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From Europe to the US: Cultural and Market Nuances in FinTech · Leaders in Lending

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  Speaker 1: You're listening to Leaders in Lending from Upstart, a podcast
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  Speaker 1: dedicated to helping consumer lenders grow their programs and improve
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  Speaker 1: their product offerings. Each week, here decision makers in the
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  Speaker 1: finance industry offer insights into the future of the lending industry,
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  Speaker 1: best practices around digital transformation, and more. Let's get into
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  Speaker 1: the show.
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  Speaker 2: Welcome to Leaders in Lending. I'm your host at Walters.
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  Speaker 2: For this episode, I had the pleasure to sit down
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  Speaker 2: with Simon Darcis, head of Partnerships at Finwise Bank. Growing
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  Speaker 2: up in France. Simon shares his perspectives on the difference
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  Speaker 2: in financial services between Europe and the United States. In addition,
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  Speaker 2: he goes into depth on how he approaches selecting and
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  Speaker 2: managing fintech partnerships in today's regulatory environment. I hope you
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  Speaker 2: enjoy his perspective. Now let's jump into the episode. Welcome everyone.
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  Speaker 2: I'm here today with Sarmon Darcis, head of Partnerships Finwise Bank. Simon.
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  Speaker 3: Hello, Hey, Ed, how are you.
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  Speaker 2: I'm doing great? Thank you for joining me today.
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  Speaker 3: Yeah, thank you for having me great.
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  Speaker 2: So, you know, the first question that we always like
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  Speaker 2: to ask on these podcasts is really folks journey and
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  Speaker 2: financial services, you know, so as we'll talk about your
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  Speaker 2: role here in a second, but that's Can we start
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  Speaker 2: kind of with you giving a summary of your journey
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  Speaker 2: in financial services and what got you to the had
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  Speaker 2: a partnership role of Finwise.
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  Speaker 3: Yeah.
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  Speaker 4: Absolutely, I mean my journey in financial services was somewhat
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  Speaker 4: of an accident, if I'm being perfectly honest. I was
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  Speaker 4: born and raised in Friends. I decided to move to
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  Speaker 4: Canada when I was sixteen. The reason why I did
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  Speaker 4: that is that I really wanted to become a doctor,
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  Speaker 4: and I figured that if you finished high school in Quebec,
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  Speaker 4: you could go straight into med school right after high school.
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  Speaker 4: You didn't have to get a bachelor's degree. So that's
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  Speaker 4: what I did. Finish high school in Montreal. Ended up
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  Speaker 4: getting into the medical program that I wanted, and I really, really,
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  Speaker 4: really hated it. I was miserable for the first semester
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  Speaker 4: of med school. Hated the way it was tough. I
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  Speaker 4: felt like I just had to learn everything by heart,
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  Speaker 4: didn't have to use my brain. So I kind of
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  Speaker 4: had to set down and figure out what it was
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  Speaker 4: that I wanted to do for the rest of my life,
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  Speaker 4: which is a really tough question to ask a seventeen
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  Speaker 4: year old that's thirty five hundred miles away from his family.
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  Speaker 3: So kind of figured that.
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  Speaker 4: I was always a geek, always really into technology, always
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  Speaker 4: loved to learn about the economy and global policies and
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  Speaker 4: how it affected the lives of citizens. So economics made
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  Speaker 4: a little bit of sense. And then what's economics without
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  Speaker 4: financial services? So that's how I kind of decided to
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  Speaker 4: study comside finance and economics because I decided not to
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  Speaker 4: make it easy for myself whatsoever did that and you know,
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  Speaker 4: my summer of freshman year it came about really wanted
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  Speaker 4: an internship. Didn't feel like doing nothing over the summer.
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  Speaker 4: So I ended up getting a summer internship at a
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  Speaker 4: bank that no one had ever heard of, that was
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  Speaker 4: based in New Jersey, in the suburbs of New York
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  Speaker 4: that now became an industry name, and that's Cross River, right.
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  Speaker 4: So spend the summer there, learned about peer to peer
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  Speaker 4: lending because that's what it was called at the time, right,
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  Speaker 4: marketplace lending was in terminology that we're using. Spend the
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  Speaker 4: summer doing that, and you know, at the end of
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  Speaker 4: the internship, I kind of went up to the CEO.
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  Speaker 4: It was like, Hey, now that I've started working, kind
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  Speaker 4: of want to keep working. Is there anyone that you
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  Speaker 4: can introduce Metween in Canada where you know I could
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  Speaker 4: keep working for during the school year, And and that's
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  Speaker 4: when he offered to fly me out to New York
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  Speaker 4: every year, every actually every week it was, and every
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  Speaker 4: year it was every week going back and forth between
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  Speaker 4: Montreal and New York. And that's how I became a
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  Speaker 4: full time intern of Cross River and how I saw
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  Speaker 4: the industry pop up.
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  Speaker 3: Right.
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  Speaker 4: We went from marketplace lending or Peter peer lending to
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  Speaker 4: what is known now as marketplace lending with the institutional investors,
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  Speaker 4: to crypto payments, cards, deposit sponsorship. So had a really
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  Speaker 4: really fun time looking at this, looking at this industry,
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  Speaker 4: kind of be born from nothing. Graduated, decided that I
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  Speaker 4: wanted to try the more traditional finance route, so went
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  Speaker 4: to Merrill Lynch for a little bit, and honestly, it
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  Speaker 4: was boring. I'm not gonna lie, you know. You go
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  Speaker 4: from fintech to this multi century old institution and you
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  Speaker 4: kind of feel like you're missing out on the cool stuff.
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  Speaker 4: So quickly went back to fintech and that's when I
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  Speaker 4: joined Finwise. I originally joined Finwise to help stand up
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  Speaker 4: this new business line. I think I was employee number nineteen.
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  Speaker 4: When I joined Finwise, it was a super tiny financial institution.
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  Speaker 4: We I think at the time we had thirteen million
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  Speaker 4: dollars in capital, barely over one hundred million dollars in
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  Speaker 4: originations every year. Now we're one hundred and seventeen million
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  Speaker 4: dollars in capital o our a billion dollars in originations
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  Speaker 4: every quarter, so really sell tremendous growth that at fin
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  Speaker 4: Wise evolved with the company. You know, at first, the
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  Speaker 4: focus was on marketplace lending. We always had this understanding
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  Speaker 4: that we wanted to grow past marketplace standing and start
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  Speaker 4: sponsoring payments and cards. But honestly, MPL was pretty successful,
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  Speaker 4: right and took up a bunch of our time. So
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  Speaker 4: as interest rates sorry to rise, in origination sorry to drop,
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  Speaker 4: we decided to take a beat figure out what it
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  Speaker 4: was that we wanted to do long term in terms
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  Speaker 4: of fintech. And and now we're growing in all directions,
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  Speaker 4: in all fintech directions, So it's it's really fun.
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  Speaker 2: No, that's a great story, and I mean definitely that
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  Speaker 2: willingness to zig zag, you know, starting with you think
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  Speaker 2: you're going to do one thing, and many of us
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  Speaker 2: are in that same spot, right we think we're this
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  Speaker 2: is what we want to do with our career, and
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  Speaker 2: then we get into it, and you know, we pivot
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  Speaker 2: and continue to ride that. You have an interesting person spective,
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  Speaker 2: as you talked about you know, you didn't start in
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  Speaker 2: the States, and so you have some views I would,
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  Speaker 2: I would imagine on the differences of how financial services
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  Speaker 2: work in Europe as it compares to America. Could you
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  Speaker 2: share some of that perspective or some of the differences
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  Speaker 2: that kind of stand out to you that occur.
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  Speaker 3: Yeah, one hundred percent.
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  Speaker 4: And I think most of the differences between the American
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  Speaker 4: market and the European markets stem in cultural differences. We
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  Speaker 4: always think, you know, Europe and America two regions of
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  Speaker 4: the Western world, they're kind of all the same, right, but.
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  Speaker 3: We we live fairly.
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  Speaker 4: Different as it pertains to financial services and money management.
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  Speaker 4: For instance, the American economy is very much driven on debt,
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  Speaker 4: whether it's it's commercial debt or consumer debt. It's a
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  Speaker 4: fun little tidbit. But in Europe we have this stereotype
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  Speaker 4: that for every dollar than an American earns he's going
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  Speaker 4: to spend three. So the difference has to be made
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  Speaker 4: up somewhere. In Europe, you don't have lending as widely available.
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  Speaker 4: Credit cards are very unknown. They exist, but they're not
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  Speaker 4: very much. They're not very much used. Installment loans same thing.
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  Speaker 4: You'll get a personal loan if you want to do
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  Speaker 4: home renovation or if you have extremely large expenditures, but
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  Speaker 4: you're now going to use a personal loan for a
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  Speaker 4: shortfall in budget, you know.
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  Speaker 3: And we're very much.
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  Speaker 4: Taught that at an early age. And I can remember
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  Speaker 4: my parents telling me, never spend more than your earn
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  Speaker 4: and make sure that you're building, you know, a nice
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  Speaker 4: little piggybank. So coming from those cultural differences, FinTechs just
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  Speaker 4: grew in different directions in America and in Europe. And
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  Speaker 4: I think that's why when you look at the fintech industry,
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  Speaker 4: the first sub sector that really popped in America was
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  Speaker 4: a lending space, right, especially that it was right after
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  Speaker 4: two thousand and eight, no one was lending anymore, very
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  Speaker 4: hard to get alone. In Europe, the sector that really
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  Speaker 4: pupped was was neo banks, right. It was transactional tools
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  Speaker 4: like cards. It was almost Venmo like companies right to
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  Speaker 4: facilitate peer to peer payments, but lending didn't take off
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  Speaker 4: and still hasn't. As I said, I think it stems
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  Speaker 4: in the cultural difference. I think it stems also in
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  Speaker 4: a difference of data being available. You know, in the States,
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  Speaker 4: even in Canada, we have the credit bureaus. We can
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  Speaker 4: easily make an assessment of the credit quality of a
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  Speaker 4: customer and all of that on an automated basis. Most
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  Speaker 4: countries in Europe, with the notable exception of Germany and
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  Speaker 4: the UK, don't have credit agencies. So if you're to
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  Speaker 4: apply for a personal loan, you do it at the
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  Speaker 4: branch of your bank that you normally go to, and
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  Speaker 4: you go through manual on the writing. You know, we
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  Speaker 4: are starting to see an effort to create open banking
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  Speaker 4: in Europe that is actually, in some regards a little
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  Speaker 4: bit more successful than it is in Europe because it
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  Speaker 4: is created by defentcial institutions and not by FinTechs. But
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  Speaker 4: that's all you get. It's access to transactional data. You
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  Speaker 4: don't get that holistic view of how a customer may
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  Speaker 4: have performed on their past debts. And also they don't
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  Speaker 4: get a lot of past debts. So you have that
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  Speaker 4: difference and that's why the fintech sector just evolved differently.
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  Speaker 4: And then you also have a difference in terms of
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  Speaker 4: how business or fintech business is done in America and
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  Speaker 4: in Europe. In America, in order for a business to scale,
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  Speaker 4: generally they'll create those famous bank partnerships. Right, it's very
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  Speaker 4: hard for fintech to get a banking license. We've seen
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  Speaker 4: a few, right they've acquired banks, it's gone into nova licenses.
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  Speaker 4: In Europe, you don't have that concept of bank partnerships.
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  Speaker 4: FinTechs very much become banks. There are simplified banking licenses
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  Speaker 4: that are available to FinTechs, or they can get full
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  Speaker 4: service licenses. And the nice thing about Europe is that
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  Speaker 4: it's a conglomerate of countries and if you have a
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  Speaker 4: banking license in one of those countries, you can operate
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  Speaker 4: throughout the European Union. The market definitely took a little
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  Speaker 4: bit of a hit when the UK exited the European Union.
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  Speaker 4: The UK was generally the point of entry for FinTechs
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  Speaker 4: into the EU. Now that has transitioned to Belgium and
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  Speaker 4: a little bit of the Netherlands, but it's very much
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  Speaker 4: still the same concept. They get their own banking licenses.
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  Speaker 2: No very interesting and that and you do I imagine
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  Speaker 2: kind of having that unique perspective just as you're incorporating
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  Speaker 2: kind of some of your I wouldn't say necessary day
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  Speaker 2: to data decisions, but as you're kind of thinking about
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  Speaker 2: the macro and thinking about expansion of just understanding how
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  Speaker 2: financial services works across the globe to bring those insights
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  Speaker 2: and say how you can maybe leverage best price. This
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  Speaker 2: is are things that you think are working other places
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  Speaker 2: that may may be able to apply here, right.
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  Speaker 4: Yeah, no, you're one hundred percent to it, right. Especially
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  Speaker 4: I think the best example of this is payments. You know,
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  Speaker 4: real time payments have always been a thing in Europe,
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  Speaker 4: And when I moved to the States and I was like, wait,
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  Speaker 4: I have to wait how.
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  Speaker 3: Long to send money?
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  Speaker 4: It creates you bring those use cases, right, those things
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  Speaker 4: that you thought you took for granted, you bring those
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  Speaker 4: things to the United States. And when you're in the
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  Speaker 4: position that I am right to looking at fintech strategy
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  Speaker 4: and fintech products on a day to day basis, that
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  Speaker 4: is a good a good baggage to have. It. It's
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  Speaker 4: a good knowledge base to have it. It just brings
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  Speaker 4: a different perspective and allows for maybe a little bit
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  Speaker 4: more creativity as it pertains to product creation.
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  Speaker 2: No good now, thank you for sharing that. Very interesting.
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  Speaker 2: As we transition to your current role, so as the
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  Speaker 2: head of partnerships, can you describe what does the day
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  Speaker 2: to day look like? What does the kind of the
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  Speaker 2: scope of work?
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  Speaker 4: So the day to day is very much split into
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  Speaker 4: two buckets. On one hand, you're very much a firefighter
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  Speaker 4: all day every day. You have to make sure that
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  Speaker 4: everything is running smoothly. You have to make sure that
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  Speaker 4: everyone is happy, particularly your your partners and your regulators.
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  Speaker 4: And you know, I've always somewhat described this roles as
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  Speaker 4: having three main buckets of people that your service. You
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  Speaker 4: have the internal people at the bank because you're you're
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  Speaker 4: the point of contact for everyone, right, internal folks, and
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  Speaker 4: your your partners. You have your partners obviously they're your
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  Speaker 4: bread and butter. They're the ones that are advertising your
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  Speaker 4: products and that are bringing your products to market. And
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  Speaker 4: then you have your regulators. So it's always a little
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  Speaker 4: bit of a juggling act to make sure that everyone
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  Speaker 4: stays happy and stays on the same page. And really
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  Speaker 4: the second part of the role is is very much
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  Speaker 4: focused on strategy, right. It's trying to stay up to
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  Speaker 4: date with the current trends, making sure that the bank
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  Speaker 4: is not falling behind on the next trends, on the
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  Speaker 4: next products that are going to come out, and how
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  Speaker 4: we ensure that we're going to be able to service
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  Speaker 4: or offer those products. So it's a little bit of
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  Speaker 4: everyday management and long term thinking, right, which makes the
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  Speaker 4: job super interesting.
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  Speaker 2: Now, it's never boring, never, So let me I'll pull
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  Speaker 2: on kind of two pieces there. In The first is
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  Speaker 2: you talked about the working with regulators in the regulatory environment.
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  Speaker 2: Can you expand a little more. Obviously, none of these
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  Speaker 2: programs are just set it and forget it, right. There's
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  Speaker 2: constant evolution and regulations as things are happening in the environment.
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  Speaker 2: So as you're working with your fintech partners and then
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  Speaker 2: also managing through the regulatory environment, can you talk about
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  Speaker 2: how you're not only staying current what the requirements are,
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  Speaker 2: but they're making sure that your fintech partners are meeting
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  Speaker 2: up to those expectations.
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  Speaker 3: Yeah.
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  Speaker 4: Absolutely, And I think it's a it's an important question
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  Speaker 4: in the context of what's going on, at least on
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  Speaker 4: the financial on the financial institution side right now, how
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  Speaker 4: do we make sure that we stay clean and that
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  Speaker 4: we run extremely compliant programs. But I do have to
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  Speaker 4: say that the recipe for us hasn't really changed at
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  Speaker 4: the bank. You know, what attracted me to finn Wise
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  Speaker 4: even back then in twenty eighteen, when the business lane
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  Speaker 4: was just getting started, was the fact that compliance was
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  Speaker 4: put first and foremost. We're not a nonprofit, we are
• 14:27
  Speaker 4: a for profit business. So the you know, the revenue
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  Speaker 4: maximization strategy is here. However, it will never come at
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  Speaker 4: the cost of compliance, which I think a lot of
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  Speaker 4: financial institutions, you know, someone missed the mark on. Yes,
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  Speaker 4: there is a ton of business to be had, but
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  Speaker 4: you have to be selected and you have to make
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  Speaker 4: sure that you're getting into the right kind of partnership. So,
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  Speaker 4: you know, yes, when we saw all of these, all
• 14:53
  Speaker 4: of these consent orders, it prompted the question of are
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  Speaker 4: we good with those things? We are we sure that
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  Speaker 4: we're squeaky clean, And I think we somewhat came up,
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  Speaker 4: you know, with the decision that we are. But we're
• 15:05
  Speaker 4: always striving for improvements. We're always putting new processes and
• 15:08
  Speaker 4: new systems in place to make sure that we remain
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  Speaker 4: best in practice as it pertains a compliance. But if
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  Speaker 4: we're being honest, it's always been a little bit challenging
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  Speaker 4: to work with FinTechs. You know, in the context of
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  Speaker 4: bank partnerships, FinTechs are two things to a bank partner.
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  Speaker 4: They are a client, but they're also an extension of
• 15:30
  Speaker 4: the bank. So if they're a client, you strive to
• 15:35
  Speaker 4: maximize your relationship, You strive to maximize revenue, you strive
• 15:39
  Speaker 4: to maximize growth, and you strive to maximize overall happiness.
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  Speaker 4: If you're looking at them as an extension of the bank,
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  Speaker 4: the same principles apply, but you do have more control
• 15:50
  Speaker 4: over them. And I think this is the really critical
• 15:54
  Speaker 4: challenging part of those fintech relationships.
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  Speaker 3: How do you.
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  Speaker 4: Force a platform and I'm saying force, you know, loosely,
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  Speaker 4: but how do you require platforms to adhere to specific
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  Speaker 4: things because of your own risk tolerance when they may
• 16:13
  Speaker 4: not be on the same page. So everything is always
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  Speaker 4: a little bit of negotiations, even you know, as it
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  Speaker 4: pertains compliance, because we may be coming from a different
• 16:22
  Speaker 4: perspective and we have to meet somewhere in the middle.
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  Speaker 4: We have to meet somewhere or where the fintech is happy,
• 16:29
  Speaker 4: growth is maximized and compliance is preserved. And you know,
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  Speaker 4: as I said, it is it is challenging. I mean,
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  Speaker 4: we we are financial institutions. We have stringent requirements that
• 16:39
  Speaker 4: we have to live with and unfortunately those requirements, unfortunately
• 16:43
  Speaker 4: or fortunately those requirements also apply to the financial to
• 16:47
  Speaker 4: the fintech. So how that translates in practice is, you know,
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  Speaker 4: the outer most need for a trust relationship between the
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  Speaker 4: fintech and the bank. The fintech has to trust that
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  Speaker 4: the bank is not going above and beyond for no reason,
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  Speaker 4: and the bank has to trust that the fintech is
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  Speaker 4: doing everything as they've presented. Right, So it's but it
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  Speaker 4: is still a culture of trust.
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  Speaker 3: But verify.
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  Speaker 4: We'll make sure that you know processes are being are
• 17:22
  Speaker 4: being respected through reports, through testing that will get done independently,
• 17:28
  Speaker 4: through audits that are done by third party firms. Will
• 17:34
  Speaker 4: get reports on a weekly basis, on a monthly basis,
• 17:38
  Speaker 4: even on a daily basis for some and you know,
• 17:41
  Speaker 4: as part of those reports and all of this data
• 17:43
  Speaker 4: that we get, we look for indicators that something is
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  Speaker 4: wrong I'll give you an example if as part of
• 17:51
  Speaker 4: your complaints or as part of a fintech complaint, we
• 17:54
  Speaker 4: see that a lot of people are complaining that there's
• 17:56
  Speaker 4: an issue with repaying their loans because the rasing platform
• 18:00
  Speaker 4: is not it's not great, it's not use or friendly.
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  Speaker 4: Most likely, depending on the kind of volume of complaints
• 18:07
  Speaker 4: that you're getting in that area, it is most likely
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  Speaker 4: an area of concern that the bank has to dive into.
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  Speaker 4: So we use all of this data is provided to
• 18:15
  Speaker 4: the fintech to make informed decision and to assess the
• 18:19
  Speaker 4: risk of each partnership. And you know, I'll somewhat wrap
• 18:23
  Speaker 4: up my long answer with an advice for the banks
• 18:26
  Speaker 4: that are looking to get into the space. It looks
• 18:29
  Speaker 4: like an extremely attractive business. You know, at face value,
• 18:33
  Speaker 4: it looks like a business with high profit margins, low
• 18:38
  Speaker 4: op X, very little risk, and that couldn't be further
• 18:42
  Speaker 4: from the truth. I have seen banks that are standing
• 18:45
  Speaker 4: up that kind of program with one compliance person in
• 18:47
  Speaker 4: this environment. It definitely does not work, and it did
• 18:51
  Speaker 4: not work ten years ago. You need to put in
• 18:54
  Speaker 4: the right investment. You need to put in the right
• 18:56
  Speaker 4: to risk control and the right infrastructure to make sure
• 18:59
  Speaker 4: that your fintech is being served correctly, your end user
• 19:03
  Speaker 4: is being served correctly, and that you're staying compliant. And
• 19:07
  Speaker 4: I think a lot of banks right now are missing
• 19:08
  Speaker 4: the mark on this.
• 19:10
  Speaker 2: No, some really good insights as you describe, I mean
• 19:13
  Speaker 2: that kind of what I was listening is that the
• 19:16
  Speaker 2: takeaway on that is, first and foremost, there has to
• 19:19
  Speaker 2: be strong communication with your partners and your regulators, because
• 19:22
  Speaker 2: you're right, making sure is everyone interpreting it the same
• 19:25
  Speaker 2: way as you're describing and having those conversations and how
• 19:28
  Speaker 2: are you discussing? And then the second thing I'm kind
• 19:31
  Speaker 2: of taking away is just making sure that you're investing
• 19:34
  Speaker 2: the resources that if you're going to get into this business,
• 19:38
  Speaker 2: don't understaff it and don't make sure you're setting up
• 19:42
  Speaker 2: with the right amount of resources to manage the risk,
• 19:45
  Speaker 2: assess the risk, and manage the partnership. And then that
• 19:48
  Speaker 2: transit lates I'll see. Then let me go your second
• 19:51
  Speaker 2: point you talked about earlier, as you said, okay, first
• 19:53
  Speaker 2: on the regulatory and then you said there's a strategy component, right,
• 19:56
  Speaker 2: so it's you have to decide all who am I
• 19:58
  Speaker 2: partnering with because of what you just described You've said
• 20:02
  Speaker 2: that there's a lot of work, there's a lot of
• 20:03
  Speaker 2: investment you need to make, there's time so finding the
• 20:07
  Speaker 2: right partner. So how do you go about selecting who
• 20:10
  Speaker 2: you work with? And is there a process to that?
• 20:13
  Speaker 2: I mean, how do you guys think about that?
• 20:14
  Speaker 3: There is?
• 20:15
  Speaker 4: And you know, the biggest thing is that you can't
• 20:18
  Speaker 4: be worried about saying no to a partner.
• 20:23
  Speaker 3: You have to be selective.
• 20:25
  Speaker 4: So the first thing that we look at when we
• 20:28
  Speaker 4: are talking to a prospective platform is market fit. Is
• 20:32
  Speaker 4: this a long term product that is creating a need
• 20:36
  Speaker 4: or that is solving for a need in the market.
• 20:40
  Speaker 4: There is a lot of startups and it's not just
• 20:42
  Speaker 4: valid for the fintech industry. It's valid for a lot
• 20:46
  Speaker 4: of various industries that are a gimmick candidatey. So you
• 20:49
  Speaker 4: want to make sure that the market fit is there.
• 20:52
  Speaker 4: Then the second thing is the culture of the company
• 20:56
  Speaker 4: and the leadership of that company. Did they run and
• 21:00
  Speaker 4: you know, I'll throw out a couple of things such as,
• 21:02
  Speaker 4: did they ever run into issues with regulators or law
• 21:08
  Speaker 4: enforcement authorities? Did one of the previous ventures that they
• 21:12
  Speaker 4: work at got into that kind of issues? So you
• 21:15
  Speaker 4: look at the past of the founding team, the past
• 21:18
  Speaker 4: of the past experience of the key staff, just to
• 21:22
  Speaker 4: get a sense of who they are and what is
• 21:25
  Speaker 4: the culture that they're looking to create in the venture
• 21:27
  Speaker 4: that is looking to partner with you. Then, finally expanding
• 21:31
  Speaker 4: on that culture, you want to make sure that they
• 21:33
  Speaker 4: have a culture of compliance and that they have the
• 21:35
  Speaker 4: right compliance staff in place, which is sometimes challenging with
• 21:40
  Speaker 4: very new startups. Right, they may not have made the
• 21:44
  Speaker 4: investment in the compliance staff, so maybe they're utilizing a
• 21:48
  Speaker 4: law firm to fulfill that need. So and if that's
• 21:51
  Speaker 4: the case, you want to make sure that they have
• 21:52
  Speaker 4: a plan in place to create that compliance environment in house.
• 21:57
  Speaker 4: They can leverage law firms if they want to, but
• 21:59
  Speaker 4: they should have the staff internally. Once we're kind of
• 22:03
  Speaker 4: pass this first hurdle, we have a pretty extensive due
• 22:06
  Speaker 4: diligence process. Right, we want to make sure that you
• 22:10
  Speaker 4: have strong financial macking. We want to make sure that
• 22:13
  Speaker 4: if you're playing on the lending side of the of
• 22:16
  Speaker 4: the of the space, that you have access to debt
• 22:19
  Speaker 4: and you have access to equity. If you're going to
• 22:21
  Speaker 4: be financing everything yourself, we want to make sure that
• 22:25
  Speaker 4: depending on the stage that you're in in the life
• 22:27
  Speaker 4: cycle of your company, which I have put in place
• 22:30
  Speaker 4: matches that if you're a very established player like upside Wise,
• 22:34
  Speaker 4: when finit partnered with Upstart, you're expecting to see quite
• 22:38
  Speaker 4: a bit of pulses and procedures, right, You're expecting to
• 22:42
  Speaker 4: see that compliance environmentorities to that. If it's a newly
• 22:47
  Speaker 4: established startup, maybe not. So those requirements will depend on
• 22:51
  Speaker 4: where the companies that in their life cycle. And then finally,
• 22:56
  Speaker 4: the most critical piece is the onboarding process.
• 23:00
  Speaker 2: Us.
• 23:00
  Speaker 4: This is when we work hand in hand with the
• 23:02
  Speaker 4: fintech to make sure that all the right pieces have
• 23:05
  Speaker 4: been put in place to stand up a fin wise product.
• 23:10
  Speaker 4: You know, there was recently updated guidance that was issued
• 23:13
  Speaker 4: by the FDIC as it pertains to third party relationships,
• 23:16
  Speaker 4: so bank partnerships fell into this where the FDIC is
• 23:20
  Speaker 4: now asking the bank to have the right process in
• 23:23
  Speaker 4: place to assess the risk of a relationship prior to
• 23:29
  Speaker 4: entering into that relationship. That's a process that we've always
• 23:32
  Speaker 4: followed that fin Wise, so we feel very confident in
• 23:35
  Speaker 4: the recipe that we've developed to select the right fintech partners.
• 23:39
  Speaker 2: No it's good and it's you have to be thorough.
• 23:41
  Speaker 2: It is any partnership you get into as a representation
• 23:44
  Speaker 2: of your brand and an extension of your organization. So
• 23:47
  Speaker 2: everything you described definitely makes sense of why you want
• 23:50
  Speaker 2: to make sure you're doing the amount of diligence that
• 23:53
  Speaker 2: you described. So let me wrap. I always like to
• 23:56
  Speaker 2: as we come to the end, kind of three quick
• 23:59
  Speaker 2: quick questions. The first is, tell me, is there a
• 24:02
  Speaker 2: tech or an app that you just right now? You
• 24:05
  Speaker 2: can't live without that? It is just part of your
• 24:07
  Speaker 2: kind of day to day that is kind of your
• 24:09
  Speaker 2: your go to right now.
• 24:10
  Speaker 4: I mean, look, it's gonna sound various, you're a typical,
• 24:13
  Speaker 4: but I don't think I could live without my phone.
• 24:16
  Speaker 4: Right This is where I conduct business. This is how
• 24:19
  Speaker 4: I talk to my family, that's abroad. It's how I
• 24:22
  Speaker 4: manage my finances, It's how I I you know, even now,
• 24:26
  Speaker 4: it's how I pay right. I honestly can't remember the
• 24:29
  Speaker 4: last time I walked out with my wallet.
• 24:32
  Speaker 3: I have my phone.
• 24:33
  Speaker 4: It's enough to do everything so that that piece of technology,
• 24:37
  Speaker 4: unfortunately has become pretty critical to my life.
• 24:41
  Speaker 2: Yeah, you'll walk out of the house without a not
• 24:44
  Speaker 2: bring a driver's license or a wallet or anything like that.
• 24:46
  Speaker 2: But if you walk out without your phone, you're heading
• 24:49
  Speaker 2: back yet.
• 24:50
  Speaker 3: One hundred percent you feel naked without it. Yeah.
• 24:53
  Speaker 2: Now, so my second question is, you know, we're financial services.
• 24:57
  Speaker 2: It's a risk based business. We all have to manage
• 25:00
  Speaker 2: risk if you're in financial services and so and sometimes
• 25:04
  Speaker 2: you have to make internal risks for career or just
• 25:07
  Speaker 2: kind of business decisions. Can you share an instance where
• 25:10
  Speaker 2: you think you had to make a risk or a
• 25:12
  Speaker 2: bold decision and what did you learn, What was the
• 25:14
  Speaker 2: outcome of doing that?
• 25:16
  Speaker 4: Yeah, so, you know, I think the biggest risk that
• 25:19
  Speaker 4: I took in my career was to switch over to
• 25:22
  Speaker 4: fin Wise. Right when I started at cross River, I
• 25:27
  Speaker 4: didn't have that consideration of is the bank small, is
• 25:31
  Speaker 4: it big? It was an internship and I was very young,
• 25:35
  Speaker 4: so I didn't have to consider those things. But by
• 25:38
  Speaker 4: the time I left cross River, it was a very
• 25:41
  Speaker 4: established player in the space, right, and so when that
• 25:45
  Speaker 4: opportunity came up at finn Wise, it would have been
• 25:50
  Speaker 4: or it was to go back to very much being
• 25:52
  Speaker 4: in the trenches. A lot of it has not been
• 25:56
  Speaker 4: stood up yet. It's recreating a business line from scratch.
• 26:00
  Speaker 4: And that was a risk, but I think it's somewhat
• 26:03
  Speaker 4: what keeps me going in my career. I love being
• 26:07
  Speaker 4: the guy that is standing up new stuff that you know,
• 26:10
  Speaker 4: is trying to figure it out, that that is deep
• 26:13
  Speaker 4: into trenches. It's it's truly what I enjoy. So the
• 26:16
  Speaker 4: switch to finn Wise definitely solidified that I'm this guy
• 26:22
  Speaker 4: that is super happy with new established company and you know,
• 26:27
  Speaker 4: being a jack of all trades as opposed to just
• 26:30
  Speaker 4: being an employee number at a company as big as
• 26:33
  Speaker 4: Bank of America for instance.
• 26:35
  Speaker 2: Now you're looking at it, it sounds like you thrive
• 26:37
  Speaker 2: in that fast paced environment. Now good to hear. And
• 26:40
  Speaker 2: then the last is is we think about twenty twenty four,
• 26:44
  Speaker 2: any bold predictions of what you think might happen, and
• 26:48
  Speaker 2: you know, over the next eighteen to twenty four months.
• 26:51
  Speaker 4: I think we'll start to see an even more dramatic
• 26:55
  Speaker 4: rise in the use of artificial intelligence. Lending has somewhat
• 26:59
  Speaker 4: embraced it already. I mean a lot of marketplace lenders
• 27:03
  Speaker 4: now use artificial intelligence based proprietary models, but I think
• 27:08
  Speaker 4: we'll see it even more in other areas. I could
• 27:12
  Speaker 4: see a tremendous rise in the use of neural nets
• 27:15
  Speaker 4: for anti fraud solutions, for instance, for KYC solutions that
• 27:20
  Speaker 4: use extremely non traditional data sources. Right now, if you're
• 27:26
  Speaker 4: looking at fraud, you know, or transaction monitoring, it is
• 27:29
  Speaker 4: using financial service data. I could see, you know, neural
• 27:34
  Speaker 4: nets being created that are pulling from news or pulling
• 27:38
  Speaker 4: from social media, that are pulling from past to usage
• 27:42
  Speaker 4: across various financial institutions.
• 27:44
  Speaker 3: So I think we'll see.
• 27:47
  Speaker 4: That, and of course we'll see the rise of artificial
• 27:50
  Speaker 4: intelligence for more operational efficiency and for improving the accuracy
• 27:55
  Speaker 4: of the models that we already have in place today.
• 27:58
  Speaker 3: And you know, I'll wrap up with this.
• 28:00
  Speaker 4: I could, you know, give your predictions all day long,
• 28:03
  Speaker 4: but I'll wrap up with this. I think big tech
• 28:07
  Speaker 4: will eat at the market shares even more than they
• 28:11
  Speaker 4: are right now as it pertains to fintech. You know,
• 28:14
  Speaker 4: if we look at Apple, I think it's a great
• 28:17
  Speaker 4: use case of how big tech can can you know,
• 28:21
  Speaker 4: try to penetrate that fintech industry. They started with an
• 28:25
  Speaker 4: Apple card. It was a partnership with Golden Sacs. We
• 28:28
  Speaker 4: knew that Golden Sax wanted to penetrate the consumer market,
• 28:32
  Speaker 4: and at first it was like this is a natural
• 28:34
  Speaker 4: evolution for Apple, but then it was by now pay later.
• 28:38
  Speaker 4: Now it's payment processing right. iPhones and iPads for the
• 28:43
  Speaker 4: past six months have been able to process card payments
• 28:46
  Speaker 4: on device. So I think big tech have seen that
• 28:51
  Speaker 4: fintech is extremely interesting and that there is a play
• 28:55
  Speaker 4: for them, right. Amazon is another great use case. I mean,
• 29:00
  Speaker 4: Amazon has been an extremely vocal adversary of interchange fees
• 29:05
  Speaker 4: in the States. We could see a world where Amazon
• 29:09
  Speaker 4: is creating their own payments hub. They may be creating
• 29:12
  Speaker 4: their own neo bank, you know. I think this will
• 29:15
  Speaker 4: happen sooner rather than later. I don't think this is
• 29:19
  Speaker 4: a multi decade opportunity for those big techs. I think
• 29:23
  Speaker 4: this is something that they're actively working on right now.
• 29:26
  Speaker 2: Yeah, you're seeing just different organizations cross traditional boundaries of
• 29:31
  Speaker 2: where you wouldn't think that they would be doing business.
• 29:34
  Speaker 3: But it just do is.
• 29:35
  Speaker 2: Financial services is kind of ingrained in a lot of
• 29:38
  Speaker 2: those components. So we'll we'll look forward to checking back
• 29:41
  Speaker 2: in and saying and some of your predictions. Simon, thank
• 29:44
  Speaker 2: you so much for taking the time today. I've enjoyed
• 29:47
  Speaker 2: the conversation. Learning a little bit more about your background
• 29:50
  Speaker 2: and your journey and appreciate the insights today perfect.
• 29:53
  Speaker 3: Thank you so much, Ed, I appreciate it.
• 29:55
  Speaker 5: Up Start partners with banks and credit unions to help
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