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Hello and welcome to How We Make Things Now, the show in which we explore the way in which
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we are building products and brands is changing and this episode is a special episode on Money
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2020 in Europe. So I'm Richard from Label Sessions and I'm also joined for this episode
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by co-founder of Label Sessions Maxine Mackie. Maxine Mackie, welcome. Hello, hello. Welcome.
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And added a bit to your name and content producer Josh Nixon, welcome. Hello. We are now about a
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week, two weeks after. Week in a bit. Yeah, a week in a bit. And we're back to Edinburgh in our cases.
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Any kind of stand out highlights or lowlights for anyone from the whole event? I thought it was
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amazing energy and seeing so many different very tools. So there was obviously a lot about AI,
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but it wasn't absolutely everything, which was slightly refreshing. I would have heard of that
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as well. I know I should say for everybody as well. So Money 2020 Europe is the biggest FinTech event
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in Europe. There's also Money 2020 in America and in Asia as well, I think. And I think the American
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one is in Vegas is slightly bigger. There was a bit of sort of response on LinkedIn and places
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like that, people saying that there was less sort of massive innovation on Money 2020 Europe.
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But there was a lot more bootstrapping, a lot more kind of focus on application maybe than in past
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years. So Josh, you were around the conference floor. We all looked at this from slightly different
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places because Maxine was talking and therefore often the speakers lounge and things like that.
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Josh was on the floor speaking to a whole range of different startups. And also,
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actually, we've actually got one interview later on that's not with a startup, that's with a trade
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body because there was a lot of kind of reflection on the way in which things are changing, not just
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in how we build products, but also in terms of how we grow innovation ecosystems and things like
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that. So Josh, you've got kind of three startups you've called up to sort of profile.
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Yes, absolutely. And the first person I spoke to was Dairos, who is the CEO of Doshi.
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And Doshi, we've seen an action in an accelerator somewhere as well around.
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Yeah, yeah, yeah. We've worked with Doshi and TSB Labs. So they're launching their proposition from
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Labs 23. So a great example of authentic that's been able to kind of think about not trying to
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solve the whole problem around financial literacy, but think about like full young people in particular,
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how can we, how can we do that? Because I know in the UK, children in schools don't necessarily
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understand about, they don't really get a lot of financial literacy. So it's an outreach from
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financial institutions and Doshi make it quite interesting and playful. So I think it will kind
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of land the messages that convert our young people need to hit. Financial education has been a thing
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for a while. It'll be interesting, I guess, in terms of what's changing in that world now versus a
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couple of years ago. So I'm Daniel, I'm the co-founder at CIO of Doshi. We are a gamified
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financial education platform. So one of the things I love is to be very close to customers, to learn
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about their problems, to find ways how we can solve them and seeing them getting really excited about
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what we're building. That validation is extremely rewarding. And I think one of the things that
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was very challenging for us at the beginning was how are we going to make money. And we started
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launching first as a consumer-facing app. We got some traction, but we didn't know how to monetize
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it. So I think thinking up front how you can build a sustainable business model as a startup is
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crucial. And it took us a couple of iterations to get there. I think the process, I would say the
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market has changed definitely. I think when we launched two years ago, it was really about kind
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of growth and building something that is shiny and sexy. I think now looking back, that was something
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that we were keen to build. And I think for people that are looking to build something today, I think
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it's really about building something that's profitable and sustainable. I think it's never
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been a better time to be an entrepreneur. I think there's so many more tools at your disposal to
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build something that, and to test something at a very low cost using web3 or using other platforms
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and using kind of your initial hypotheses and test something with kind of a very light front end
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experience. That's really changed. Just to give an example, when we're using Doshi,
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we don't have a massive content team anymore. Whilst we're in a bad education, we can really
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leverage some of the tools at our disposal and really work with some of the biggest banks in
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the world. And that would have been an unthinkable idea even five years ago. Look, our proposition
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is constantly evolving. Right now, our main path is that we can leverage micro-learning and the
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tools that some of the best companies have rather filled. I think there's going to be
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definitely a trend towards more contextual learning experiences, towards even AI-based
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learning where you might want to just speak to somebody in a conversational matter. So we are
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constantly looking out how we can embed new technologies into our learning experience.
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I think Doshi will look like a very different solution in five years than it looks today,
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and we're very excited about that transition. It's funny, isn't it? In terms of everyone,
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all tech conferences, people always say it's the best time in the world to be here,
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the best time in history to be an entrepreneur and a wide-cannot piece. But the flip side of it
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when it comes to AI, which I guess Doshi have found by the sense of things, is it's really hard to
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commercialize direct-to-consumer applications right now. So in terms of it was, it was a big
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conference for AI, but in terms of commercializing it, it was almost always B2B.
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I think the direct-to-consumer thing is linked to content strategies. And I think, as Daniel was
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saying, that they don't have as big a content team anymore. And it's actually, it's not a profit
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driving part of the business, and there's a lot of content already out there. Something I think
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is really interesting for Doshi in particular. I don't think Daniel mentioned it there, but
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part of their proposition is incentivizing people through the education as well. So it is really
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hard to cut through the noise and kind of a direct-to-consumer. But they've looked at ways,
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I think, I don't know what particular companies that they've looked to, but in the market you see
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different ways of incentivization, whether it's kind of a weight loss, money saving,
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reaching a goal. And they've directly kind of brought incentivizations at the forefront of it,
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which I think is a really smart way to bypass the kind of the noise or the cloud, the gray cloud
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you can get stuck in when it's purely driven by a content strategy.
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Yeah, okay. There's also like an interesting thing I thought in that one, which is, you know,
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the whole Doshi story, which is one of the weird effects of AI is that everybody, whether you're
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a startup or a big bank, is using quite similar tool set just now, which means that actually
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some of the issues around compliance and kind of onboarding new suppliers for proof of concepts
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of things are actually simplified to some level, whilst not always understood. But actually,
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the kind of the tool set is so similar across lots of the different applications that we saw
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in money 2020. So some of the blockers that were there in the past are not always there,
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especially given the revenue model for all this stuff in terms of paying users for achieving
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streaks and stuff is all based on how can I be to be playing in some way.
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So the next person who continues to solve regulatory trend that spoke to you was very early on,
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actually, it was a person called David Beyer. So we're going to start straight into what he had to say.
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I'm David Beyer. I'm head of Enterprise Solutions and Partnerships at Kogo. So Kogo is a carbon
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insight, carbon management solution. In essence, what we do is we work with 18 banks around the
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world. We use bank transaction data to build retail and business banking experiences. So
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retail or business banking customers can measure and manage their carbon footprint
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based on their everyday spend. What I've loved on that is the influence that we can have and
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to effect change. We talk a lot about the intention action gap. There's a lot of people that want to
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do more and want to make more ethical decisions. They don't know really where to start. So by
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using bank transaction data, they can actually make decisions about more ethical choices.
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And you can actually educate them around the decisions they're actually making,
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maybe what other alternative choices might look like. Using behavioral science to give them ethical
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nudges. So what that means is for positive impact currently through the banking relationships we
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reach somewhere around 30 million individuals on a daily basis now have the opportunity to create
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impact. And so it's that impact and scale that I think is really important. And moving it away
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from measurement to not just talk about what a carbon footprint is or what are really things that
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people can do to actually make better decisions. I suppose on a negative side, we would like to
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this to be more mainstream. We would love it that more banks actually pick this up and look
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that this is part of their social responsibility to give this opportunity to a lot of their customers.
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You know what we're seeing? We're seeing a lot of evolution in regards to this. I think when we
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first started working on this, this was seen as very much just a new feature, just a fun feature
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within the banking experiences where the bank sees wider benefits from that now. There's really
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three things that the banks are really focusing on. One is the decarbonisation of their customer base
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or decarbonisation of their business and how do they do that? So how do they collect viable data
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that they can make better decisions? The second is around the rise of conscious consumers. There's
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more conscious consumers. How do they then offer them something that's unique for what they want?
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So how do they create these more hyper-versalised experiences? And the third I think is a really
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exciting area where we're more moving into is the commercialisation of this. How do we help the banks
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actually launch green finance products? It could be electric vehicle loans. It could be home energy
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retrofits. It could be green mortgages. The problem with a lot of those areas, no one wakes up in
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the morning and say, hey, I'm going to buy an electric vehicle. I want to retrofit my home around
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energy efficiency. So if we were doing this again, the focus is a lot around that commercialisation
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piece. It's just highlighting the benefits of what the commercial and overall strategic benefits
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that a bank can actually get by doing this and making a right decision. As we move into more
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open banking, open data, there's going to be more data sets that you can blend with transaction data
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to create a more hyper-personalised experience. You're also looking at things like getting access
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to financial and non-financial data using AI that can crunch those data sets and actually help create
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more hyper-personalised experiences in bedded finance products at point of need. What's happening
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currently at the moment is a lot of solutions are disconnected. The home energy proposition doesn't
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sip with inside that a mobile banking experience is connected as it needs to be. So I think that's
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really where heading is more hyper-personalisation and bedded finance, but using data to not only
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affect products, but also affect credit affordability, future risk, and even around asset
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valuation. So if you think about it, if I energy retrofit my own, does that mean my assets,
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if my property is now worth more, more saleable, does that mean then that the bank's got more
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security, the bank has a more trusted and protected customer going forward as well?
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I think one of the key things is that how do you take this out of a box? Because it's siloed
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currently at the moment, it's looked at one feature inside a mobile banking experience,
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but how was this interconnected? We talk a lot and say in nature everything is connected,
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nothing sits in isolation and try to open the eyes to the bank around that interconnectivity
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and some of the things they can actually see by blending data sets together or combining experiences
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what that power of that network can actually be to help them achieve what they want to achieve.
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Because often they're thinking about it and go no it sits here, go well does it, it does, but it
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also sits here, here, and here. And how do we kind of open that thinking up about it? What we're looking
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at is how do we keep on evolving, how do we keep on offering more advanced features, how do we use
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behavioral science, how do we create more hyper-personalized experiences for the individuals
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and the businesses, but also how do we help banks in other areas? Banks have got massive supply chain
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exposure and how do we then use the same principles to help them achieve that? For a bank it's around
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data, getting access to data, we can help them get access to more data and actually help them
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understand the interpretation of that data that can not only protect them from a financial risk
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point of view, but how does that data then also create opportunity for the bank as well?
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So I think this is a massive space that people don't necessarily understand yet in terms of how
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important it could be because one of the things, it was a real trend on the floor of money 2020,
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but also around the world. So we see this all the way all the way through, we have a sustainable
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business accelerator and there's lots of financial institutions getting involved in this space and
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it's because banks around the world have made different levels of commitment around decarbonization,
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not just of their own operations, but of their customers. So in terms of their issuing a mortgage
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to a house, that house is part of their carbon impact. It plays out in slightly different ways
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in different parts of the world because in some parts of the UK it comes with more kind of
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government heft and other parts in the world, it's more of a straight commitment than the banks have
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made, but it's a really key area of animation I think because you, you know, most green choices that
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people can make, we can make, consumers can make at home, have a financial element, whether it is
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changing something to your house, choosing a different car. So actually the fact that
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financial institutions and therefore FinTech comes into this space is really powerful potentially,
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although, you know, Kogo is a really good example of this, to make it really work, you both need to
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redesign the way propositions work, but also, you know, really drive some technical innovation
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in terms of how you deliver those kind of propositions in the new world.
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And were you thinking there, Nick, around like the digital operations and like actually how
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you deliver it and delivering things in a more sustainable way?
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Well, I think also that there's the thing tanks over the last couple of years,
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we've been publishing papers talking about all the smart moves you could potentially suggest
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to a customer, which is kind of fine, but actually, one, it's a lot harder than people think
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to be able to do the personalization thing. So how can you actually spot a smart suggestion to
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make to someone when that smart suggestion might rely on a bit of understanding of their finances?
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So could they even afford that thing to happen a bit or understanding of the building that their
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home is or that their business is and whether that adjustment could be made in a sensible way?
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And also, you know, there's, you know, regulation and lots of this isn't necessarily intended for
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the stateability thing, it's regulation that's about how financial institutions speak to customers
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and there's good reasons why those things are applied. So those things are all the barriers,
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but they should be manageable. But I think one of the things that's a really interesting area
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that Kogo are facing directly into is, you know, technically, all of those challenges are about
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data at the end of the day. You know, AI is a massive, massive part of it, but that capability
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is only going to be brought to bear if the data is good enough quality, if you're able to use it
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in the right ways in the right systems. And also, it requires a certain amount of rethinking. So I
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thought that was a really interesting thing in David's interview there around this idea of moving
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away from the carbon footprint. Because one thing we can say for definite, having done all
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of these search around the world, is no one, you know, nobody understands the carbon footprint
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in practice. There's that good or bad when you get given the size. I certainly don't know how to
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translate a carbon footprint abstraction number into action. So there's a lot in this area of,
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you know, breaking down some of the old consensus and saying, actually, based on where we are now,
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how do we do things going forward? And Kogo are a really good example of that. I think the real
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challenge for them as they go forward is, how much are they able to stay focused on the core
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problem they are going after? And how much do they have to start to play into the internal
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agendas of banks, which quite often will be sticking to a more traditional, you know, idea
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of how you communicate sustainability, how you talk about these things. And I think if we're
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under that kind of a notion of how we make things now, one thing David said that I thought was
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really powerful is moving away from being a direct feature. So that's essentially a widget to do a
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thing. So it's a service for customers to understand the carbon footprint to your point,
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people don't really understand that. And it's useful to have kind of a personalized data, but
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there is often a bit of an intervention needed by the customers. So if you're thinking about like
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the impact of your home, the kind of a public data sets might think your home is X, Y and Z,
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but actually, you need to kind of update that and make it more specific. One thing I thought David,
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what David said was really interesting. And the thing that I think will help make that shift
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from direct like tracking your carbon footprint is again, this notion of the value exchange.
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And it was when he was talking about actually, if you have a more saleable home, because you've
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got solar panels, you've made kind of a different insulation choices, etc.
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actually better mortgage rates or things that impact customers. So I think it's going from
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one step beyond just understanding your carbon footprint, because that's really just a number
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and my better or worse and a better or worse, it's actually going to something that impacts
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your day to day life. Oh, I can do more of that. And then I think it creates that dialogue. As you
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said earlier, Nick, a lot of these decisions around sustainability and making sustainable choices
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have a price point and a cost. And then I think you can do what most people do in their day to day
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lives. Can I afford this? Is it worth it? Do I want to spend my money on this? And I think it's
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that value exchange gets broader. I think that gets quite interesting. And I think also, the thing
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we know, but isn't easy necessarily for the fintech world to digest is, you know, it's going to be a
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dead end. If we use AI to personalize apps on the basis of if the deal is still that I need to open
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my banking app, come into an experience and you've you've you prioritize certain things to show me,
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then that's not a huge step forward. Because actually, what we need is to create services and
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products that require me as a consumer to be less. And so actually, at the right time, send me some
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message around making changes to my home, if that's the thing I can afford at that point, you've got
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an offer around that thing or something to say. But that requires us to one rethink how the experiences
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work. And secondly, also to measure ourselves in different ways, because the truth is,
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lots of financial institutions really care about engagement on the app right now.
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Because that's the way those teams are incentivized. That's what they see could a good app experience
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being as people are logging in very often. Whereas, I think the reality of where we are is if we can
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build the systems in a smarter way, then it should be that the way you build loyalty is not that you're
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logging in every day is that you really turn up at the right time with something useful to say.
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And that's going to be really important for the sustainability changes that go on.
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So the next one is as a person called Tom Kittle co founder of place with Palisade, we'll get straight
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into you what Tom has to say. My name is Tom Kittle. I'm the co founder and co CEO of a company
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called Palisade. Palisade is a digital asset custody platform. And we provide safeguarding of assets,
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digital assets such as Bitcoin, XRP and Ethereum to enterprise and institutional clients.
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Custody by nature is very, very sensitive. And it means that everything you build or anything
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you build in that space has to be scrutinized. My background is as a software engineer. So I've
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been a software engineer for about 20 years. So custody as a product, as a platform presents a
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number of very, very interesting software engineering challenges around how you provision the wallet
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and the private key and then how you safeguard that and safeguard the assets in flight.
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And so from an engineering perspective, super, super interesting. I think, you know, custody also
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comes with a lot of obligations around regulation as well. And that's been one of the biggest
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challenges for me and for our team is, you know, figuring out what those obligations are,
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the jurisdictions that we want to operate in, etc. One thing that we would do differently if we
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would start all over again is we'd certainly focus more on the go to market earlier on,
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commercializing the product much, much sooner. Custody is difficult, difficult thing to build.
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So we spent the last two and a half years really heads down focused on building that.
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I think what we would have done probably earlier on is brought more design partners on
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to help us, you know, build the product in those earlier stages. I think that our process is
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definitely going to change. And I think what will change for us is like the hiring process.
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I think that's been one of the most biggest challenges for us is like finding the right
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people. And so we need to come up with better ways to, you know, bring those people in those
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right people in. What we're ultimately looking for is people that want to go the distance with us
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and not just pick up a paycheck at the end of the month. And then, yeah, so I think that's been
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the biggest, biggest thing for us. And I think that's something that we would continuously focus
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on improving. As I said, my background is software engineering. But for most of my, most of that
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career, I've really been focused on how can I use software and the experience I have in software
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to build a solution to a problem. And so it's always been a means to an end for me.
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I think probably what I would have done earlier in my career is worked more closely with commercial
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teams. I had a great opportunity to do that at Ripple. So I was working for a company called
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Ripple Previous to this, very small office based in London, and meant you were very close to those
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commercial teams. But I think I would have probably moved around in organizations and maybe got a bit
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closer to the commercial teams. This is the main focus. This is like the core of our project,
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of our product is the safeguarding of digital assets. But the technology side of it, I would say,
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in the Web3 space is becoming commoditized. So we use a technology called MPC. We use HSMs as
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well to secure those digital assets. And that layer is becoming commoditized. So what we're
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starting to do now is we're seeing companies competitors to us start to add those value added
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services on top. And we have a few of those. So tokenization is one of them. And that's like a
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new product line that we're developing at the moment. One reflection I have from the three
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startups we've just heard from is each of them talked about commercialization. You talk
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you kind of alluded to, I think, both the economic landscape and the challenges that
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fintechs and startups have in the sense that they're founded on a particular mission.
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And typically people are kind of hyper focused on that, whether it's the financial education platform,
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the carbon tracking, etc. with Kogo, and what we just heard from Palestine
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around the kind of security of some of the crypto assets. All of them are so different,
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but they're all struggling with commercialization. Well, I think it's maybe a fundamental question
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for fintech in Europe in particular, or maybe around the world, because one of the things we
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still haven't seen from the last wave of fintech, the rise of fintech, was that lots of that was
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based on the assumption that lots of these companies were going to be acquired by incumbents
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in different places. And we aren't seeing that come through that any kind of pace. Now, in terms
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of the solution in the short term is that there's lots of great founding teams being set up in
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different places and some interesting solutions are there. And certainly because of the way that
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the economics of building a product has changed, those companies can grow fast, they won't necessarily
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grow faster, but they can grow profitably much earlier. So that allows them to succeed. But
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there is still a question mark, I think, in terms of are the banks about to make good on their part
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of the buying and so far as this market is concerned, which is are they going to start acquiring these
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companies or are they going to start adopting the technologies at scale, which has happened in
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pieces in different places. And there are indeed banks like TSB you're on stage with who've really
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sort of pioneered genuinely bringing companies in for pre-for-concepts and scaling those solutions
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across the bank. But as a as a European scene, we still don't have that conveyor belt, which
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was always the story of events like Money 2020, actually, which the idea was that we're going
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to have lots of these new companies coming through, put them into the marketplace. The big
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establishing incumbents were then either going to adopt that solutions and scale it so that
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company would become very big or on the flip side acquire their solution. It happens in patches,
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but it certainly isn't happening anything like the scale that the people projected a few years ago.
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Yeah, for sure. And I think the partnerships is interesting. So we were on stage with TSB,
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so they're head of partnerships, Irina Balor, and we were talking about accelerator labs and
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how they're kind of a fast track for success for fintechs or kind of a fast track to failure.
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The role of partnerships is quite different. I think you're seeing fewer acquisitions and
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more flexibility being held by the by the bank and the financial services institution with the
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partners that they work with. And I think with the pricing models too, with some of the SaaS
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companies in the fintechs, it's a far more challenging environment for the fintech and
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really flexible for the bank or the financial services organization. But I think that age
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old decision of what do we build? Who do we partner with? What do we buy? I suspect there's far more
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in the partner debate rather than in who we buying. And I think actually we're seeing a lot more
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kind of a financial services institutions interested in being an early investor rather
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than necessarily acquiring. So to actually have just like they have a really broad innovation
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portfolio, a broader portfolio for their partnerships as well.
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So that leads us on neatly because one of the other conversations we're having a lot on the floor
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was partly with party for starters, I was part of the banks that were looking to drive innovation
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in different ways, but also with trade bodies, governments looking to develop their fintechs
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seen in different places. And I know Josh, he caught up with Mikhail Paris or fintechs,
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Scotland, the particular to talk around the way the ways in which what they do is changing.
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That I did absolutely. And we'll demonstrate why you had to say.
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I'm Mikhail Paris, I'm the marketing director at fintech Scotland. We are at money 2020 today.
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We try to come every year. But it's the second year in a row that we've done that in collaboration
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with the Department of Business and Trade for the UK and Scottish Development International.
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We'll be hosting a panel session later on to speak about the future financial regulation,
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which is a topic that's very close to our heart with the financial regulation innovation lab
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that we launched in Glasgow at the start of the year. A lot of fruitful thoughts and
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improvements that we are looking at just now as we're about to launch the second innovation call.
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What I loved was to the idea of bringing the industry together. We've done innovation calls
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before with Lloyds, with TSB, with Phoenix, with NatWest and they've worked amazingly well.
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And we thought, you know what, for some of those challenges that are industry-wide,
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and when you look at financial regulation, it caused the UK financial sector over eight billion
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every year. We thought, let's bring the large financial industry together. Let's bring the
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academics together, the universities, the University of Glasgow, University of Strathclyde,
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and the power of research there. Let's bring the innovators, not just from Scotland,
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but from around the globe, and see what we can do to make things a bit better. So that was the
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highlight for me on Demo Day. We had 100 people in the room just connecting from all industries,
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all sizes, and that was really uplifting and really, I wasn't surprised because I know in
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Scotland we've got a very collaborative ecosystem, but it was really reaffirming that we're doing
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the right thing, that the cluster in Scotland is very vibrant. It's definitely been a trend towards
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more collaboration between large and small if you want to go into that role between FinTech and
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established firms. So if I go back to a bit further, when we started in 2018, the two would be
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looking at each other, not knowing how to engage with one another. The large FAS probably looking
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at FinTech as those maybe threats that are wanting to take business away. And on the other side,
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the FinTechs looking at the large FAS saying, you don't know how to do innovation. We're faster
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than you, we're smaller than you, we can do things a bit better. But in fact, when you look at the
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Scottish FinTech community, we've got 235 companies in there, 99% are B2B, so they want to work with
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the banks. That's their route to market. So they're not here to take business away. How do you bring
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that innovation, those great initiatives from FinTechs and you embed them into your BAU so
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it can be fit all your customers? That's the difficult part. From a procurement perspective,
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it's hard. When implementation, it's hard. It's more in terms of the difficulty comes more from
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maybe the culture, but also the way of doing things. Because you can't help it. FinTech will
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always be faster than a large FAS. Not because they're better, it's just because they're smaller.
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And we just have to realize that and learn how to work with one another really. Where we are just
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now and where we'll be in maybe even one year or two years time is going to be very different.
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AI is moving so fast. It's already being used by a majority of the FinTechs in Scotland and I'm
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sure around the world as well. At different levels, sometimes it's just for content supply,
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sometimes it's a chatbot, sometimes it's like predictive at the company that's from Scotland
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with us today at money 2020. It's about looking at trading and how do you automate that.
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It's real replace jobs. A lot of people try to reassure themselves saying that actually it won't
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and it will be used by people to enhance their capabilities. I think it's absolutely true,
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but I think it would be wrong to assume that that will always be the case. I think at one point AI
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might be good enough that it can actually replace maybe most of a company's employees. What do you
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do with that? I'm not sure. How do you reinvent the society where maybe only a small portion of the
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people have work? I don't know, but I think AI is going to push us to really reinvent everything
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we do from a technology perspective, from a societal perspective, from a culture, from a human
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perspective. It's going to really find who we are and our purpose on this planet. If you don't have
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to go to work, what do you do? Big questions. We published the FinTech Research and Innovation
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Roadmap a couple of years ago and we had four key themes that came out of it. Financial regulation
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was one. We also had payments. On the payment, we're looking at potentially developing a center
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of excellence, looking at DLT technology, crypto, cryptography, digital identity under that theme.
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On the climate, we've been doing quite a lot of exciting work. Just started with Space Scotland,
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which is quite surprising. Not many people know, but Glasgow produces more satellites than any other
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cities in Europe, which is great, which means we've got a lot of things up there, sending a lot of
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data back down. What do you do with that data? You can look at things like insure tech, risk
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prevention, or damage analysis after a storm, for example, or you could look at supply chain
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management, all those things to come back to AI. If you put AI with open banking data, it's only
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going to be as good as the data it gets. If you want to give someone financial advice, you need
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to know about the pension, you need to know about the credit cards, you need to know about the savings
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product. Until you reach that state, AI is not going to replace a financial advisor, which is
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what I was hinting at earlier. In the future, maybe, and that's where we intervene and we do
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those calls to see what's out there and how we progress the overall sector. I'm looking for 2024,
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2025, yeah, plenty to do. Not a lot of time to do it. It's interesting hearing here, Michael,
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there are big questions in a whole host of different ways. I guess in some ways, Scotland's
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interesting example of all this, right? In terms of actually giving the question, the conversation
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we had before, in terms of commercial cases, really interesting times for startups in an ecosystem
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like Scotland to face into regulation challenges, given the high level of regulation compliance
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teams with big banking groups that are based in that market. That's a great opportunity.
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On the flip side, long term, those are the classic areas for things to be automated and jobs to be
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taken away. It's a really interesting time, actually, for the Scottish ecosystem.
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I think what we're not here talking about is the jobs that will be created, a lot more in data,
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because I think powerful AI requires clean data sets that we can use. It was interesting at
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Money 2020. Different folks were talking about the risk of losing jobs. Some people were in
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the Kells camp, they're very much around. We're going to have to really think about how societies
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frame very differently. Things like universal basic income, and those things people are mentioning.
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But actually, other people were talking about, yes, I think the shift is going to be very difficult,
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but there are a lot of new jobs being created, data analysts, AI prompts as well, those type
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of things really expanding. One thing I think was interesting, and Mikael just said, is around
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some of the industry-wide things as well. There's this we've been talking about with fintechs.
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Fewer are being acquired, but more are being partnered with. I think that's just a strong
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direction of travel, and we'll see more of that. It's interesting how partnerships teams at big
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financial services institutions use fintechs and engage with the community, both about knowing
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what's coming and connecting the dots around the problems that they're having internally and what
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fintechs can solve. I think that's what a great partnerships lead will do at a bank.
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And I think the industry-wide things and challenges give startups confidence that it's not just one
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bank that has the problem. I think that's quite important when they're going on their own investment
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journeys as well, creating, convert their products and services. That's, yeah, that is very true.
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Very true indeed. Lots of big things have come up as we go through these conversations.
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For those listening to this podcast over the coming weeks, we're going to be facing quite a
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few of these things, especially when it goes through the different news podcasts each week,
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especially around this idea of innovation in the face of climate change, which is going to be a bit
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of a recurring theme as we go through. Also, though, for people that are interested in fintech or
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fintech yourselves, we will have live challenges out just now, all of our social networks, partly
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with the TSB Open Lab and also with the Financial Regulation and Innovation Lab that
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Mackell referenced there. So lots of opportunities to get directly involved as well.
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I think this is a really interesting one for fintechs because at TSB, they're all about
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launching new propositions. Their focus is around open banking. So whether that's consumer facing,
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propositions, helping people understand what financial products are relevant to them and
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write for them in that moment, helping SMEs like business accounts and small businesses get paid
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on time. What does children's banking look like in the world of open banking, but also ones around
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data sets? What can banks do differently with different data sets? I'm just making this a plug
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about TSB Labs now. And lots of other opportunities as well. Also, if you work in the drinks industry,
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there's some interesting challenges coming out on the socials as well. And plus, Josh will be happy
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to get through an entire episode of this without talking about street party and the fact that you
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are a little bit groggy the next morning, Josh. So this is like a bonus.
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Hello and welcome to How We Make Things Now, the show in which we explore the way in which
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we are building products and brands is changing and this episode is a special episode on Money
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2020 in Europe. So I'm Richard from Label Sessions and I'm also joined for this episode
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by co-founder of Label Sessions Maxine Mackie. Maxine Mackie, welcome. Hello, hello. Welcome.
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And added a bit to your name and content producer Josh Nixon, welcome. Hello. We are now about a
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week, two weeks after. Week in a bit. Yeah, a week in a bit. And we're back to Edinburgh in our cases.
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Any kind of stand out highlights or lowlights for anyone from the whole event? I thought it was
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amazing energy and seeing so many different very tools. So there was obviously a lot about AI,
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but it wasn't absolutely everything, which was slightly refreshing. I would have heard of that
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as well. I know I should say for everybody as well. So Money 2020 Europe is the biggest FinTech event
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in Europe. There's also Money 2020 in America and in Asia as well, I think. And I think the American
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one is in Vegas is slightly bigger. There was a bit of sort of response on LinkedIn and places
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like that, people saying that there was less sort of massive innovation on Money 2020 Europe.
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But there was a lot more bootstrapping, a lot more kind of focus on application maybe than in past
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years. So Josh, you were around the conference floor. We all looked at this from slightly different
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places because Maxine was talking and therefore often the speakers lounge and things like that.
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Josh was on the floor speaking to a whole range of different startups. And also,
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actually, we've actually got one interview later on that's not with a startup, that's with a trade
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body because there was a lot of kind of reflection on the way in which things are changing, not just
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in how we build products, but also in terms of how we grow innovation ecosystems and things like
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that. So Josh, you've got kind of three startups you've called up to sort of profile.
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Yes, absolutely. And the first person I spoke to was Dairos, who is the CEO of Doshi.
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And Doshi, we've seen an action in an accelerator somewhere as well around.
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Yeah, yeah, yeah. We've worked with Doshi and TSB Labs. So they're launching their proposition from
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Labs 23. So a great example of authentic that's been able to kind of think about not trying to
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solve the whole problem around financial literacy, but think about like full young people in particular,
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how can we, how can we do that? Because I know in the UK, children in schools don't necessarily
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understand about, they don't really get a lot of financial literacy. So it's an outreach from
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financial institutions and Doshi make it quite interesting and playful. So I think it will kind
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of land the messages that convert our young people need to hit. Financial education has been a thing
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for a while. It'll be interesting, I guess, in terms of what's changing in that world now versus a
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couple of years ago. So I'm Daniel, I'm the co-founder at CIO of Doshi. We are a gamified
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financial education platform. So one of the things I love is to be very close to customers, to learn
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about their problems, to find ways how we can solve them and seeing them getting really excited about
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what we're building. That validation is extremely rewarding. And I think one of the things that
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was very challenging for us at the beginning was how are we going to make money. And we started
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launching first as a consumer-facing app. We got some traction, but we didn't know how to monetize
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it. So I think thinking up front how you can build a sustainable business model as a startup is
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crucial. And it took us a couple of iterations to get there. I think the process, I would say the
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market has changed definitely. I think when we launched two years ago, it was really about kind
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of growth and building something that is shiny and sexy. I think now looking back, that was something
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that we were keen to build. And I think for people that are looking to build something today, I think
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it's really about building something that's profitable and sustainable. I think it's never
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been a better time to be an entrepreneur. I think there's so many more tools at your disposal to
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build something that, and to test something at a very low cost using web3 or using other platforms
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and using kind of your initial hypotheses and test something with kind of a very light front end
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experience. That's really changed. Just to give an example, when we're using Doshi,
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we don't have a massive content team anymore. Whilst we're in a bad education, we can really
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leverage some of the tools at our disposal and really work with some of the biggest banks in
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the world. And that would have been an unthinkable idea even five years ago. Look, our proposition
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is constantly evolving. Right now, our main path is that we can leverage micro-learning and the
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tools that some of the best companies have rather filled. I think there's going to be
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definitely a trend towards more contextual learning experiences, towards even AI-based
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learning where you might want to just speak to somebody in a conversational matter. So we are
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constantly looking out how we can embed new technologies into our learning experience.
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I think Doshi will look like a very different solution in five years than it looks today,
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and we're very excited about that transition. It's funny, isn't it? In terms of everyone,
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all tech conferences, people always say it's the best time in the world to be here,
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the best time in history to be an entrepreneur and a wide-cannot piece. But the flip side of it
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when it comes to AI, which I guess Doshi have found by the sense of things, is it's really hard to
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commercialize direct-to-consumer applications right now. So in terms of it was, it was a big
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conference for AI, but in terms of commercializing it, it was almost always B2B.
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I think the direct-to-consumer thing is linked to content strategies. And I think, as Daniel was
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saying, that they don't have as big a content team anymore. And it's actually, it's not a profit
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driving part of the business, and there's a lot of content already out there. Something I think
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is really interesting for Doshi in particular. I don't think Daniel mentioned it there, but
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part of their proposition is incentivizing people through the education as well. So it is really
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hard to cut through the noise and kind of a direct-to-consumer. But they've looked at ways,
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I think, I don't know what particular companies that they've looked to, but in the market you see
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different ways of incentivization, whether it's kind of a weight loss, money saving,
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reaching a goal. And they've directly kind of brought incentivizations at the forefront of it,
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which I think is a really smart way to bypass the kind of the noise or the cloud, the gray cloud
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you can get stuck in when it's purely driven by a content strategy.
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Yeah, okay. There's also like an interesting thing I thought in that one, which is, you know,
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the whole Doshi story, which is one of the weird effects of AI is that everybody, whether you're
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a startup or a big bank, is using quite similar tool set just now, which means that actually
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some of the issues around compliance and kind of onboarding new suppliers for proof of concepts
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of things are actually simplified to some level, whilst not always understood. But actually,
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the kind of the tool set is so similar across lots of the different applications that we saw
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in money 2020. So some of the blockers that were there in the past are not always there,
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especially given the revenue model for all this stuff in terms of paying users for achieving
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streaks and stuff is all based on how can I be to be playing in some way.
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So the next person who continues to solve regulatory trend that spoke to you was very early on,
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actually, it was a person called David Beyer. So we're going to start straight into what he had to say.
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I'm David Beyer. I'm head of Enterprise Solutions and Partnerships at Kogo. So Kogo is a carbon
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insight, carbon management solution. In essence, what we do is we work with 18 banks around the
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world. We use bank transaction data to build retail and business banking experiences. So
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retail or business banking customers can measure and manage their carbon footprint
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based on their everyday spend. What I've loved on that is the influence that we can have and
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to effect change. We talk a lot about the intention action gap. There's a lot of people that want to
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do more and want to make more ethical decisions. They don't know really where to start. So by
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using bank transaction data, they can actually make decisions about more ethical choices.
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And you can actually educate them around the decisions they're actually making,
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maybe what other alternative choices might look like. Using behavioral science to give them ethical
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nudges. So what that means is for positive impact currently through the banking relationships we
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reach somewhere around 30 million individuals on a daily basis now have the opportunity to create
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impact. And so it's that impact and scale that I think is really important. And moving it away
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from measurement to not just talk about what a carbon footprint is or what are really things that
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people can do to actually make better decisions. I suppose on a negative side, we would like to
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this to be more mainstream. We would love it that more banks actually pick this up and look
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that this is part of their social responsibility to give this opportunity to a lot of their customers.
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You know what we're seeing? We're seeing a lot of evolution in regards to this. I think when we
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first started working on this, this was seen as very much just a new feature, just a fun feature
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within the banking experiences where the bank sees wider benefits from that now. There's really
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three things that the banks are really focusing on. One is the decarbonisation of their customer base
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or decarbonisation of their business and how do they do that? So how do they collect viable data
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that they can make better decisions? The second is around the rise of conscious consumers. There's
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more conscious consumers. How do they then offer them something that's unique for what they want?
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So how do they create these more hyper-versalised experiences? And the third I think is a really
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exciting area where we're more moving into is the commercialisation of this. How do we help the banks
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actually launch green finance products? It could be electric vehicle loans. It could be home energy
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retrofits. It could be green mortgages. The problem with a lot of those areas, no one wakes up in
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the morning and say, hey, I'm going to buy an electric vehicle. I want to retrofit my home around
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energy efficiency. So if we were doing this again, the focus is a lot around that commercialisation
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piece. It's just highlighting the benefits of what the commercial and overall strategic benefits
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that a bank can actually get by doing this and making a right decision. As we move into more
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open banking, open data, there's going to be more data sets that you can blend with transaction data
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to create a more hyper-personalised experience. You're also looking at things like getting access
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to financial and non-financial data using AI that can crunch those data sets and actually help create
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more hyper-personalised experiences in bedded finance products at point of need. What's happening
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currently at the moment is a lot of solutions are disconnected. The home energy proposition doesn't
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sip with inside that a mobile banking experience is connected as it needs to be. So I think that's
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really where heading is more hyper-personalisation and bedded finance, but using data to not only
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affect products, but also affect credit affordability, future risk, and even around asset
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valuation. So if you think about it, if I energy retrofit my own, does that mean my assets,
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if my property is now worth more, more saleable, does that mean then that the bank's got more
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security, the bank has a more trusted and protected customer going forward as well?
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I think one of the key things is that how do you take this out of a box? Because it's siloed
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currently at the moment, it's looked at one feature inside a mobile banking experience,
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but how was this interconnected? We talk a lot and say in nature everything is connected,
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nothing sits in isolation and try to open the eyes to the bank around that interconnectivity
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and some of the things they can actually see by blending data sets together or combining experiences
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what that power of that network can actually be to help them achieve what they want to achieve.
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Because often they're thinking about it and go no it sits here, go well does it, it does, but it
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also sits here, here, and here. And how do we kind of open that thinking up about it? What we're looking
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at is how do we keep on evolving, how do we keep on offering more advanced features, how do we use
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behavioral science, how do we create more hyper-personalized experiences for the individuals
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and the businesses, but also how do we help banks in other areas? Banks have got massive supply chain
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exposure and how do we then use the same principles to help them achieve that? For a bank it's around
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data, getting access to data, we can help them get access to more data and actually help them
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understand the interpretation of that data that can not only protect them from a financial risk
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point of view, but how does that data then also create opportunity for the bank as well?
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So I think this is a massive space that people don't necessarily understand yet in terms of how
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important it could be because one of the things, it was a real trend on the floor of money 2020,
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but also around the world. So we see this all the way all the way through, we have a sustainable
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business accelerator and there's lots of financial institutions getting involved in this space and
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it's because banks around the world have made different levels of commitment around decarbonization,
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not just of their own operations, but of their customers. So in terms of their issuing a mortgage
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to a house, that house is part of their carbon impact. It plays out in slightly different ways
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in different parts of the world because in some parts of the UK it comes with more kind of
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government heft and other parts in the world, it's more of a straight commitment than the banks have
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made, but it's a really key area of animation I think because you, you know, most green choices that
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people can make, we can make, consumers can make at home, have a financial element, whether it is
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changing something to your house, choosing a different car. So actually the fact that
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financial institutions and therefore FinTech comes into this space is really powerful potentially,
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although, you know, Kogo is a really good example of this, to make it really work, you both need to
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redesign the way propositions work, but also, you know, really drive some technical innovation
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in terms of how you deliver those kind of propositions in the new world.
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And were you thinking there, Nick, around like the digital operations and like actually how
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you deliver it and delivering things in a more sustainable way?
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Well, I think also that there's the thing tanks over the last couple of years,
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we've been publishing papers talking about all the smart moves you could potentially suggest
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to a customer, which is kind of fine, but actually, one, it's a lot harder than people think
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to be able to do the personalization thing. So how can you actually spot a smart suggestion to
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make to someone when that smart suggestion might rely on a bit of understanding of their finances?
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So could they even afford that thing to happen a bit or understanding of the building that their
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home is or that their business is and whether that adjustment could be made in a sensible way?
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And also, you know, there's, you know, regulation and lots of this isn't necessarily intended for
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the stateability thing, it's regulation that's about how financial institutions speak to customers
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and there's good reasons why those things are applied. So those things are all the barriers,
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but they should be manageable. But I think one of the things that's a really interesting area
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that Kogo are facing directly into is, you know, technically, all of those challenges are about
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data at the end of the day. You know, AI is a massive, massive part of it, but that capability
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is only going to be brought to bear if the data is good enough quality, if you're able to use it
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in the right ways in the right systems. And also, it requires a certain amount of rethinking. So I
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thought that was a really interesting thing in David's interview there around this idea of moving
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away from the carbon footprint. Because one thing we can say for definite, having done all
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of these search around the world, is no one, you know, nobody understands the carbon footprint
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in practice. There's that good or bad when you get given the size. I certainly don't know how to
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translate a carbon footprint abstraction number into action. So there's a lot in this area of,
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you know, breaking down some of the old consensus and saying, actually, based on where we are now,
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how do we do things going forward? And Kogo are a really good example of that. I think the real
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challenge for them as they go forward is, how much are they able to stay focused on the core
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problem they are going after? And how much do they have to start to play into the internal
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agendas of banks, which quite often will be sticking to a more traditional, you know, idea
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of how you communicate sustainability, how you talk about these things. And I think if we're
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under that kind of a notion of how we make things now, one thing David said that I thought was
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really powerful is moving away from being a direct feature. So that's essentially a widget to do a
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thing. So it's a service for customers to understand the carbon footprint to your point,
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people don't really understand that. And it's useful to have kind of a personalized data, but
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there is often a bit of an intervention needed by the customers. So if you're thinking about like
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the impact of your home, the kind of a public data sets might think your home is X, Y and Z,
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but actually, you need to kind of update that and make it more specific. One thing I thought David,
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what David said was really interesting. And the thing that I think will help make that shift
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from direct like tracking your carbon footprint is again, this notion of the value exchange.
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And it was when he was talking about actually, if you have a more saleable home, because you've
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got solar panels, you've made kind of a different insulation choices, etc.
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actually better mortgage rates or things that impact customers. So I think it's going from
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one step beyond just understanding your carbon footprint, because that's really just a number
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and my better or worse and a better or worse, it's actually going to something that impacts
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your day to day life. Oh, I can do more of that. And then I think it creates that dialogue. As you
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said earlier, Nick, a lot of these decisions around sustainability and making sustainable choices
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have a price point and a cost. And then I think you can do what most people do in their day to day
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lives. Can I afford this? Is it worth it? Do I want to spend my money on this? And I think it's
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that value exchange gets broader. I think that gets quite interesting. And I think also, the thing
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we know, but isn't easy necessarily for the fintech world to digest is, you know, it's going to be a
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dead end. If we use AI to personalize apps on the basis of if the deal is still that I need to open
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my banking app, come into an experience and you've you've you prioritize certain things to show me,
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then that's not a huge step forward. Because actually, what we need is to create services and
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products that require me as a consumer to be less. And so actually, at the right time, send me some
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message around making changes to my home, if that's the thing I can afford at that point, you've got
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an offer around that thing or something to say. But that requires us to one rethink how the experiences
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work. And secondly, also to measure ourselves in different ways, because the truth is,
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lots of financial institutions really care about engagement on the app right now.
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Because that's the way those teams are incentivized. That's what they see could a good app experience
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being as people are logging in very often. Whereas, I think the reality of where we are is if we can
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build the systems in a smarter way, then it should be that the way you build loyalty is not that you're
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logging in every day is that you really turn up at the right time with something useful to say.
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And that's going to be really important for the sustainability changes that go on.
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So the next one is as a person called Tom Kittle co founder of place with Palisade, we'll get straight
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into you what Tom has to say. My name is Tom Kittle. I'm the co founder and co CEO of a company
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called Palisade. Palisade is a digital asset custody platform. And we provide safeguarding of assets,
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digital assets such as Bitcoin, XRP and Ethereum to enterprise and institutional clients.
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Custody by nature is very, very sensitive. And it means that everything you build or anything
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you build in that space has to be scrutinized. My background is as a software engineer. So I've
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been a software engineer for about 20 years. So custody as a product, as a platform presents a
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number of very, very interesting software engineering challenges around how you provision the wallet
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and the private key and then how you safeguard that and safeguard the assets in flight.
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And so from an engineering perspective, super, super interesting. I think, you know, custody also
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comes with a lot of obligations around regulation as well. And that's been one of the biggest
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challenges for me and for our team is, you know, figuring out what those obligations are,
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the jurisdictions that we want to operate in, etc. One thing that we would do differently if we
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would start all over again is we'd certainly focus more on the go to market earlier on,
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commercializing the product much, much sooner. Custody is difficult, difficult thing to build.
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So we spent the last two and a half years really heads down focused on building that.
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I think what we would have done probably earlier on is brought more design partners on
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to help us, you know, build the product in those earlier stages. I think that our process is
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definitely going to change. And I think what will change for us is like the hiring process.
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I think that's been one of the most biggest challenges for us is like finding the right
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people. And so we need to come up with better ways to, you know, bring those people in those
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right people in. What we're ultimately looking for is people that want to go the distance with us
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and not just pick up a paycheck at the end of the month. And then, yeah, so I think that's been
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the biggest, biggest thing for us. And I think that's something that we would continuously focus
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on improving. As I said, my background is software engineering. But for most of my, most of that
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career, I've really been focused on how can I use software and the experience I have in software
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to build a solution to a problem. And so it's always been a means to an end for me.
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I think probably what I would have done earlier in my career is worked more closely with commercial
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teams. I had a great opportunity to do that at Ripple. So I was working for a company called
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Ripple Previous to this, very small office based in London, and meant you were very close to those
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commercial teams. But I think I would have probably moved around in organizations and maybe got a bit
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closer to the commercial teams. This is the main focus. This is like the core of our project,
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of our product is the safeguarding of digital assets. But the technology side of it, I would say,
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in the Web3 space is becoming commoditized. So we use a technology called MPC. We use HSMs as
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well to secure those digital assets. And that layer is becoming commoditized. So what we're
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starting to do now is we're seeing companies competitors to us start to add those value added
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services on top. And we have a few of those. So tokenization is one of them. And that's like a
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new product line that we're developing at the moment. One reflection I have from the three
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startups we've just heard from is each of them talked about commercialization. You talk
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you kind of alluded to, I think, both the economic landscape and the challenges that
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fintechs and startups have in the sense that they're founded on a particular mission.
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And typically people are kind of hyper focused on that, whether it's the financial education platform,
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the carbon tracking, etc. with Kogo, and what we just heard from Palestine
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around the kind of security of some of the crypto assets. All of them are so different,
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but they're all struggling with commercialization. Well, I think it's maybe a fundamental question
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for fintech in Europe in particular, or maybe around the world, because one of the things we
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still haven't seen from the last wave of fintech, the rise of fintech, was that lots of that was
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based on the assumption that lots of these companies were going to be acquired by incumbents
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in different places. And we aren't seeing that come through that any kind of pace. Now, in terms
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of the solution in the short term is that there's lots of great founding teams being set up in
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different places and some interesting solutions are there. And certainly because of the way that
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the economics of building a product has changed, those companies can grow fast, they won't necessarily
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grow faster, but they can grow profitably much earlier. So that allows them to succeed. But
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there is still a question mark, I think, in terms of are the banks about to make good on their part
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of the buying and so far as this market is concerned, which is are they going to start acquiring these
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companies or are they going to start adopting the technologies at scale, which has happened in
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pieces in different places. And there are indeed banks like TSB you're on stage with who've really
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sort of pioneered genuinely bringing companies in for pre-for-concepts and scaling those solutions
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across the bank. But as a as a European scene, we still don't have that conveyor belt, which
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was always the story of events like Money 2020, actually, which the idea was that we're going
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to have lots of these new companies coming through, put them into the marketplace. The big
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establishing incumbents were then either going to adopt that solutions and scale it so that
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company would become very big or on the flip side acquire their solution. It happens in patches,
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but it certainly isn't happening anything like the scale that the people projected a few years ago.
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Yeah, for sure. And I think the partnerships is interesting. So we were on stage with TSB,
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so they're head of partnerships, Irina Balor, and we were talking about accelerator labs and
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how they're kind of a fast track for success for fintechs or kind of a fast track to failure.
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The role of partnerships is quite different. I think you're seeing fewer acquisitions and
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more flexibility being held by the by the bank and the financial services institution with the
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partners that they work with. And I think with the pricing models too, with some of the SaaS
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companies in the fintechs, it's a far more challenging environment for the fintech and
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really flexible for the bank or the financial services organization. But I think that age
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old decision of what do we build? Who do we partner with? What do we buy? I suspect there's far more
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in the partner debate rather than in who we buying. And I think actually we're seeing a lot more
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kind of a financial services institutions interested in being an early investor rather
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than necessarily acquiring. So to actually have just like they have a really broad innovation
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portfolio, a broader portfolio for their partnerships as well.
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So that leads us on neatly because one of the other conversations we're having a lot on the floor
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was partly with party for starters, I was part of the banks that were looking to drive innovation
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in different ways, but also with trade bodies, governments looking to develop their fintechs
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seen in different places. And I know Josh, he caught up with Mikhail Paris or fintechs,
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Scotland, the particular to talk around the way the ways in which what they do is changing.
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That I did absolutely. And we'll demonstrate why you had to say.
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I'm Mikhail Paris, I'm the marketing director at fintech Scotland. We are at money 2020 today.
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We try to come every year. But it's the second year in a row that we've done that in collaboration
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with the Department of Business and Trade for the UK and Scottish Development International.
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We'll be hosting a panel session later on to speak about the future financial regulation,
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which is a topic that's very close to our heart with the financial regulation innovation lab
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that we launched in Glasgow at the start of the year. A lot of fruitful thoughts and
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improvements that we are looking at just now as we're about to launch the second innovation call.
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What I loved was to the idea of bringing the industry together. We've done innovation calls
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before with Lloyds, with TSB, with Phoenix, with NatWest and they've worked amazingly well.
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And we thought, you know what, for some of those challenges that are industry-wide,
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and when you look at financial regulation, it caused the UK financial sector over eight billion
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every year. We thought, let's bring the large financial industry together. Let's bring the
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academics together, the universities, the University of Glasgow, University of Strathclyde,
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and the power of research there. Let's bring the innovators, not just from Scotland,
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but from around the globe, and see what we can do to make things a bit better. So that was the
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highlight for me on Demo Day. We had 100 people in the room just connecting from all industries,
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all sizes, and that was really uplifting and really, I wasn't surprised because I know in
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Scotland we've got a very collaborative ecosystem, but it was really reaffirming that we're doing
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the right thing, that the cluster in Scotland is very vibrant. It's definitely been a trend towards
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more collaboration between large and small if you want to go into that role between FinTech and
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established firms. So if I go back to a bit further, when we started in 2018, the two would be
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looking at each other, not knowing how to engage with one another. The large FAS probably looking
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at FinTech as those maybe threats that are wanting to take business away. And on the other side,
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the FinTechs looking at the large FAS saying, you don't know how to do innovation. We're faster
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than you, we're smaller than you, we can do things a bit better. But in fact, when you look at the
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Scottish FinTech community, we've got 235 companies in there, 99% are B2B, so they want to work with
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the banks. That's their route to market. So they're not here to take business away. How do you bring
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that innovation, those great initiatives from FinTechs and you embed them into your BAU so
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it can be fit all your customers? That's the difficult part. From a procurement perspective,
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it's hard. When implementation, it's hard. It's more in terms of the difficulty comes more from
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maybe the culture, but also the way of doing things. Because you can't help it. FinTech will
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always be faster than a large FAS. Not because they're better, it's just because they're smaller.
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And we just have to realize that and learn how to work with one another really. Where we are just
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now and where we'll be in maybe even one year or two years time is going to be very different.
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AI is moving so fast. It's already being used by a majority of the FinTechs in Scotland and I'm
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sure around the world as well. At different levels, sometimes it's just for content supply,
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sometimes it's a chatbot, sometimes it's like predictive at the company that's from Scotland
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with us today at money 2020. It's about looking at trading and how do you automate that.
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It's real replace jobs. A lot of people try to reassure themselves saying that actually it won't
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and it will be used by people to enhance their capabilities. I think it's absolutely true,
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but I think it would be wrong to assume that that will always be the case. I think at one point AI
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might be good enough that it can actually replace maybe most of a company's employees. What do you
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do with that? I'm not sure. How do you reinvent the society where maybe only a small portion of the
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people have work? I don't know, but I think AI is going to push us to really reinvent everything
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we do from a technology perspective, from a societal perspective, from a culture, from a human
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perspective. It's going to really find who we are and our purpose on this planet. If you don't have
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to go to work, what do you do? Big questions. We published the FinTech Research and Innovation
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Roadmap a couple of years ago and we had four key themes that came out of it. Financial regulation
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was one. We also had payments. On the payment, we're looking at potentially developing a center
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of excellence, looking at DLT technology, crypto, cryptography, digital identity under that theme.
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On the climate, we've been doing quite a lot of exciting work. Just started with Space Scotland,
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which is quite surprising. Not many people know, but Glasgow produces more satellites than any other
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cities in Europe, which is great, which means we've got a lot of things up there, sending a lot of
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data back down. What do you do with that data? You can look at things like insure tech, risk
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prevention, or damage analysis after a storm, for example, or you could look at supply chain
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management, all those things to come back to AI. If you put AI with open banking data, it's only
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going to be as good as the data it gets. If you want to give someone financial advice, you need
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to know about the pension, you need to know about the credit cards, you need to know about the savings
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product. Until you reach that state, AI is not going to replace a financial advisor, which is
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what I was hinting at earlier. In the future, maybe, and that's where we intervene and we do
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those calls to see what's out there and how we progress the overall sector. I'm looking for 2024,
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2025, yeah, plenty to do. Not a lot of time to do it. It's interesting hearing here, Michael,
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there are big questions in a whole host of different ways. I guess in some ways, Scotland's
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interesting example of all this, right? In terms of actually giving the question, the conversation
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we had before, in terms of commercial cases, really interesting times for startups in an ecosystem
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like Scotland to face into regulation challenges, given the high level of regulation compliance
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teams with big banking groups that are based in that market. That's a great opportunity.
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On the flip side, long term, those are the classic areas for things to be automated and jobs to be
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taken away. It's a really interesting time, actually, for the Scottish ecosystem.
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I think what we're not here talking about is the jobs that will be created, a lot more in data,
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because I think powerful AI requires clean data sets that we can use. It was interesting at
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Money 2020. Different folks were talking about the risk of losing jobs. Some people were in
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the Kells camp, they're very much around. We're going to have to really think about how societies
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frame very differently. Things like universal basic income, and those things people are mentioning.
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But actually, other people were talking about, yes, I think the shift is going to be very difficult,
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but there are a lot of new jobs being created, data analysts, AI prompts as well, those type
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of things really expanding. One thing I think was interesting, and Mikael just said, is around
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some of the industry-wide things as well. There's this we've been talking about with fintechs.
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Fewer are being acquired, but more are being partnered with. I think that's just a strong
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direction of travel, and we'll see more of that. It's interesting how partnerships teams at big
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financial services institutions use fintechs and engage with the community, both about knowing
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what's coming and connecting the dots around the problems that they're having internally and what
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fintechs can solve. I think that's what a great partnerships lead will do at a bank.
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And I think the industry-wide things and challenges give startups confidence that it's not just one
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bank that has the problem. I think that's quite important when they're going on their own investment
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journeys as well, creating, convert their products and services. That's, yeah, that is very true.
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Very true indeed. Lots of big things have come up as we go through these conversations.
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For those listening to this podcast over the coming weeks, we're going to be facing quite a
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few of these things, especially when it goes through the different news podcasts each week,
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especially around this idea of innovation in the face of climate change, which is going to be a bit
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of a recurring theme as we go through. Also, though, for people that are interested in fintech or
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fintech yourselves, we will have live challenges out just now, all of our social networks, partly
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with the TSB Open Lab and also with the Financial Regulation and Innovation Lab that
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Mackell referenced there. So lots of opportunities to get directly involved as well.
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I think this is a really interesting one for fintechs because at TSB, they're all about
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launching new propositions. Their focus is around open banking. So whether that's consumer facing,
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propositions, helping people understand what financial products are relevant to them and
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write for them in that moment, helping SMEs like business accounts and small businesses get paid
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on time. What does children's banking look like in the world of open banking, but also ones around
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data sets? What can banks do differently with different data sets? I'm just making this a plug
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about TSB Labs now. And lots of other opportunities as well. Also, if you work in the drinks industry,
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there's some interesting challenges coming out on the socials as well. And plus, Josh will be happy
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to get through an entire episode of this without talking about street party and the fact that you
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are a little bit groggy the next morning, Josh. So this is like a bonus.
