← Fintech Insider Podcast by 11:FS
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- [00:15]
A
Welcome back to FinTech Insider. I'm Benjamin Ensor and today we're talking about something that affects every business. Whether you're a fintech startup, a digital bank, a licensed financial institution, onboarding a business can be where the magic stops and compliance chaos begins. In this episode, in partnership with our friends at 3S, we're diving into why onboarding businesses is still so broken, especially for the mid market. Too complex for small business flows, too small for enterprise grade service. Totally overlooked. We'll be digging into why Know youw Business for businesses. KYB or KYC is still miles behind the sleek, streamlined experiences that people have come to expect in retail. We'll explore what it actually takes to onboard and verify complex business structures. Think multi entity, multi director companies. And why the industry continues to overlook the missing middle businesses that are too complex for startup flows, but not quite big enough for enterprise grade attention. We're also going to zoom out to focus on a bigger question. Are we seeing the rise of offshore banking 2.0? In a world of borderless founders, globally distributed teams and decentralized operations, how do you even begin to onboard a business that lives everywhere and nowhere? Let's get into it. Firstly, we have someone who is very familiar with 3s and the work that the company does. The Chief Executive, Ivan Zhesnevsky, Founder and Chief Executive at 3S Money. Welcome Ivan. Can you tell our listeners a little bit about 3s money please?
- [01:55]
B
Hello everyone, I'm Ivan. I'm a founder and a CEO of 3S Money. We build a state of art cross border payments and effects platform for all sorts of cross border businesses. No matter where the founders are based, no matter where the target market is, we're bringing them closer to their customers and we allow seamless transactions. Cross border. The main product that we offer to them is an IBAN that that can collect and send money for business purposes to and from any country in the world. And indeed today's topic is resonating a lot with us as a business and to me personally because I was left out from the banking system myself when I tried to open a bank account in the Netherlands. Being American national living in the uk. So the true cross border nature comes together and every single bank in that country said no to me. And that's how the whole idea of non discriminating of founders based on their passport color came about.
- [02:56]
A
Lovely. Joining Ivan, we have a FinTech Insider debut for Rudolf Jaeger, senior product lead at OpenPaid. Welcome to the show Rudolf. Please could you also tell our listeners a little bit about you and a little bit about your role at OpenPaid.
- [03:12]
C
Thank you, Benjamin. I'm Rudolf Diego. I'm lead product manager at OpenPaid and I've been in the financial services industry industry for over 15 years. My career began in the asset management industry as an analyst before I pivoted into fintech in mid 2010s, right as the sector was generating momentum, neo banks were emerging and blockchain technology was entering the mainstream. So I had a little bit of a fear of missing out. So I decided to make a switch into fintech and since then I've been specializing in product management for internal tools that power onboarding and compliance processes with a focus on creating intuitive, efficient experiences for internal teams to accelerate that time to revenue. Before OpenPaid, I held product roles at Zopa and checkout.com. at OpenPaids, I lead a squad dedicated to building onboarding technology and due diligence provider integrations, helping the business to streamline compliance processes and scale onboarding with confidence.
- [04:23]
A
Fabulous.
- [04:24]
C
It's my first experience recording a podcast, so I'm very excited for the opportunity and to share my experiences and learn from the panel.
- [04:32]
A
Oh, fantastic. Well, welcome to the show and I'm also delighted to welcome Emma Lindley, the founder of Women in Identity. Welcome back to the show, Emma. It's great to have you on again. Can you remind our listeners a little bit about you and a little bit about women in Identity, please?
- [04:49]
D
Of course I can. Thanks, Ben. My name is Emma Lindley. I have spent about 20 years in the identity industry. I was part of a team that built the UK's first identity proofing tooling. Thought I was only going to do identity for a couple of years, so I'd fix the Internet, fix identity on the Internet, and then would move on to something else. Twenty years later, I'm still doing things with identity on the Internet. So yeah, I've worked a number of different roles. I was head of Identity and Risk at Visa and I'm currently an independent consultant working with private equity firms, VCs in the ID and fraud space.
- [05:29]
A
Fabulous. Well, welcome. Okay, well, let's dive in. So in this first part of the podcast, we want to discuss exactly what's sort of going wrong with onboarding for businesses right now. So people who have opened an account with a digital bank, which I imagine is quite a lot of the listeners to this podcast, will have gone through a pretty fast and often fairly easy process involving a selfie, taking a picture of your ID and so on. That takes maybe minutes maybe, maybe 10 minutes if you're a bit unlucky, but a quick and easy process. But any of our listeners who've tried to open an account as a business may have had an experience a bit like yours, Ivan, or indeed, of course, you may have been talking about your experience as an individual. Why is it so much harder to know your customer checks for a business than it is for a consumer? Maybe let's start with you, Ivan. What's hard about it? I mean, I realise a lot of people know the answer to what's hard, but let's just get the basics out. What's hard?
- [06:33]
B
Well, the basics is that we're dealing with a legal entity and normally a legal entity is more than one person. We need to identify who is behind who is running it. And there's an other dimension to it as well. What business is this entity is conducting, whether it's genuine or not. So compared to retail banking, where we're identifying an individual, here from start we're dealing with multi layer identification of different persons and business activities where consumer activity is quite simple. Yeah, doing shopping, going out for groceries, holidays and stuff like that. Business activity is more harder to assess and it's even more difficult to explain to customers that this information is required in details to get them on board. That's a challenge.
- [07:26]
A
Emma, do you agree? Is that right? Is it just that it's just more complex or are there other factors as well?
- [07:32]
D
Yeah, so I agree. I think KYC was, we figured that out quite a long time ago because it, because it was an easier problem to solve because you're just having to verify the individual. As Ivan says, when you're doing kyb, you have to verify that the company is a real company and it's on the official register of whichever country it's in. You then have to verify the directors and the shareholders and then what you've got to do is dependent on which jurisdiction that you're regulated in. You often have to get to the ultimate beneficial owner. And the challenge with that is the ultimate beneficial owner can often be in a completely different country, as can the directors and shareholders. So even if you're perhaps you're a payments company and you're verifying a business that's in the uk, you will still have to potentially hop across jurisdictions to verify the directors, the shareholders and get to the ultimate beneficial owner. So it is more challenging, it's more of a process than it is just being able to take identity documents. And for all of those directors and shareholders, you have to verify the individual identities as well.
- [08:49]
A
So you're saying there's sort of two levels of complexity. One level of complexity is the fact you've got sort of multiple individuals and multiple entities and so on involved. And then the second one is when you throw in the cross border dimension, that isn't necessarily a Singaporean company with Singaporean directors operating in Singapore, it's a Singaporean entity with directors from Malaysia and.
- [09:09]
D
Indonesia and wherever, with directors all over the world. And that's really challenging. Right. So even if you think that you're doing businesses, doing business with businesses in the uk, it means that you end up having a cross border element to your verification, even though you're just doing business with businesses in the uk.
- [09:26]
A
Rudolf, I'd love to bring you in as well. We've sort of got used to fintech businesses, you know, just coming up with amazing innovations that make everything simpler and of course, you know, that's happening all the time. But it does seem this problem has been quite an intractable one. We've seen progress. What do you think? How much progress are we seeing?
- [09:45]
C
I think the key issue with business onboarding is it's not as formulaic as kyc, so you can only create onboarding rules up to a point, at which point it's about trust, it's about gaining that understanding of the business and it's a discovery journey. So you're on the discovery journey with your client and during the compliance interviews, for example, with the business, you might discover some aspects that you want to explore further and request additional documentation, for example. So that is very hard to put into a rule set. But the progress has been made, of course, in the KYC space. So that friction of requesting two plus two from the directors and the shareholders has now largely gone away and that speeds up KYB a lot. But there is still the inevitable element of the trust building and the discovery aspects of the business that is still very hard to automate.
- [10:49]
A
Ivan, I'd love you to build on that. Obviously there are some sort of red flags that all of us can imagine that if a business is involved in, I don't know, gambling or pornography or arms trading, obviously that's going to be a little bit more difficult to onboard. So presumably there are certain activities that businesses can be involved in. But what are maybe, are there some other sort of things where, you know, hang on, as soon as the business is involved in this, it's going to be complex. So are there certain jurisdictions, certain countries in the world where maybe all the records are on paper? Are there certain Things where you hit something and you're like, oh no, this is going to be more difficult because X, Y, Z.
- [11:24]
B
That's a spot on question actually. I think one of the challenges in business onboarding is the mindset, the compliance mindset because we're trying to use old risk assessment tools for modern world and it's largely based on nationality or country of residency. Right. Oh, there's a Nigerian founder behind this business and it was just set up a few weeks ago. Can we trust it? No, we can't. It's high risk, we don't want to deal with it. Yeah, that's what's happening a lot. And it puts lots of different people off the financial services industry and actually prevents them from making money and doing good business and offering their fantastic services. Cross border. Also thinking about all these threats, oh, it might be pornography or it might be gambling or something unregulated. And at the end of the day we're all so scared that we don't want to make a judgment call. We're scared to make a decision. And again, that puts a lot of good businesses off. But to tackle that, I think, and I agree with Rudolph, that fintech made a tremendous progress in creating a fairer risk assessment journey for those businesses that High street banks can learn from. And let's define what the quick onboarding actually means because the definition of what's quick for business and for individual is very different. If a cross border legal entity can open an account and if we can onboard them say in 10 days, this is super quick. It equals instant onboarding of an individual with Revolut or Monzo. Right. So with High street banks, this onboarding journey for these cross border entities can take weeks or even months. So if we can shorten it up to two weeks, we win.
- [13:22]
A
So let's build on that mindset point. And Rudolf, you were sort of alluding to it a little bit around sort of. How do you get to the point where you trust that, that you can take a business sort of on board? How do you sort of shift from a sort of maybe purely sort of rules based box ticking approach to more of a sort of trust scoring type of approach where you say, okay, we've got to the point where we're comfortable with this.
- [13:47]
C
I think there's still a lot of mileage to go in bringing teams together and the data that you collect about the customer together. So that's where I came in from the product perspective, is that we have largely solved the issue on the customer side. We all know how to design a good onboarding form. But what happens once that form is submitted to the internal teams? Often the experience of the onboarding analysts is ignored and they're assumed to, they will just find out their way. And you have disjointed information sources, you have multiple systems, you just really have a poor UX for the hard working analysts. So in changing that mindset and giving that product attention to the internal tools, you can gain a lot of reduction in times revenue by bringing the systems together, by exposing the data at the right time, by making sure all the customer information in the right place so that the analyst can make that trust this decision much quicker.
- [15:09]
A
Very interesting. What do you think Emma, on this sort of mindset point that Ivan's making? Do you think that's, is that right? Is that part of how we get better at this?
- [15:19]
D
I suppose there's a few parts to this. I think the compliance people are scared by the regulation and the regulators. Right. So they're frightened if they get it wrong that they'll end up with a fine or having their license taken off them or whatever else. And one of the challenges that I think we have with business onboarding is the availability of the authoritative data sources, particularly when you go to some of these jurisdictions. So you mentioned gambling. I mean, I've worked with the gambling industry and onboarding for a long period of time and I actually, I mean some of those businesses are incredibly well run. They're not risky businesses and you know, lots of payments companies, you know, onboard those businesses all the time. I think one of the challenges that we have with those types of organizations is because they sit in, they often sit in tax havens and those tax havens don't have the authoritative data source available for organizations to verify against. So if you're, you know, Curacao, Cayman Islands, you know, I'm going to do gambling, tax haven, bingo, Gibraltar, some of those. It's quite hard then for analysts to go, okay, I can now access that data source. Because actually that data source might not be available and might not be open. So I think there's a regulatory piece where a lot of the, you know, there needs to be regulatory pressure put on some of those jurisdictions to make that data open and available. I know that's kind of a big statement, but I think that would make a massive difference because then the data would be accessible and analysts then could go, okay, you know, I can access the Cayman Islands registry. And then I think what we are seeing in the industry is we are seeing organizations starting to build kybal systems from the bottom up. So what I think we've seen historically is organizations say well we've got a KYC system, we're just going to tag some KYB capabilities onto it. That doesn't work in my opinion. What you need is it needs to be purpose built for KYB because it's this process. And actually then the analysts need to see where the application's up to because it might be five days in. They need to know what data's been compiled and then be able to know what data they still are waiting for to make that a complete onboarding. And what I think we have seen in probably the sort of the last five years is the identity industry starting to see some of those kind of new startups just to put a couple of names out there like Detected is one of them. But they've actually built a KYB system from KYB the problem rather than going we've got a KYC system and we're going to tag some of that on. So I think we are starting to see it. But I work with lots of companies and have done historically that particularly payments companies who were trying to onboard gambling companies that have a huge challenges with trying to do kyb. And I don't think it needs to be as hard as it is. Both from a tooling perspective but also the regulatory perspective. To Ivan's point, the regulator enforces the regulation but is not taking into account the fact that the data might not be available. And it makes it almost impossible.
- [18:42]
A
Ivan, you've obviously built 3s money to sort of try and tackle some of these problems, particularly around where you've got a founder who's born in one country, passport from a second country, setting up a business in a third country, or maybe multiple founders, all from different places come together. What have you learned about trying to design the onboarding flows to work better? Kind of along the lines Emma was just talking about.
- [19:04]
B
I think Emma made a very good point and it is if you don't understand what gambling is, you should not onboard a gambling company. The international businesses became so diverse and we witnessed that at 3s money in the time of COVID when people and founders realized that you don't have to travel to to set up a business. You can sell everything online, you can register your business online, you don't have to be present in another country to offer your fantastic product to other people. And that led to a whole new generation of very diverse small and medium sized businesses that started to enter cross border space. And compliance analysts cannot be expert in all industries, in all types of businesses that exist in the world. And because it's so diverse and all these applications are coming to us daily. Today you're dealing with an importer from China, tomorrow you're dealing with financial services, custody for securities from Luxembourg, and tomorrow it's digital Nomad from Dubai that is dealing in apps development. Right. And you cannot possibly know all these clients, all their flows and actually I think a compliance job is very exciting these days because you're learning about so many different things daily. Right. And therefore I believe that there should be industry specialization within fintech where I'm dealing with international trading flows. And 3S is entertaining that logistics companies flow of goods from China to Europe. And we're experts in that, we know how to assess that. But we know nothing about gaming or gambling, we know nothing about some other areas of business. And if you try to create a product for everyone, then, well, many people are getting upset. It's better to be best in class in one thing.
- [21:13]
A
Rudolf, what do you think? Maybe if you could solve sort of one thing, if you could sort of try and fix one of these sort of multiple levels of problem we've been talking about, what would be maybe one of the ones that would make the most difference?
- [21:31]
C
I think absolutely right, to Emma's point, inconsistent data formats like you have hundreds of global registries and I'm not even going to try to reconcile how even the simple address field is defined in different registries. There are of course the aggregators that are emerging, emerging than trying to solve that problem. But you still have to manually map that into what those fields mean for you internally. So there is a still huge opportunity for unification of KYB data standards and data formats.
- [22:11]
A
Emma, if you could wave a magic wand, what would be sort of one of the things you'd wave a wand at to try and fix?
- [22:19]
D
I would fix the global registry problem. I would fix the data problem. Data's and I've been talking a lot about data in relation to AI because everyone's getting very excited about generative AI and AI and what can be done with it. But it's baseline, you know, and this is the same with the registry. If the data's not available or if the data's really cool, you actually can't do anything. And so, and data is not sexy, unfortunately. Nobody likes to talk about data, but I think it's one of the, one of the really big issues if, if the registry data was made available and, and I'm not saying making it available because we had A huge problem in the UK which, which they've only just tried to fix recently, where to get a business put on the UK registry, you didn't have to go through an identity verification process and the data was publicly available. So we had a huge amount of problem with fraudulent businesses being put on the UK business registry and then also people stealing people's data and identities off the UK business registry. So I'm not saying that, I'm not saying it should be open and I'm saying that there should be an identity verification process to get on the registry in the Cayman Islands or Curacao, but having a license to be able to access that data, you know, if you're a fintech or if you're one of these ID companies and that data is made available and the UBO information is made available, you know, they have to take it and they have to make it available. I think that would really make the, you know, the biggest. If you. And there's no silver bullets in any of this, but that would make one of the biggest impact changes to the.
- [24:00]
A
KYB process globally, the UBO being the ultimate beneficial owner. And of course, one of the attractions of some of those tax havens is precisely that they don't reveal who ultimate beneficial owners of certain companies and so on are. So there's a sort of political problem there, is there not?
- [24:20]
D
Yeah, I mean, I didn't say it was an easy problem to solve.
- [24:23]
A
No, you didn't use it.
- [24:27]
D
You asked me a specific question. How do we make it easy? I gave you a very specific answer. That's what, that's what would make it easy. I'm not saying it's an easy problem to solve and I'm not saying it's, you know, it's a politically popular thing to do, but that will really solve it. Because the challenge is obviously sometimes the ubos aren't just trying to hide from tax. They could be in a, you know, could be in a nation state actor that is supplying, you know, money because they're laundering money for arms and, you know, human trafficking. So it's not just to do with tax havens. I think the challenge is they then hang out in some of those places and that is a multi layered problem.
- [25:08]
A
Ivan, what would be the thing that you'd most like to try and fix sort of overnight? Again, if you had a sort of magic wand and could magically fix something?
- [25:21]
B
I would like to fix up distrust in financial services industry because that's a major problem. If we could rely on, on each other, that would greatly help to identify these businesses and people behind them and everything else. Because imagine this relatively complex entity with a couple of founders in different countries and the business in third country and then suppliers all across the world and then they're getting on board, losing weeks of their time into one fintech or one bank and then they need another account with somebody else and the same thing repeats itself. And there's a massive distrust across financial service industry. Everyone keeps repeating we cannot rely on somebody else's assessment. We need to make our own judgment, our own judgment calls, which is the right thing to do of course. But we are in a licensed regulated environment where we suppose that other actors are other players observing the same rules. So what I propose is to create the level of trust that open banking has created in this country where we can source the data directly from another institution because they already made not even the assessment, but just source those data points that we expect a client to supply to us because they're already verified by another trusted party. So again, I give an example. A client comes to us, comes to three US money with an account at HSBC and they just need a currency that HSBC cannot offer to them and they allow us access like open banking to their banking details, to their bank statements and then we can analyze this data, process it and get them on board much quicker than if we just ask the same questions directly again and again.
- [27:18]
D
I think that's an interesting point because they've, in the UK they have actually the regulation does allow you to do that for individuals. So this kind of idea of reusable digital identity because it's been paving the way for the digital identity scheme and the reusability element of that. So it is allowed, to Ivan's point, it is allowed for individuals, but we don't have it for businesses. So yeah, I mean that would be another thing that would be helpful.
- [27:49]
A
Fabulous. Okay, we're going to take a quick pause here for a quick break and coming up we will dig deeper into some of the bottlenecks surrounding onboarding and how to get everyone on the right track. Welcome back everyone. Let's dive a little bit more into what it actually takes to onboard and verify complex business structures. This is multi entity, multi director companies. And one of the places we want to start is thinking about some of these sort of mid sized and sort of growing businesses because we hear a lot about sort of small businesses and brand new startups and there's big corporations are obviously taken very seriously, but sometimes the sort of mid sized growing businesses sort of Fall through the cracks. Ivan, is that something that you've seen, that there's sort of certain sizes of businesses that just harder or get less well served?
- [28:46]
B
I believe that there's no limits anymore, no barriers for business of any size to start trading cross border. But what happens by definition, once they say they're starting to trade cross border, it elevates their risk profile and we have to ask more questions about their overseas activity. So no, I don't think it's a question of a size. It's a question of geographies, where they intend to send the money or receive the money from. And that affects their risk profile. And unfortunately, the risk assessment again is very much based on geographies and countries. And if we believe that the country is risky, the country is bad, then it badly affects the journey for that particular customer. And it's very difficult to explain to the client as to why we need all this information, why we're asking again and again the same thing. But I do believe that user experience can solve this problem or make this journey less painful. I think Rudolf can share his insight about that. But from our experience, we see that customers, when they are being asked during the application process about different things, if they can receive feedback immediately on their answer, if we can prompt them to answer in more details to certain queries, then their journey is more successful.
- [30:10]
A
Rudolf, please comment on this because you've already talked about the sort of user experience for the analysts, but also the user experience of the customers.
- [30:17]
C
I don't think there is a chasm between SMEs mid market and the sort of white glove service at the top. So if your company is technology first and is investing in the onboarding technology, you can automate a lot of those checks that take most of the time, like the QC for connected individuals, for example. So if you already have a lot of those processes automated and streamlined, then pretty much any business can have a relatively smooth journey. What happens as the size and complexity of the business increases is that the data interconnectedness between the internal teams becomes more and more important. What I mean by that is that you are on board and you collect certain information and certain expectations about the trading activities of the company, for example. But when they actually come to trade, which could be several months down the line, you want to review that information just to make sure that everything is in line. And often the two teams are completely different teams. The periodic review team and onboarding team, they, they might use different tools, they might look at different information, and the flow of that information may not be very efficient. So from my experience, there's a lot of success from combining those teams, giving them the same tools to use so that they see the same information. So that trust and review and the ongoing monitoring is becoming much more easier.
- [31:58]
A
And I like that point, Ivan, you were making about sort of sharing the information or coming back to companies and saying, well, we need more information on this and more information on that. Does a more transparent process, does that work better for everybody? If both the company and the companies doing the KYB can all see the same information, does that help accelerate processes? I'm not really sure who I'm asking that question to.
- [32:25]
B
Is it me? Well, to my mind, the whole user journey, no matter what it is about, it's about managing client's expectation, what happens next. Yeah. That helps to prevent the feeling of anxiety from a client because what's gonna happen? I cannot manage my time. And for businesses, for entrepreneurs, it's so important to manage their time efficiently to understand where's the ultimate goal when it's going to happen. So as long as we at least communicate properly with a client so they can understand how much effort and time they're dedicating to the process, that's a big win.
- [33:06]
A
Emma, we live in a sort of increasingly globalized world. Well, I feel a little bit less confident about that statement now than I might have done five years ago. But to the point Ivan was making earlier, during the pandemic, we saw all sorts of businesses being set up in all sorts of places, trading with all sorts of places, businesses. And we have more and more businesses that do trade cross border, that have maybe founders from different countries and so on. I mean, is the sort of concept of a business's domicile even sort of still relevant? And I think the answer is yes, because they still have to comply with national laws. But how helpful is it, that sort of concept? Because you do have these sort of international, increasingly international businesses.
- [33:52]
D
Yeah, I mean, I think, I mean it all comes back to the regulation, doesn't it? Because I think then if we didn't do that, what's the alternative to say, well, this business is domiciled here, therefore they're going to get the license here, and therefore they're regulated here. I do think there's. Because obviously there's different types of due diligence that you have to do on businesses. And for big global, multinational, publicly listed businesses, you have a simplified due diligence process because they're so big and because they're publicly listed. And I do wonder, for Some of these smaller businesses, whether, you know, and I think Ivan was saying this, is there a more simplified due diligence process that we could take? Is there a iterative process that we could take to risk that allows those companies to have a more simplified business onboarding process? So it's not taking. And I think, I think the stats on opening a business bank account, it can be up to three months and sometimes longer. So some of the businesses that I've worked in, it's taking six months to open a business account, which, I mean that is just, it's ridiculous. It's too long. I mean I have a number of business bank accounts and I have them with some of the NEO banks and I have them with some of the large institutional ones and I'm not going to name drop which large institutional one. It won. It was, but it was a, you know, it's a British bank and it was, it was an unbelievable nightmare trying to sort out my British bank. So I think that we, you know, finding a way from a regulatory perspective because if the regulators can find a way to make some of this stuff more like a, take a real risk based approach rather than it being, well, you know, a bit more blunt force trauma, they will actually attract more businesses to be domiciled with them. You know, some more of these entrepreneurs will want to be based there because, and you hear entrepreneurs say that they'll go, oh, we're going to be based here because it's really entrepreneur friendly. And that's everything from them being able to set up their business to being able to get access to, you know, financial services. So I think there's an incentive for regulators to look at that and governments to look at it because it will have an impact on GDP growth. But we do have this, there is quite a lot of forward, you know, the regulations say this and analysts understandably get concerned about that because you know, their job potentially are on the line if they make a mistake.
- [36:33]
A
You're making numerous really interesting points in there, but among them are the concept of jurisdictions competing to be easier to do business in by simplifying or streamlining some of the rules, making it a little bit easier to comply with some of the rules, but also the concept of different companies, different fintechs, different banks, different providers competing with each other to provide actually better, faster onboarding processes. And I'm remembering some work we did for one of our clients here at 11F where we were looking at the different onboarding processes of various different service providers to fintechs and it was Very, very interesting how some of them had this, some had a really solid front door and it took you months to get to the front door and once you were at the front door you were allowed in. Whereas others, it was much more progressive sort of disclosure. Gradually you could do things and you could gradually start accessing certain systems, certain APIs and so on, but you couldn't actually move any money until you'd got through the final hurdles. But having this sort of progressive onboarding. Rudolf, you're nodding there. Have you been sort of thinking about that approach of like, can you sort of onboard companies in stages rather than it being just a yes, no process?
- [37:44]
C
Certainly it's a big product dilemma, whether you want to front load all of the work or you want what's called the staggered onboarding journey. And I think I've seen some studies that you actually, in a business onboarding context, you might as well get all the pain up front and you, because you don't want to protract that painful onboarding experience. So you want to make sure that you set the expectations early about what's required during onboarding process and if you must, design the onboarding form in a way that you get as much information as possible whilst you're having the customer, because a lot of the time is lost in the back and forth after the submission of the application. And reducing that back and forth actually allows you to save a lot of time. And that's where the emerging technologies like the, of course the AI and LLMs can help a lot because they can look at the application whilst you have the customer and provide feedback and allow the customer to self heal whilst you have them so that when it's submitted to onboarding teams, they have the full information to work with to make a decision.
- [39:07]
A
That's a really, really interesting point. So as you were talking, I was thinking about this sort of quantity of when you're trying to get into a cold sea or a cold lake or swimming pool, do you jump headfirst in or do you sort of dip your toe in and go in slowly? But that point you're making about AI is really, really interesting, that your AI agent in the background is potentially looking for red flags, looking for gaps in the information and so on. Sounds as though, Rudolf, you're already testing and experimenting and using that in certain ways, some of which you may be willing to share publicly, some of which you may not. I don't know. Ivan, are you also sort of starting to use AI in various places?
- [39:44]
B
We do, yeah. Everyone is playing with AI. These days and whether or not it's relia to use for risk assessment. Irrespective of that, I think it's very important to build a good communication channel with the client. That's what Rudolph was just touching on just now. When the client is in the context of the application, if we can identify that we need more information from them or some clarification and we can ask them straight away, there's more chance that they will respond and will be able to, to get them on board quicker. It's just real time dialogue with a customer about their business that is really, really helpful. And in terms of delivering this painful experience later or earlier in the process, I don't think there is a massive difference. Business customers live in fear. Okay, let's just face that. We need to be honest. They live in fear. And when they need a bank account, they apply to 10 different FinTechs at the same because they're not sure whether they're gonna have the luck of getting this account. And then more pain points come. It's just this anxiety of the payments getting stopped and maybe they get an account quicker but they were not asked certain questions and therefore their payments can get stopped. So yeah, I agree with Rudolph in this respect. If we could use technology to get as much information at start as possible that would allow to complete this process, then the customer suddenly wins.
- [41:28]
A
So I gave you all the magic wand earlier and you came up with a number of things that could be done to make onboarding easier, such as sort of better data, better data registries, more trust between financial institutions, enabling them to share. But if we try and improve business onboarding going forward, what are one or two of the key things that you think we want to see over the next three to five years to really try and improve some of these processes? We've started talking about some of that already with sort of AI and automation. Emma, perhaps you first. What are some of the things that you think we could and should see over the next few years to try and make these processes more effective, smoother?
- [42:17]
D
Yeah, I mean I think we are going to see more platforms, KYB platforms that are implemented, that are purpose built, that have a, you know, you can build your own workflow, for example, your own KYB workflow. And then I think that there is a, there is a real opportunity for AI agents to do some of that work of going back to the customer when they haven't got certain bits of documentation, rather than it having to be people, the AI agent going back to the customer and saying well you know, can you send us this, can you upload us this? I think there's a real opportunity there. Even if the data isn't easy to get, just automating the actual end to end process and using more AI automation will make a massive difference and I think it will be in stages. KYC didn't get get to where it's got to overnight. In the UK it's taken sort of 15, 15 years and we're not even at digital identities yet. So I think these are staged things. But I think even organizations saying, well, rather than us just continuing to do the manual processes, we're going to automate that part of the journey and we're going to use tooling to allow us to do that. It's a really basic thing, but I think it would just help the individuals then focus on the compliance cases that are complex rather than them just doing effectively the boring, repetitive everyday tasks that I see them having to do today.
- [43:55]
A
Rudolph, do you agree with that? Are there other things you want to see in addition to some of what Emma's talked about? What would you like to see over the next five years?
- [44:02]
C
Interesting point about the unified global due diligence standards and, and if you working across multiple domiciles you often find yourself sticking to the strictest requirement because it's just, let's just ask for the strictest requirement rather than have a dozen different application forms. So if companies are doing that, why there is not more collaboration globally to create those standards? And then on the internal sides I think there is an opportunity in how teams that are working on the onboarding journeys are organized and there is this great opportunity to create more cross functional, closely collaborating teams that do not treat onboarding as a project but treat it as a continuous discovery process and constantly gaining knowledge about the customers, about the pains of the onboarding journey, about the different integrations that can speed things up. Because if you treat it as a project, you get engineers in, they build your integrations and then move on and then the insight and knowledge moves on with them. But if you have an internal team that is dedicated to that onboarding journey, you very quickly see dramatic decreases in that time to value for the customer.
- [45:24]
A
Love that. Ivan, what about you?
- [45:27]
B
I may express provocative opinion here. I would like to get rid of customer onboarding in the next five years at all. No onboarding, no problem. No application, whether it's paper or digital. Yeah. Emma shared this thought earlier. It would be great to see emerging independently verified service providers where they can create a case for your business with all the data again, independently identified, verified. And when you come to a business where you want to get an account, you just share this file, this pile of documents with them and they process it in the way they want.
- [46:09]
A
So like a sort of verified identity for a business?
- [46:13]
B
That's right, yeah. A shared trusted digital identity, whether it's individual or a business.
- [46:18]
A
Love it. Is this something that. Who can build that? I suppose you're saying that could be independent companies could start not trying to create and build that. They have to work with lots of other companies to get that accepted.
- [46:38]
B
I think messengers can do that for individuals. I think Telegram made an attempt a while ago, failed. WhatsApp can do that. So like day to day communication services can take this on board and build out this service for businesses? Well, really difficult to say but I think the likes of open banking like cross border or governmentally supported initiatives can deal with that. Actually Companies House is now verifying directors identities. Right Emma?
- [47:09]
D
They are, they are doing that now. Yeah, yeah, yeah, yeah. There is an organization called glaif, which is the Global Legal Identity Something Something Foundation. Might have to edit that out because I can't remember what the acronym is. But they are creating a unique identifier for all businesses. It's been a pretty slow rollout but I am starting to see organizations use that rather than using the registry data themselves. And organizations have to go and they get themselves verified and then they get put on this registry. So it's a replacement for the registries. You still have to go through some of the other verifications. So I think something like that, that combined with being able to share verified business data would simplify things. I agree with even.
- [48:08]
A
Fantastic. Well that's a wonderful point to wrap up the discussion on. Thank you so much to the three of you for joining me today. This has been an absolutely fascinating discussion. Where can people find out more about each of you and about your companies? Ivan, where can people find out more about you and about 3s money?
- [48:28]
B
It is 3s money. And of course follow me on LinkedIn, Ivan, and start typing my family name with Z and you'll find me.
- [48:39]
A
Fantastic. Rudolph, where can people find out more about you and about OpenPaid?
- [48:44]
C
LinkedIn is the best. Rudolf Jago with an F and Y, a G O R. I'd love to connect and chat more. And you can find out about OpenPaid@openpaid.com with a Y where we are building a universal financial infrastructure to help businesses move and manage money globally.
- [49:04]
A
And Emma, where can people find out more about you and Women in Identity.
- [49:09]
D
Yeah. So emma Lindley on LinkedIn and Women in Identity as at www.womeninidentity.org and you.
- [49:17]
A
Can find me Benjamin Ensor on LinkedIn. So thank you all so much for listening. If you liked what you've heard, please do follow our podcast. Please do recommend us to friends and colleagues who you think might enjoy it as well. If you want to join the conversation, please seek us out on social media. Just search for 11 FS or FinTech Insider, or you can email us@podcastslevenfs.com thank you very much and goodbye.