidence based on the consumer payments that are happening in the moment in the UK and how well they are provided for. They identified that central bank, digital currency and new payments architecture, which are two major infrastructure pieces that are going to be built over the next 5 to 10 years, will cost something like £10 – 20 billion for the payments sector. Briony wants there to be a focus on how open banking is expedited.
Surash Patel, VP, EMEA, TeleSign
Surash started with an introduction to Telesign. Telesign connects, protects and defends people in the digital world. They work with organizations to help them identify issues when it comes to onboarding and account takeover, when it comes to detecting fraudulent access on their platforms. They have over 2000 data signals from their continuous trust authority, andthey utilize those data signals and phone number signals from over 60 operators to come up with these risk indicators for brands to use.
He then spoke about the AI and digital ID panel, which covered the application of machine learning to fraud, and one of the big issues that came up was how brands are finding it difficult to onboard customers. Telesign can provide risk signals in real time so brands can onboard the right customers and detect the bad actors.
Surah went on to talk about the threat posed by account takeover, which they’ve seen rise by over 300% in the last 2 or 3 years. The main reason for that is because there have been so many data breaches. You can buy someone’s profile for as little as $0.90 which makes it rife for account takeover.
The key to combatting this, according to Surash, is to use these real time signal so you know the person you onboarded is still the same person. This could be when someone wants to change their email address and you need to ensure that there hasn’t been a SIM swap.
Surah finished by talking about Telesign’s consumer trust index survey and the key finding was that 25% of those surveyed wanted to know they were protected during the onboarding process to a company. Telesign can ensure this protection.
Kurt Azzopardi, CTO, Andaria
Kurt spoke about how he and the team developed Andaria’s embedded finance solution. They began by focusing on automation not only for their clients, but also in-house products for the key members of the team. It was then a natural evolution to embedded finance as a product – starting with the technology and framework to serve their own internal stakeholders and then build another layer to serve clients.
Kurt talked about how he sees the next big thing in embedded finance being productization. He wants to develop their offering to other applications, whether that’s buy now, pay later or an ecosystem creating a closed loop network.
Over the next 12 months, his focus is to productize what they develop. What makes this easier is that success for internal stakeholders within Andaria is likely to be the same as it is for their clients. Andaria are also looking at enhancing their card offering within the embedded finance space and at ways they can incorporate AI into their mainstream product.
Valentina Kristensen, Director, Growth and Communications, OakNorth
Valentina spoke about the panel she featured on called, ‘The Fight to Keep the Crown,’ which was about whether the UK could maintain its crown when it comes to being a global fintech leader. Valentina said the UK was a great place for fintech businesses to be born and thrive due to a number of factors: a forward-thinking regulator; some of the world’s best universities, which produce some of the best talent; a diverse investor network; the benefit of being in a great location to do business with the US and the Far East. What’s more London, as well as being a global financial centre, has all these things in a very small area. This is not something that Paris, Amsterdam, Berlin, New York or California could easily replicate.
Valentina thinks that in the short-term the UK can keep its crown, but there is more of a question mark over the medium to long-term. When these fintechs have reached a certain scale and maturity, the question is where they go next with the options being listing in the UK or the US. The UK needs more growth investors to attract fintechs to list here. If they go to the US, the UK will lose its crown.
Reform is needed to prevent this. Valentina wants to see the London Stock Exchange become a more attractive listing location for high growth companies. To demonstrate this, she talked about the Nasdaq which has predominantly tech stocks, the New York Stock Exchange which has about 30% tech stocks, compared to the UK which has only 3% tech stocks.
Valentina spoke about OakNorth and the launch of its business banking offering. OakNorth launched in 2015, with a focus on commercial lending and targeting businesses with between 1 million to 100 million turnover that needed capital to scale. They found that 85% of businesses bank with one of the big five banks, with all the pain points that brings. OakNorth have identified what they call the ‘missing middle’ of business who aren’t having their banking needs met. They feel they are the right player to help these businesses.
Victor Mithouard, VP of Growth, Numeral
Victor spoke about how Numeral is a payment infrastructure company. They help fintechs, banks and any regulated financial institutions build pan European payment flows. They take away the complexity of building one on one bank integrations. They take away the complexity of building custom payment flows and make them resilient and scalable on top of the payment infrastructure across Europe.
Victor said that opening an office in London last year was one of the most exciting things that Numeral had done. He was amazed by the sheer number of fintechs and innovators that have sprung on the back of a regulation in payments 10 years ago. He sees a lot of very innovative companies accessing the different UK payment schemes such as BACS, FPS and CHAPS. Numeral works with these businesses as they look to mature and expand.
Victor spoke about the acceleration of payments as one of the key trends, driven by regulation and new payment systems. He thinks this will create exciting new business models and accelerate embedded finance trends. He sees the financialization of business models as another opportunity.
He went to say that he thinks that ultimately every company is going to become a finance company. The number of payments is expected to grow by three times over the next five years, the fastest it’s ever grown in terms of number. Companies need the right payment infrastructure to take advantage.
Victor finished by talking about his priorities at Numeral which is, primarily, to serve their UK customers, working with fintechs to help with payment solutions and scaling their payment operations across Europe. He then said they also want to support building societies, which create a lot of opportunities through their lending operations, but they have a lot of modernization challenges when it comes to payments. Numeral can help them do that without the complexity and the cost.
Dastan Shukanyev, Senior Payments Technology and Strategy, Marks and Spencer
Dastan started by talking about the opportunities that embedded finance presents for Marks and Spencer. He sees a trend of people moving away from traditional banking into omnichannel financing options, which is BNPLs or in-house closed loop. They’ve introduced Sparks Pay at Marks & Spencer but they are keen to discover new options.
He thinks that these could open up new revenue streams for M&S. As a company you can miss out because of people’s profiles, backgrounds and then how they want to pay for their goods and services. Agility is key, especially when it comes to company decision making,
Dastan spoke about Apple as being a good example of a safe, secure, frictionless platform. They don’t hold any regulatory or any liability, but they provide a very secure gateway. He sees this as the template for any e-commerce platform. He sees a lot of possibilities going forward with the introduction of AI and GenAI.
Dastan commented on how fraud is getting creative and becoming more humane. Fraud is becoming a lifestyle choice as you can buy fraud instruments and identity details from the black market and become a fraudster. It’s now a life earning stream for many people.
To combat the fraudsters, he commented that robust fraud rules are needed, as well as introducing strong customer authentication flows and embedding AI fraud mechanisms.
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