(upbeat music) This is FinTech Insider News. This week, Clana applies for US banking license, financial platform for immigrants Lemfai buys well-v8 and Santander publishes AI projects on GitHub. We'll be tagging all of this and more on today's news show. So please don't go anywhere. (upbeat music) Hey folks, David Breyer here, CEO of 11FS. Here's something you might not know about me. I get a lot of people trying to impersonate me online, fake profiles, scam emails, the lot. And a big part of that comes from data brokers, hundreds of them, quietly collecting and selling your personal information, your phone number, email, home address, job title, all out there, and all fueling identity theft, scam calls, and spam. If you've ever searched your own name online, hands up, who hasn't? You'll know how exposed you really are. That's why we've partnered with in Cogni. They contact 230 plus data brokers and tell them to delete your information, properly and legally under GDPR and CCPA. Doing it yourself would take hundreds of hours. In Cogni automates the whole thing and keeps working with repeat removal requests if your data reappears. I tried it and within days saw brokers deleting my data. You can even protect your family members too. Fintech Insider listeners get 60% off an annual plan. Just head to incogni.com/fintechinsider and use code Fintech Insider. And yes, it's risk-free with a 30-day money back guarantee. You'll find the link in the description. (upbeat music) - Hello and welcome to episode 180 of Fintech Insider News, brought to you by 11 of us, the now six time consultancy of the year. That works with financial providers big and small to build the next generation of financial services. I'm Ross Gallagher, the head of consulting here at 11FS. Now to help me unpack the biggest and most interesting stories from Fintech and financial services from the past week, I'm joined by a quite brilliant panel of guests. First up, we have a welcome back to the show for Dave Morris, the CEO of Foundry OS. Dave, as ever, it's always great to see you. Maybe you can just remind the listeners a little bit about yourself, your role, and what's going on at Foundry OS. - Yeah, good to be on again, Ross. Foundry OS is a SaaS banking and wealth platform that we've been building from the 11 of us family over a few years, which we finally launched at the beginning of this year, and we're now live on offers to customers. A lot of plans for what we're doing next half of the year. A lot of interesting AI things, so it'd be good when we get to the last story around the center and stuff. We can talk about some of that stuff. So yeah, it's really good to be on again. - Yeah, great to have you Dave. Thanks for coming on and sharing your insights and perspectives. We now have a Fintech inside a debut for the one and only Kylie Ado, the head of UK operations of Upvest. Kylie, welcome. It's lovely to have you. Thank you for coming on the show. Would you mind just introducing yourself to our listeners and maybe a little bit about ground into Upvest as well? - Of course, yeah. So yeah, my name is Kylie. Thank you so much for having me. As you mentioned, I'm currently head of UK operations at Upvest. And at Upvest, we provide an investment infrastructure in the form of an investment API. So we allow bio and Fintechs to offer investment products for their end-Jews, as without having to build custody and brokerage systems from scratch. So we actually began in Germany in 2017 before obtaining our UK license and moving to the UK in 2024. And now we empower the investment offerings of the likes of Zopabang, Kaplum and Rafferlut. - Really cool. Some really cool brands there. Great partner ships. It's lovely to have you, Kylie. Thank you for coming on. - Thank you. - And last but not least, we have another very welcome back to the show for Jason Macooler, the publisher of Fintech Business Weekly. Jason, likewise, always great to see you. How are things going? - You know, it has been a toasty summer here in the Netherlands, but I am surviving and it's always great to be back. - Awesome. It's always great to have you. And look, we've got some really great stories that I'm very excited to dig into. So I suppose without further ado, let's do just that. So this first story comes from Fintechs, true of the headline, "Clana applies for US banking license." So Clana has taken another step beyond it by now pay later routes, applying for US banking license to establish Clana bank USA. The Swedish Fintech already operates as a licensed banking Europe, but a US license would allow it to bring more of its banking operations in-house, supporting payments, savings, lending, and merchant services under a regulated banking entity. The move comes as Clana continues to broaden its proposition. Alongside BNPL, it's launched a debit card, announced plans around stablecoins and entered the peer-to-peer payment space. Clana also joins a growing number of global Fintechs seeking greater control over their banking infrastructure. Earlier this year, Revolues applied for US National Bank Charter, while Wise has been exploring becoming a bank and has taken steps to deepen its own banking capabilities in both the UK and the US. They've all come to you first on this one. Obviously, Clana's built its reputation as one of the world's leading by now pay later providers. What do you think it gains by taking this next step and becoming a bank in the US? I think for me, this is about then trying to get more of their own destiny and control, so bring things in-house that they're not relying on partners anymore for. For say, it'd be layer of partner. You put in its cost as well, so there may be a degree of that. I'm not sure how much they'll go from a bank perspective in the US and whether it's more about being able to control where they're going and produce overall costs and things like that, be interested to see where they go on that. I'm sure how deep their pockets from the marketing perspective want to be to actually go out there and actually become a US bank fully. I think that'll probably be a stretch to far in the short term for sure. And Dave, we mentioned in the sort of story overview that the likes of Revolute and Wise have been making some moves in this space as well. Do you think this signals maybe more of a fundamental shift in terms of the strategies that we're seeing some of these thin text taken, I suppose, specifically in reference to the point about wanting more of the infrastructure and all of that side of things under their control? Yeah, there may be a degree of keeping up with the gems that's going on that they don't want to be seen. If Revolute had in that way and Wise had in that way, they want to keep going against them. Maybe they want to keep following that sort of route and that control at their own utilities, the Wise at the bottom. But maybe as well, it's the current banking world in the US and where some of that's being pushed from an administration perspective and things like that. So trying to make sure you keep it in your own control as much as possible. Did you want to jump in on that, Jason? Yeah, I mean, I think it is a couple of things that I think are worth noting. Specifically, it relates to the types of charters. So the US is very interesting and bizarre from a banking landscape. It is the only country with a dual state federal banking system. And then even within that federal or the national level charters, you do have different kinds of charters, right? So we mentioned Wise. In the United States, Wise is actually specifically applying for a national trust bank charter, which is not a deposit-taking charter. It does not enable lending. So it is correct to say that Wise is seeking a charter in the United States, but it's not in any conventional sense of the word a bank the way that a typical customer, a typical consumer would think of one. When it comes to what Clarna is applying for here, it's specifically applying for a Utah ILC, which is a Utah industrial loan company charter. And not that I want to go to politics on this podcast because I absolutely do not want to do that. But I bring that up because there is a sense that under Democratic administrations, this type of charter of the ILC is basically a no-go. We haven't seen any granted under a Democratic administration since the 2008 financial crisis. And I'm simplifying this, but the basic reason why is ILC is a company can hold an ILC, which enables them to hold deposits, ensure deposits qualify for FDIC insurance, while not having the restrictions of the bank holding company act apply. Now I know that I'm not a lawyer. I don't think any of you guys are lawyers or solicitors or barristers. But in the US, typically a commercial business, so like a St. Mary's or a Tesco in the UK, typically cannot hold a bank charter. The ILC is what some might refer to as a loophole or an ability for a commercial business to have a banking subsidiary that takes deposits. So you see companies specifically in the automotive space, Ford, Stellantis, BMW, either historically have these charters, or now that the so-called charter window is open, seek to a
apply for them. So I think that Dave, to your point about sort of like, insourcing or taking more control of their destiny, I think that certainly a component of it, right? Right now, Clarna is heavily dependent on its partner web bank, which also happens to be a Utah ILC. And this also, you know, in the medium to longer term, gives Clarna the ability to source USD-denominated deposits to fund its business. So I mean, there's a whole array of reasons the control over the destiny, the improved economics, the greater control. And like, frankly, now's the time. There's a sense that if you apply now, you're much, much more likely to get approved than you were under the prior administration. And there's real uncertainty, not just of what happens at the next US presidential election, God willing, that they have one. But even what happens in the midterm elections, which could shape how banking regulators treat denovo bank-trader applications and FDIC deposit insurance applications? I have so much respect for how delicately you navigated the political aspects of that, of that explanation. And actually, it's so helpful to draw out those nuances and understand the differences and the different types of charters, because I suppose it's easy to rush into drawing too tight a thread when you see a few different UK-based thin-texts going in at the same time and kind of thinking, oh, is there something underlying here, but not necessarily, right? They've all got their own individual reasons for why they're doing what they're doing and why they're going for the specific types of charters that they are. Absolutely. And Carly, we're seeing more thin-text moves beyond a single product into the broader financial ecosystem. What do you think, what are you think starting to drive that shift? Yeah, I think it's heavily driven by customer needs and expectations, to be honest. I think if my bank or ISO provider can provide me with a full suite of products and services, it really does reduce the need for me to have multiple products with multiple banking partners or thin-text. So I think it does make sense, Senate's almost a bit of a risk of not providing your customers with more. When it makes sense, of course, I don't think you should go into insurance or something if that doesn't suit the needs of your customers. But I think ultimately, if you can find them with everything that they need, the need to look elsewhere isn't really there. And ultimately, I think the more that you know your customer and what they're doing outside of your platform. So, for example, if their first product is just a cash savings product, but your customer might have a mortgage somewhere else and savings and investing somewhere else. But if you only see that they have £1,000 saved with you, you might have a very different picture or understanding of that customer than seeing actually their whole financial profile. So I think that does also really drive the desire for a bank or a thin-text to want to understand their customer and to provide all of the products that will allow them to do so as well. Yeah, completely agree. And I suppose, Carly building on that, there's also I suppose the customer perspective. And I'm very clear what you're saying is that you very much got to start from a very deep understanding of your customer and what your customer wants. What do you think from their perspective makes that sort of financial platform compelling? Yeah, I think a product suite that makes sense and also having a solid UX. So the products that I'm being offered when I log onto my app needs to suit me and my financial journey. So if I talk about myself, I'm fortunate enough to be a homeowner, but I don't drive a car for example. So if I log onto my banking app and it's offering me car insurance and telling me to look for the best mortgage, it's not really going to match with what I'm looking for at that moment. So I think the product suite and the needs have to align. I think also like brand and UX does go a long way. I genuinely was having coffee with a friend yesterday. And we were talking about how we both independently had quite similar experience of trying to withdraw money from an app that we both use and how it was quite difficult. And so that's an experience that I'm going to remember and that's not going to, you know, drive that product or that company is being compelling in terms of my experience. I think definitely the UX and also products that make sense for me. Yeah, like the impact of that sort of negative experience and negative word of mouth, just like it's so much more impactful than like positive word of mouth for sort of better or worse. And on that point, Jason, because you know, the US is one of the most competitive markets now, I think, from a financial services perspective. And so nailing all of those points that Carly mentioned around experience and offerings and all of that sort of stuff is just so important. Yeah, absolutely. I mean, I think a trend that we've seen in the US and to be fair in pretty much every other market is FinTech's startup companies go in and identify a specific pain point or a specific which could be UX that is not being met or well served by existing players in the market. Use that as a wedge competitive advantage to peel off customers and then sort of land and expand from there, right? So if we think about like so far, for example, and I do think so far is probably the best example in the US market is like if you were upper income and you were carrying student loan debt, like there's a pretty bad experience. You were paying high rates, you had multiple payments. So if I identified that segment, high earners with good credit and potentially multiple private and public loans and said, hey, we're going to give them a better product and a better experience. And then using that as a wedge, over time has been able to build a full product suite and attempt to cross sell their users into other products, checking savings, mortgage, crypto and so on. It's still an uphill battle because you know, if those users are already having that need met somewhere else, if they already have a mortgage somewhere else, if they already have an investment account somewhere else, it is a challenge to win them over. But there is I think a benefit that if the product is par or better and the UX is par or better, there's a benefit to having all of those needs met in a single app or in a single company. And so we do see this sort of land and expand or this wedge product strategy time and time again, whether it's BNPL with Klarna and Affirm, whether it is international remittance with Ys. And I think you know, it is a time tested strategy assuming that the company is able to execute. I think Klarna overall does have a fairly good track record of execution. And Dave, final word to you on this, I mean, picking up on the points that both Kylie and Jason have made about the delivered experience, the offerings, the propositions, you know, how important is it that they have the license in terms of the experiences and the propositions that they can deliver. And obviously, I mean, beyond, you know, not being able to offer specific financial products and more, I suppose, back to the point you made at the top of this story around operations, technology, et cetera. Yeah, I think for a lot of, when it comes out, for a lot of customers, do they care if they're a bank or not? I'm sure with that, you know, all the people who've, you know, in the UK have received the emails from Revolut going, we're now a bank, you know, even I've got a bank account and you go, and then I'm as vast majority have gone, I thought you already are a bank rather than I think, but, but, you know, if you've got the, you know, if you're getting the right service, the right products at the rise price points with the right experience to customers, actually at that point care, that much, whether it's a banking license or not, yes, some people will because, you know, you know, is my money guaranteed in some sort of, you know, deposit guarantee scheme or whatever, some people will think about those things. So, I think the vast majority don't and at the end of the day, it's, you know, a market in the right service, and it's at the right experience and the right, right, you know, the right cost for what I'm doing. Yeah, agreed. Although I will say shout out to Revolut for the Graham Norton ad, because I think they've nailed that in a similar way to the, they sort of seem to be nailing everything at the minute. And all right, excellent. Well, look, I'm going to move us on to our next story. This one comes from Finnexture with a headline of financial platform for immigrants LEMFI buys wealth eight. So, LEMFI has received regulatory approval to acquire UK investment platform wealth eight, marking another step in its evolution from a remittance provider into a broader financial services platform. Founded in 2021, LEMFI had begun by helping immigrants send money home, but is steadily expanded its offering through savings credit and now investing. The company serves more than two million customers across Europe and North America and recently announced plans to invest 100 million pounds in the UK over the next five years. Well, they mean while was built to make investing more accessible, particularly for underrepresented communities with low minimum investments and diversified portfolios. And, Cully, I'd love to come to you for us on this one. What do you think has driven that evolution? Yeah, so first, I think it's a really, really good move and it does make a lot of sense. I think LEMFI did a really good job in terms of starting with one very. specific problem helping people some money home. That was it. If you've already kind of built trust with your customer in terms of them, remiss the money home and then you're taking them on a journey which is then saving them, fried in credit, I think customers will then also increasingly expect you to help you to help them grow their money as well, especially if you're holding on to their money for any period of time. So I think investing is becoming more and more of a default expectation for any financial platform with real scale. Just a few years ago, it was still treated as a specialist product. It's not that anymore. So I think what's changed isn't only customers appetite. It's also the infrastructure that allows firms like Lemphide, like I partner with Wellfate or other platforms to offer investing. So yeah, I think it's driven, I guess, by customer need. The fact that they've already built their trust, they understand to their customer ears, but also the fact that for Lemphide itself, the gap between we can move a customer's money to we can actually grow a customer's money is a lot smaller than it used to be. And actually, Carly, I think to your point on the previous story is quite a natural evolution, quite a natural follow-on from where they started in terms of expanding out that offering and something that adds tangible benefit for their customer base. No, genuinely, and I think it does almost feel like natural progression now, not to plug where I work in, but at Artfast, we've also seen demand from our mittens, companies to offer broader financial services, our investment opportunities. And I think ultimately, I mentioned it before, but really earning that person's trust when it comes to taking care of that money is a massive first step. Once you've done that, it's almost a responsibility to then help them achieve their financial goals and achieve better financial outcomes. I think you know it's fair to say, if you map the performance of cash balances over a period of time compared with investing, investing will always outperform. So yeah, I think it's really important for the industry to also be looking to achieve those better financial outcomes for its users, and that does heavily include direct them into investing when it's appropriate. And I couldn't agree more about your point about trust. And it kind of reminds me of Mox, sort of standard charter's digital banking, Hong Kong, and they used to talk a lot about winning heart share when they were designing out the proposition we were lucky to work with them quite closely in the early days and help them design out the proposition. And they used to talk about trust all of the time and that being a really core part of the proposition. And they've gone on, obviously, they've been enormously successful. I think they're sort of signing up close to a million customers. And they've launched a whole heap of products that build on top of the existing proposition. One of them was Mox Invest, and straight away once they launched at 10% of their existing customer base, signed up for the investing product. And I think it's because they prioritize building that trust, winning that heart share. And so that, you know, when that next product came along, it made sense from the customer's perspective. So that definitely resonates. And Jason, to Carly's previous point, this goes back to the point that you were making in the previous story as well about start small nail your niche and then sort of build out from there. Yeah, absolutely. I mean, I had two thoughts. As you were sort of talking through the story, I mean, one is exactly that piece, right, which is essentially customer acquisition across all. You already have these users who are on your platform using it for remittances to send money home. I mean, that is an indicator that they have disposable income might not be quite the right word, but they have income in excess of their expenses that they're able to send money home to their family, which is a good indicator that they should have income that is that is investible. I mean, another related thought, you know, there's definitely academic literature. And this is based more on like low moderate income communities in in the United States, but the principles should generalize to the scenario where individuals or families that earn more than people in their sort of social or family network become often become depended on to help support friends and family, essentially when they have a hard time if they need to borrow some money, etc. Which on the one hand, you know, is is a positive. On the other hand, it can also make it very challenging for those individuals or those households to build wealth because when a friend or when a family does fall on a hard time, you know, somebody is, you know, knocking out the door or texting, you know, I had a flat tire, my boiler broke, whatever, asking to borrow money. So I think that like integrating a wealth building opportunity alongside a remittance platform like this makes a lot of sense as far as trying to simultaneously meet both of those needs. Like, yes, of course, you want to support friends and family, you know, back home, but at the same time, you should be supporting, you know, supporting your own family and building for your own future. And so offering those two capabilities in parallel, I think, you know, intuitively makes a lot of sense. Yeah, and I guess it's where things like the sort of low minimum investment requirements come into their own because you can start small and you can sort of build it up over time and build good habits and behaviors around, um, around investments, which, which I think is so important. Dave, what was, I'm interested, what was your reaction when you you read this story? Yeah, I was just, there's a couple of things. It was slightly, you know, slightly cynical head of mine or some of this is about keeping money in their platform. If you're in a remittance platform, you know, it tends to be money going through. And, you know, they're not necessarily holding, you know, cash assets within their world. And then, you know, that remittance is a hard world. It's, you know, it's a competitive world. It's all about price point. And so by offering the wider service of people who trust them in there, they not only are probably, you know, getting an easy acquisition to a wider product set because they've got people who trust them for the remittance piece, but they're also now extending what actually is kept within their world on their balance sheets and be able to sort of, you know, increase their scale as a company as well at the same time. I think the acquisition is interesting because for me, it's, you know, it lets them run forward very quickly without having to partner or build it themselves or anything like that. You know, often the, you know, what, why do you buy? It's about getting that quick. You know, not having to wait to get to market on things by by bringing things in. Whether, you know, that shows that they were relatively cash rich or had, you know, a good view of a strategy around their investing. I don't know, but, you know, it's a smart move to actually have it as part of your, your world as opposed to going out and partnering if that's your long-term strategy for sure. I like that you're keeping us honest with the cynical view. I think it's easy to get carried away. You know, it's all sit around and be like, yeah, it's all great. But no, I appreciate that. I guess, Dave, as well, you're starting to sort of touch on that sort of like build partner by strategy. And I suppose there's without wanting to generalize too much because I appreciate obviously this will be an individual decision for each business that's making it. But, you know, how do, how do fintechs in particular tend to think about that? What informs that decision? Yeah, well, often it depends where you are in, you know, in your life cycle, in your investment position. If you want to get there, if you want to get some work with Glee's end partner, you know, and often works well at small scale. And as you start to grow, you know, that is, you know, every time that you've got a layer of partner, you're giving a slice away. And so as you scale, you want to have it in your own world so that you're not giving it away and you're, you know, not not having to pay fees out to other people and you're keeping that all within your own control. So there's a balance where that, that, that, that twists over. It's one of the things we talk a lot in, in foundry, US where, you know, that one of the things about switching where you're partnering is often an economic decision about the scale of where you are. You know, what you're connecting to may work really well day one, but, you know, six months, eight months out when you've got, you know, a million customers, that doesn't work at all and economically becomes unviable quite quickly. So that ability to switch things out there in there. The fact that they went straight into this with something that they owned is the interesting bit on this role of starting partnering with some pink and then thinking about bringing something in when they've proved it to be successful. It's quite a ballsy move. Yeah, and there's rest.
right? I mean, ultimately how good this feels from an end user perspective will depend on how how successful that integration has gone or not. Kylie, any final thoughts from you on this one? Yeah, so I guess two points. I kind of want to respond to what Dave said about the skepticism. Think super fair. I mentioned that at VES we have seen demand from remittance companies to begin offering investment products. And I think it speaks to the fact that their end users are also demanding this or expecting that anywhere that they're leaving money at some point it should grow. Obviously you can have base rates of interest but we all know that in face to move so lot quicker than interest. So you know, it's not a great outcome for that end user. I think when you think specifically about Lemphine, Wellfate's customer base it is those underserved, up and are represented. A community is in Jason's spoke about some stats from the US and we have similar stats in the UK in terms of that ethnic Wellfgap. I think it was like five years ago there was an article or a paper about the fact that for every I think the Wellfgap for Black British and Bangladesh households on average will have 10 times less wealth than a white British person. So that gap still very much exists. And I think the decision for anyone to send money home is not because it's from disposable income. It's a need and they've often maybe moved to this country to serve the need of their families back home. So I think yes granted it is also an opportunity from a commercial perspective for Lemphine for a wealth of eight. But ultimately they still met that customer at the point of need. So maybe it will start with sending money back home, maybe then a year later it will be about building savings and then eventually hopefully it should be about investing for their future. So yeah, I take your point. It is definitely a revenue-generating scheme and opportunity. But it also for that end user it's unlocking something that they might otherwise not have access to. So I definitely think it's important to bear that in mind. And then on the point of infrastructure, I work at an infrastructure provider so there's an element of an angle though I'm approaching this question with as well. But there is so much happening in the financial space and in the industry, even when we think of regulations and new things that coming out AI open finance, there is so much going on targeted support as well. Four firms to have time to build and to keep pace with their competitors. Often it's not a case of, should I build in house or should I outsource? It's a case of a case if I want to keep up with everything else that everyone else is doing. I need to have engineering and product resource to be able to do that. And so day to day outsourcing of say an investment infrastructure arm or buying that via another company, I think at least can also be a long-term strategy just to keep up with everything else that's going on. In the industry, but I appreciate with scale like that can also involve a lot of costs. So yeah, those are my just two cents on these points. That's awesome, Kylie. Great point. Thank you so much. All right, well look on that note, we are just going to take a very quick pause here and we should be back with you very shortly. Before we get back to the news, we wanted to tell you about our latest insight show. This week, Kate Moody is joined by Joe Colchester and Olivia Vassick from the 11FS Pulse team to explore the next generation of AI experiences in financial services. Drawing on Pulse's latest research and exclusive conversations with Robin Hood and public, they discuss what separate genuinely useful AI products from AI hype and what the rest of the industry can learn. Now back to the news and our final main story this week is from Phinextra with a headline, Santander published is AI projects on GitHub. Santander has published a number of its internal AI projects in GitHub making them freely available under an open source license in an effort to encourage collaboration across the industry. The bank has released 11 projects developed by its AI lab, including tools for generating synthetic fraud data and testing AI systems for fairness and bias without exposing real customer information. The move comes as Santander continues to scale AI across the organization with plans to give all 185,000 employees access to AI tools and an expectation that the technology will generate more than 200 million euros in business value next year. Dave, obviously very keen to come to you first on this. I know this is something you've been looking at for a little while, but what's your reaction? What's your experience? Yeah, obviously right now in what we're doing at Foundry OS and the wider world that we're working with the 11FS holdings team and David Breer and the team there is a lot of AI things we're doing on there about AI driven on board and other aspects of things. It was interesting to see them publishing this. I'm a big fan of this collaboration in that space. There's a lot of people who are trying to get their heads around what does AI in a regulated world mean to a lot of people. We talk a lot about a lot of the things that you have to do in the regular space, really have to stay on the left brain size. It's very decision rule based things that you couldn't give to a lot of these LLM models and things like that that are very much predictive in what they do because you need the same outcome every time and you're not less likely to get the same outcome every time on those models. Whereas if you're making a decision about onboarding a customer, you need the same outcome. You need to be able to prove that every time. Some of those things, some of the things that they're looking there around some of those guard rails in there and some of the things are sort of lined up with some of the things we're working on. We was interesting to see some of that stuff. Actually this synthetic fraud stuff, we were actually starting to work on our fraud monitoring piece and things like that and actually taking a lot of advantages of some of the stuff that I'd logged out there because it was actually great just to build billions of transactions out to actually play around with and things with embedded fraud profiles within that data. Some of that's being really useful and I can see a lot of that collaboration. We use a lot of open source in other things and people contribute from my team back out to those projects. I think we'll probably contribute back to some of this stuff as well. I think that collaboration can only be a good thing for the wider industry for sure. Completely agree. Kali, I saw you again, nodding along during some of David's points for what's your reaction to this one. I do think it is a move that definitely makes sense. I think Davey spoke about awaiting to see what the regulators do in the AI space in particular. I think talking about fraud fairness and AI in a collaborative way is really essential because they are industry wide challenges. It's not just something that Santander will be experiencing or one bank will be experiencing almost in a fairness perspective. I wouldn't want me to be less protected by fraud, depending on who I bank with, for example. I think in a highly regulated space, like banking, these problems are so interconnected that it's not so legal for only one single institution to do it by themselves. Ultimately, the end goal is reducing fraud. It's having regulations that define appropriate use of AI for everyone in the industry. It does require us to collaborate and do so. I think even day to day, we are up there. We often share how we are using AI internally with our customers and our clients. I think that also builds trust even from a client and a supplier perspective. What we're doing, the fact that we've been innovative, but we've also been very mindful and conscious of how we use it as well. I think collaboration is key across the board. I couldn't agree more, especially when you're talking about solving for really big problems, major problems like fraud, Jason, what's your reaction? At the time when there's both a lot of excitement and growth around AI and AI tools, but simultaneously a certain amount of skepticism and even backlash from consumers. I think it makes a lot of sense to be more transparent in how industry can benefit from some of these tools. I think fair to say unusual for financial services institutions to make tools and things they've developed internally, fully open source. Maybe you see some of this collaboration in the form of bank-owned consortiums. In the US, even Visa and Mastercard, or at least Visa, was born out of a bank-owned consortium. That served the needs of all these banks. Obviously, this is a little bit distinct, but I think not to put on my somewhat cynical hat, but I think from a PR standpoint, it is a positive.
be able to say, hey, look, like we have developed, in this case, Santander has developed these tools using AI technology AI capabilities. And they are using them to do, you know, what I think anyone would create are generally positive things, trying to block fraud, trying to ensure systems they're building are fair and free from illegal bias. And so I think by making these available through GitHub on an open source basis, I mean, one, hopefully it helps other financial services, players in the industry to to benefit from the resources Santander has expanded to develop these. And again, maybe a little bit cynical on my part, but it also is sort of a demonstrates the potential positive force that AI tools and technologies can have on industry and on consumers. And it's also incredibly important that, you know, financial financial providers, financial services providers in this space are proactive, right? Because we know that the bad actors are going to be using these tools, right? So it's where they already are, right? Exactly. And actually the rate at which they're evolving and improving is terrifying. And so it's currently going back to your appointment, which I think you articulated so well, this is an industry wide challenge. And we have to come together to sort of, yeah, create the tools and the protections for consumers. Yeah, exactly that. I think it is really, really important. I don't want to reiterate everything that has been said, but there is so much scope with AI, like even internally operationally, when it comes to engineering and releasing things, when it comes to how one industries use an AI versus another. There is so much that we get to uncover. And so I think there is a lot of learning out there and a lot of learning to be had. So yeah, the one we collaborate the better it will be. And Dave, I think, look, as an industry, we've probably been guilty of being maybe a little bit parochial and generally tending towards protecting our competitive advantage rather than sort of collaborating with other players. You know, we're not what we're not saying here is that banks are giving up their competitive advantage in terms of how they use AI to design better customer propositions and experiences and all that sort of stuff. What we're saying is we're talking about a very well-defined set of problems and co-creating a set of tools to help. And those two things can coexist, right? Yeah, yeah, absolutely. Yeah. These are tools and framework things. And some of the things in there are fairly basic. There's no secret sources, nothing in there that putting out there for sure. So, you know, although they're helpful, I think it helps people understand how to work on those sorts of frameworks around how AI is going to work into the complications of our regulated world that we sit within. And I think the other challenge for a lot of people is how one where do we best use AI? Because there's so many people who are on the hype at the moment who are consuming the crack of AI, which they are going to end up in problem. I know people in engineering teams who are struggling with the costs where the token prices because they're just consuming it for everything. Healthy skepticism of some of this stuff is quite important because you know, use AI for adding value, not just for the sake of it, or you know, there's only one direction the cost of tokens is going. These people have got to make a lot of money back on these big investments. And so, you know, the anthropics and the open AI are very hackily wanting us to just use it for everything and get us bought into the addiction to it because that's where, you know, they will get us all back on it all. But for me, it's about looking very carefully and going. There's a lot of value that AI can add, but use it for the things that are adding a lot of value, not just for the sake of it. Yeah, and Carly, I mean, the value point is interesting, isn't it? I mean, Santander said that they're going to generate more than 200 million euros in business value sort of with AI next year. Do you think it's that useful way for them to be thinking about measuring its success? So, I'm just talking about Jason's reaction to that. But, yeah, I mean, the value definitely has to be measured at some point. You know, AI is almost a bottomless bucket in terms of how much you can spend on AI. So, value definitely does have to be measured. I think it's actually up to each business owner within Santander or any other company to define how they're going to measure it as well. Our best, for example, each individual has 20,000 euros worth of tokens each year to spend on AI, which is a huge amount of money. But you'd want to be see where that value is being, you know, use how it's being driven. And so, for me, with my operational hat on, I'd be thinking about, okay, am I saving costs? My increase in efficiency of my cost to serve reduced for every client that we have, for example, and how can AI adoption drive that? How can I measure that? If I worked in commercial, I might be thinking about, okay, have I released AI through hyper personalization for my end issues. So, that's meant that actually they're putting more money into the platform, which means that I'm generating revenue off that. If I worked in support, I might be thinking, because my customers satisfaction gone up because they've had an experience with a bot that's given them really accurate information really quickly. So, I think it's definitely up to each business stream to kind of define how they measure that value. But I think also as a company as well, like it has to be clear what the expectations are, how they are protecting their staff from also the use of AI, and ensuring that people are still thinking critically. Because I don't think I know anyone, and I'm speaking for myself as well, who's typed something into Gemini or a Claude and have the exact perfect answer. Like, I have caught so many mistakes. So, it's definitely important to still be thinking about things critically. But yeah, definitely important to still measure value, how that's defined I think has to be up to each business owner, even with then a company. I think that sums it up really well. So, then on that note, we are just going to take a very quick pause here, and we will again be back with you very shortly. Okay, now for a quick look at the story, we don't have time to cover in full. This one comes from FF News. It was a headline, "Styling Bank debuts UK first quote, "snatch theft detector to combat 64% surge in summer phone fraud." So, "Styling Bank has introduced a pair of new security features designed to tackle the growing problem of phone theft and the fraud that often follows." The first is a quote, "snatch theft detector," which uses a smartphone built-in motion centers to detect when a device has been forcibly grabbed. If triggered, the "Styling app" immediately locks itself preventing access to banking services until the user authenticates with biometrics or their passcode. The bank has also launched, quote, "safe locations allowing customers to nominate trusted places such as their home, where certain transactions can take place without additional checks." Attempts to move money outside those locations will trigger extra authentication, helping protect customers if criminals have managed to steal both their phone and passcode. Now, Bernadette Smith starlings, chief customer banking officer, sent us a soundbite about this product, so let's listen to it. This week at Starling, we launched "snatch theft detector." This is a UK first banking tool that's designed to protect our customers from account takeover fraud, which can happen as a result of having your phone snatched. It works by using the accelerometer in your phone to detect if the device has been snatched at speed. If it detects movement, it will automatically lock the Starling app and require a passcode or biometric authentication to enter the app again. So for example, so you're watching the England game at the pub and you're checking your balance on the Starling app. And a thief snatters your phone from your hands, they'll be locked out of the app entirely. This can make all the difference in protecting a customer's money as it prevents the thief from draining funds from your account and into theirs. We're launching this tool now in the summer as our fraud records indicate that the amount lost to account takeover fraud searched by 64% in June, July and August of last year. It's a typical trend for the summer months. People are out and about more enjoying festivals and sporting events and the longer evenings, but it also means that these have more opportunities to shoulder serve for their details, snatch their devices and access and drain their bank accounts. We're really excited to be launching "snatch theft detector." It joins our roster of fraud and scam prevention tools, including scam intelligence, which uses AI to detect the signs of bromance scams, investment scams and many more. And we've many more planned. Wow, I mean that 64% surge in account takeover fraud is staggering and terrifying and it's amazing to see financial services providers stepping up and putting the fraud prevention tools and controls in place to help protect this. Obviously we saw Revolute announce its street mode not too long ago.
slightly different angle in so far as starting to be focusing on detecting the physical act of a phone being snatched while reveling focuses on making it harder for thieves to move money after the theft has happened. But again, look, I mean, incredible to see these types of fraud prevention techniques and tools being put in place to protect customers from what is already an enormous and obviously a growing problem. All right. And finally, from banking licenses and AI to one of the most important financial institutions of them all wait for it. It's the tooth fairy. This one comes from the financial times with a headline, tooth fairy payout near five pounds as UK childhood finances overtake inflation. Well, actually worries me about reading that headline is they've got tooth fairy in quotations. I don't know how many young children read the financial times, but that could give it away. The tooth fairy appears to have received a pay rise. According to netwests rooster money's latest podcast money index, the average payout for a lost tooth is now almost five pounds. While children are also receiving just under 10 pounds a week in pocket money on average, perhaps the biggest challenge though isn't the amount. It's how it's paid. Rather than finding coins under the pillow, many parents are now transferring the money into their children's savings or pocket money accounts. So we thought we'd finish with a little nostalgia and maybe a little parenting advice. Jason, I mean, this is a cracking story. No, it's hilarious. I mean, I the thing that occurred to me in particular about paying the, I guess, the tooth fairy money into children's directly into their savings account as opposed to physically giving currency. Not to sound like the nerdy academic that I am or I almost was. But there are also studies that people are more likely to basically save and spend less when they're using tangible physical currency as opposed to the lower friction debit or credit card or of course now mobile payments. And I mean, I will, I know this is an audio medium. I will reveal my age and it's like growing up. My allowance was a physical in my case $10 bill, not a 10 quid bill. And yeah, I had a savings account with a physical, with a physical passbook that I could like write down when I deposited money. And yes, this is like all the timey and I doubt that any parents listening to the second to do that. But I do think that those rituals teach certain habits and responsibilities that are much harder to replicate in a purely digital way. I love Jason how you've moved on from sort of like very succinctly navigating politics to now very succinctly navigating time travel. I feel like, I feel like we should probably spend the rest of this show just explaining what a passbook is for our listeners. Dave, what was your reaction to this one? I'm not that old for the right. We did say you'd reveal your age and then you didn't. So now we just left it hanging and it's just up to our listeners own judgment. Yeah, I'm quite happy you didn't reveal because I'm sure I'm my children. And then the stowder of the passbook and the guy used to have the site as well, that the printer when you took it in and and it was printed in at that still I still remember that noise of the you know the impact printer going across those. I can't see how I'm sorry, you know, I remember it's a long time, no, because my kids are in their late 20s and then they've come in up to 30 but it was always cash under the pillow and it had the mysticism of it that you know, it hadn't come from you as a parent and you know, not sure how long it lasted before they were like, I know it's come from from from from your parents. But it's going to arrive in their pocket money account all their you know, their monso account or whatever you know, you know, and you know, it's obviously it's come from Mum and Dad and the other, you know, the transaction reference has two for Perry on it. I'm sure there's a lot, the quite the same same mysticism to it in that for me. With a with a tooth emoji. Like it's I'm kind of with you Dave. I mean, look, we love digital. I mean, our podcast is call FinTech insider. But Carly, what do you think for me? I feel like there's you lose something when it's instead of getting something under your pillow. It's like, we'll go check your app. Yeah, don't I say I actually also do remember having like a little book which I take to the bank. My name is actually from Abby National, which doesn't even exist anymore. So I'm also feeling pretty old in the group. I never got money from the tooth fairy, but I did get £10 a week when I was asking secondary school. So that was kind of my first exposure to money. What I will say is I don't know if maybe we're also viewing it a bit differently because I guess for kids now, you know, pocket money and penny sweets aren't really a thing anymore. So maybe actually this is just how the next generation are going to view money. And maybe it's an opportunity for parents to actually talk about money in the sense that all like so looking at our banking apps, how much of you got all you did like you you choose this week or I can see an extra £5 for little Tim or you know, so maybe this is actually just how the world is going. And because I think even places where you can spend cash nowadays is dramatically reducing as well. So maybe you know, giving the kid a pound. I don't know how far that's really going to go. So yeah. It's a really good point. And I love you pulling us like like like nostalgia like back into the modern world. I think that is really useful. All right, look, I'm going to wrap us there. Thank you so much to today's guests. If we just do a quick whiz round, maybe you can tell us a little bit more about where people can get in touch with you, where people can find out more about both you as an individual and I guess your companies. Dave, let's start with you. Yeah, you can find me Dave Morris on LinkedIn or on content at FandryHiveForNoWes.com. Amazing. Thank you, Dave. Carly, how about you? Yeah, you should find me on LinkedIn as well. So Carly, I don't know without one are confusing me. But working with our fast and yeah, you'll see me posted about what I do on a day-to-day basis and also things I mentioned to them. Amazing. Jason, are you? You can find me at Fandric Business Weekly.com as well as on X and LinkedIn. And my best link book about bank Fandric partnerships is available on Amazon. Amazing. Thank you, Jason. And as for me, as ever, you can find me on LinkedIn. That wraps up today's episode. Thank you so much for listening to today's show. If you like what you heard, please make sure to follow us on your favourite podcast platform of choice. And if you really like what you've heard, why not share the podcast with a colleague or friend. As always, if you want to join the conversation, find us on social media, just search for 11FS or FinTech Insider or email
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