#33 – RegTalks with Oli Platt, NayaOne

Episode Notes

Join Know Your Customer’s CEO Claus Christensen for a lively discussion with NayaOne’s Oli Platt, where they explore:

• The most common reasons why Fintech and digital transformation POCs tend to fail
• How the success of ChatGPT is changing the way we think and talk about AI in general
• How the FCA’s permanent digital inbox is actively driving innovation across financial services in the UK

Oli Platt is a data-driven product manager with a background in data science. Currently, he’s leading NayaOne’s marketplace, where he collaborates with high-quality fintechs and works with leading financial institutions to support their innovation journey through Naya-One’s digital transformation platform.

RegTalks is a podcast produced by Margherita Maspero for Know Your Customer.

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Episode Transcript

Claus: Welcome to RegTalks, a podcast dedicated to the latest trends from the world of RegTech, Fintech and financial regulations. My name is Claus Christensen and I’m the CEO and Co-founder of award-winning RegTech provider Know Your Customer. Today it’s my great pleasure to welcome Oli Platt as my guest.

Oli is a data-driven product manager with a background in data science. Currently, he’s leading NayaOne’s marketplace, where he collaborates with high-quality fintechs and works with leading financial institutions to support their innovation journey through NayaOne’s digital transformation platform. Oli, thanks so much for joining us today.

Oli: Thanks Claus, thanks for having me. Looking forward to it.

Claus: Great. To get started, can you give us an overview of NayaOne’s overall mission and how you have set out to achieve it?

Oli: For those who haven’t heard of NayaOne before… In essence, we’re a digital transformation platform, typically helping out large financial organisations, such as large banks, insurers, asset managers. What we’re doing there is really helping them evaluate Fintech, Insurtech, RegTech better, really bringing that ecosystem together. So the way we end up achieving this goal is ultimately by having these secure environments in which the banks can actually start to test and start to play in, effectively, so that they can say: “Oh, I’ve got a big KYB problem, but I don’t know who the best provider is to help me out and I want to start testing, I don’t want to go through procurement to find out who’s going to integrate with my existing system”. So, in that circumstance, we provide secure environments they can leverage, alongside the marketplace, which is where I spend a lot of my time working with tech providers.

Claus: When I looked at your website first, I picked up on the term “embedded finance”, that’s big there, and “Fintech”. As insiders, we tend to use these terms a lot, but we’ve also seen shifts in the meaning of the terms. For example, I would have called our own company financial technology or Fintech in 2016, or 2017, before the term RegTech was coined and Fintech actually went on a bit to mean something else. How would you define “Fintech” at the moment in your world, and maybe embedded finance?

Oli: When I say “Fintech”, I probably really mean technology, RegTech, Insurtech, all of the types of tech that ultimately a bank may use. So, if you think about generative AI, which has to come up at some point in the current conversation, even some of those applications I would probably semi-refer to as Fintech in certain circumstances, when they’re working with financial services.

Claus: The first thing that comes to my mind when I think about what you do is that there must be gaps between what your customers think and what you think… so, in your experience, what are some of the biggest gaps between the expectations of banks and financial institutions and what Fintech and RegTech providers are able actually to provide?

Oli: I would say that the expectation difference almost changes depending on who’s approached whom. Being in the world of Fintech and RegTech, obviously, we know that you’re often going into banks or financial institutions and trying to sell. Now, when it’s that way round, I think there’s this common expectation mismatch, particularly in a world pre-us, where the salesperson may be overselling slightly and then the bank is not quite getting necessarily what they’re after. I’m not going to say that anyone’s at fault, it’s somewhat the nature of the game, but the Fintech is maybe over-promising slightly and under-delivering. I would almost say that this flips on its head when it’s actually the bank approaching the Fintech. Me, as the bank, I have a problem that I want to solve in digital onboarding… I’ll keep referring to this as an easy one we can all understand. But when they do that, then the mismatch isn’t that the bank isn’t adventurous enough or excitable enough… They’ll come in and go: “Oh, do you solve this very, very narrow set of KPIs? This is my exact problem. Do you solve it?”. In that case, the failure is to not understand that when you’re working with a new, innovative fintech, they’re a little bit more of a partner to some degree, they probably have capabilities you haven’t considered. Trying to take those outside of this small business unit you’re serving and seeing how they help other arms of the business becomes really interesting as well. So, on one side, it’s possible – when a Fintech is selling slightly too hard – that the expectation mismatch is understanding when the tech maybe isn’t quite at its full end state yet. And on the other side, it’s whether you’re going where the tech has grown, maybe in ways you wouldn’t expect it to, and it all comes down to: how is the tech set up?

Claus: We see both actually in our own case. Customers might shoot too low, just want a very narrow problem solved that doesn’t actually move much. But we also see the other side where expectations are incredibly high: “Can you not just solve this whole big thorny issue with all these little facts in it…?”. But I think this is normal in a fast-developing industry like ours, the gaps between expectations and what we can actually deliver would widen at this stage a bit when the fantasy of the users runs ahead of what they can actually do until everybody gains a deeper understanding. Or, well, maybe until technology catches up with the imagination. That is where we can plug in generative AI immediately. I would say ChatGPT just closed a gap of half a century between sci-fi movies in the 60s, how you would interact with technology there, and today, when you can actually do just that.

Oli: You’re definitely right there. And in some ways, it’s awesome to see tech jumping this far. Then, on the other hand, it almost does damage to the service you’re talking about in that if banks are viewing your stuff and going: “Oh, can you not solve all of my problems in one fell swoop?”. Well, then something like ChatGPT possibly hasn’t helped because of the vast capabilities of something like large language models.

Claus: Yeah, well, from the sci-fi world, let’s go back to Earth a bit. We both work essentially on digital transformations in the financial industry and a lot of times these work in phases, starting for example with a proof of concept and not all the time these are successful. What do you see as the most common reasons why Fintech and digital transformation POC tend to fail?

Oli: In the pre-NayaOne world, which I’ve seen a bit of, and also the kind of post-NayaOne world… Maybe I’ll get into both of them because I think it’s quite interesting to see why companies succeed and don’t succeed on both sides of that world map. In the pre-NayaOne world, some of the typical reasons why we see them not necessarily working out are when people weren’t really sure what they were assessing. They wanted to look at some tech, they vaguely knew the area it was in, but they weren’t really agreeing that these were success metrics. Things weren’t necessarily always done in the best way. But then there’s also starting to be the inability to showcase tech out in its best way and actually bring in all the stakeholders within the banks. There are so many different parties who need to say: “Yes, this is a great idea!”, from procurement, and security teams, through to the people who are actually going to be using the tech, through to potentially, in some circumstances, even customers on the other side. You’ve got all of these different stakeholders and actually getting them all to agree that this is a great idea can be really tough. And bringing them all to the table and showing them all how great it is can be really tough. Now when we flip that and go, OK, so in the world where we actually work, once we’ve moved into this place, there is one really common request we get from financial customers: “We’ve been speaking to such and such. They’re not in your marketplace yet. Could you bring them on for us?”

Oli: And our answer is always: “Absolutely, that doesn’t take us very long. That’s a couple of days of work, no issue”. What then typically happens is we turn around to the Fintech and go: “Guys, this big bank you’ve been talking to for the last two months is really excited to test you, congratulations! And we’re going to make that happen at the start of next week”. And then what often happens is the Fintech goes: “Ohh I thought this was going to be another four, five months, I’m not yet ready”. Proofs of concept go really, really successfully for tech that is ready. And for those who maybe aren’t quite yet at that point, it tails away really hard, but at least there is this cool scenario where companies like yourselves that are on the marketplace, and I hope that you and others see it in a similar way, almost see it as a badge of a job well done, a sign of tech being ready. Because we know that if the tech is on that marketplace, the tech is ready to go. There is no question of: “Could you make this happen?”. The answer is ultimately yes. That tech is already.

Claus: I see great value in that, actually. A lot of our clients would have their doubts about all the different vendors out there. What stage are they in? Yes, they are innovative, they’re new, they have great ideas. But are they ready? Can we contract with them right away and do stuff? Will they be there? That trust factor… Having an independent party like yourselves in there in the mix as a sign of confidence: “Yes, they are here. You can immediately trial them. This is not a concept”. That is indeed valuable for our common clients.

In what areas of financial services are you currently seeing the most interesting and transformative Fintech and Regtech applications? Is it B2B payments, is it SME lending, embedded finance… where is stuff happening at the moment?

Oli: We sit in this really cool spot where we see all the weird, wonderful, and awesome ideas start to take fruition. But if we have to really start to narrow it down as to what’s exciting, right now for a lot of our customers, that’s anything that engages customers, both SMBs or retail customers, and really brings them through that front door and gets them on board and keeps them engaged and keeps them going and ultimately drives them to use the bank more… So that’s loans, for example… how can we turn our existing customer base into more revenue? How can we improve that, the P&L, is really where we’re seeing the excitement. Anything on that side is super exciting. But I’d probably also be remiss not to mention the other particularly interesting thing we’re seeing a lot of right now, which is GAI just spread across the bank.

If we go back to even the customer engagement piece, obviously the nature of Generative AI is they hallucinate, they do slightly weird things and financial institutions aren’t 100% sure necessarily how much they can use them, where their risk appetite lies, how they view those types of models.

Now, we see that a lot with inside of our physical environments we provide because actually it gives these financial institutions a way to go: “OK, if we wanted to create a chat bot to enable on boarding, let’s have a look what that would look like, how much work would it be? Are there models out there? Are there companies out there that we could leverage? Could we build our own?”, all ultimately without risking anything on the bank side. Claus, this is an awesome question and I could spend hours and hours going on but, as a summary, it would be anything that ultimately gains and retains customers you’ve spent all that hard marketing money to get and then GAI just across anything you can think of because it seems to really be able to move the lever.

Claus: Yeah, the whole Generative AI discussion is so universal now. We’ve all tried it. We all have open AI accounts and in a couple of months, we’ll all have Microsoft Co-Pilot. So it’s so visible at the moment. At the same time, that also means that customer expectations in that area are furthest from what you can actually do safely in the financial space. We have actually been very careful not to talk too much about our own AI usage.

Now, generative AI is a thing there, but we’ve used general AI models in our software for a long time. We’ve always kept that very, very controlled. It’s very specific jobs that are done, not “Well, I’ll just replace my Head of Compliance with an AI model and let them onboard the customer”. No, you cannot. That’s not how it works, but can you let the AI decide very specific parts of the journey? Yes, there’s a huge potential there. And can you have a more human model of communication with the machines? Yeah.

Oli: And are you seeing a bit of a shift to what you can talk about now? Are you finding that you can talk about AI more or are you still kind of careful with how you use the term, particularly in the RegTech space, I guess?

Claus: We haven’t actually made a big switch, but yes, I personally believe that we can now because it’s so universal now.

If you think about it, what are the key drivers for banks and financial institutions looking to provide better customer experience? Because customer experience is what digital transformation really centres around, but what drives this? Is it the fear of being left behind by the more digital-minded new players or is it a different reason?

Oli: It exactly comes down to that, right? In the UK, you’ve got your neo-banks; in the US, you’ve got even the likes of Apple who are starting to play in these spaces. Typically they’re all going after younger-ish people who have decent livelihoods and have needs to open new bank accounts, or going after SMBs. Those individuals and those businesses are used to being able to do things quickly. So, for me where the fear almost comes in, or I think fear is maybe the wrong word, but the motivation to actually enable fast seamless customer experience, quick onboarding comes from this idea that people are used to that. Not doing that is no longer an option… if you are going to be slow, well, then, frankly people are just going to go down the street. You’ll have spent all this hard money to get people to click on, to download your app, to click on your website. The customer acquisition cost is a notable thing, right? And then to lose them at that point because you didn’t have some features that others had or you were too slow to on board just isn’t really an option.

Claus: I very much agree. But here’s the funny thing. I was actually a bit surprised about our own customers. Now, we’re in the B2B space more than anything. We do business entity customer onboarding, not so much IDV, but in my estimates only about half come to us for a better customer experience. The others want a better process or risk reduction in compliance. I guess in the end, in B2B situations, customer experience is just a bit behind the curve of B2C and I don’t think that’s quite right because businesses are made up out of individuals and as individuals we want the same smooth digital experience as in our B2C dealings when we use personal Fintech apps. That should be the same in B2B. I think there’s a big opportunity still there in my opinion.

Oli: Yeah, and I don’t know if you’ve tried recently, but let’s see you take a large incumbent bank and you try to on board with the bank. It’s not a straightforward process and that’s assuming that you are probably from the same country for the bank account that you’re applying for, for a business that is set up in that country. The second you start to add any level of complexity to that, suddenly that becomes incredibly hard, right? And there are good reasons to keep your risk down, to make sure you’re doing this right. Ultimately the key goal is to keep the risk low, if anything, decrease the risk, while increasing your speed.

Claus: And it isn’t yet. That is exactly our point here. A year ago, I’d say, we onboarded with a UK bank. It is a UK bank where we already have an account with their Irish subsidiary and we onboarded a new company, yes, our UK subsidiary. And there is a bit of complexity we do have  3 levels of ownership in there. As a corporate structure, we have other subsidiaries in Singapore, for example, and in Ireland. It took 182 days. Literally six months of ping pong, of documents by e-mail and all of that… it was a horrible process. So, yeah, lots to do. We’ll get there.

Earlier this year, I’ve heard you announced a partnership with the FCA in the UK with the objective of providing a permanent digital sandbox. That’s huge. Congrats on that. Can you tell us a bit more about the project and how it contributes to innovation in the industry?

Oli: First of all, thank you. But yeah, the FCA in this circumstance is doing quite an awesome job of trying to be this digital first, very innovative, very active regulator. So the fact that they’re even at this level of thinking, I think is quite astounding for a regulator, frankly.

But yeah, just going back to what this means. Ultimately with the FCA, the permanent digital sandbox is a place which goes like this: when companies start to exist or you’ve got early-stage or growing companies, one of the critical things they often need is either data or they need to be able to gain access to APIs of companies and they maybe don’t know the best ones to leverage. They maybe need a payment solution, they maybe need to offer IDV. You need to start to grab some of these tools that you probably wouldn’t have access to for a few years into your growth without a tool like the FCA digital sandbox, which actually allows you to get potentially real and anonymised transaction data from banks, it allows you to get synthetic data. It allows you to get data that these partners have provided to them. But really the key here is just to allow the whole of the financial industry to innovate faster and help grow the UK as an innovation hub, as a digital transformation Mecca, for lack of a better word.

Claus: Good job, actually, yeah. We’ve all seen what the regulator’s approach meant for the whole industry, as in the new term fintech, as in challenger banks and so on. That is quite amazing what came out of the UK. And I think it’s great for that market. You can now see some of those companies taking advantage in other regions and other markets, like European markets, and continue to grow. Well done.

Oli: Particularly on the FCA, what’s cool is they’ve not started to limit themselves to Neo-banks or things like that. It’s a very progressive thing, right? They don’t necessarily quite know what the next big tech is, obviously right now it’s generative AI and everything related to that obviously is really exciting, but the next thing could be quantum. So, part of this and the reason it’s so influential and powerful to a regulator is they can now see: OK, Fintechs are starting to create quantum-based solutions that are going to be probably with banks not for another year or two years. But at that point, they are going to be, and they’ve got this kind of jump start on the whole of the market going: “OK, we’ve watched these companies grow over the last two years, we can now create policies very easily or very well informed that are going to protect the people we ultimately need to protect while also not hampering these companies we’ve been growing with.

00:18:45 Claus

About quantum, by the way, as you might have seen, LK 99 doesn’t seem to be a room-temperature superconductor anymore. Very, very sad about that…

Oli: Yeah, it’s incredibly sad, right?

Claus: Alright, Oli, this has been fun already, but I have one more question. If tomorrow you woke up and somehow you had become the global financial regulator, what would be the first thing you’d do and why?

Oli: The obvious thing I would do is make sandboxes a regulatory requirement for all other regulators to have. But I’m going to accept that maybe this is a slightly biased answer in this case, so I would say, besides that, which I do think is a good idea, I think really what would be fantastic is it’s not necessarily a full policy, but starting to enable different regulators within the same countries and different regulators across countries to talk slightly more effectively and create policies together slightly more effectively.

And the reason for this cross-vertical, international need for policies is becoming ever more apparent, right? With generative AI, we’ve talked plenty about that already today, it hits so many different areas. It’s really quite hard to understand who needs to police that, who has that responsibility. But there are other technology types that hit the same thing. You’ve got the quantum we briefly touched on. You’ve got the whole of the blockchain, digital assets’ space, which whilst may have gone quiet slightly at the moment in the big banking world, it’s very real and unless they can come across and unilaterally start to agree on things, it’s incredibly hard to police.

So if I am a global regulator tomorrow and I have some say and have some ability to do it, I think starting to connect across those regulators, both within individual jurisdictions and across jurisdictions, is really right.

Claus: Right. Well, Oli, this has been fun. Thanks so much for all your contributions. That was very interesting and hope to see you soon in person when I’m next in the UK.

Oli: Yeah, looking forward to seeing you, and thank you for having me on.

Claus: Thank you for listening to this episode of RegTalks. My name is Claus Christensen and I’m the CEO and Co-founder of award-winning RegTech provider Know Your Customer.

 

If you liked this episode and you’re interested in the global Fintech and RegTech space, make sure to check out our past interviews. We now have more than 30 episodes in our series. RegTalks is available on Spotify, Apple Podcasts, Google Podcasts and at knowyourcustomer.com/regtalks. If you have any questions or suggestions for future guests, please e-mail us at info@knowyourcustomer.com. Thanks again and hope you enjoy the rest of the week. It’s been a blast.