Any Company Can Offer Financial Services | Summary and Q&A

TL;DR

The future of financial services will see every company becoming a financial services company, leveraging infrastructure to provide better products, more options, and affordable prices to consumers.

Key Insights

• 🐕‍🦺 Nearly every company will become a financial services company in the future, transforming the industry.
• 🖤 The current state of the banking industry is lacking trust and providing unsatisfactory products.
• 🐕‍🦺 Startups can leverage the new as-a-service infrastructure to enter the financial services market.
• 💨 Existing financial institutions can replace legacy systems and launch new products faster through partnerships with startups.
• 🐕‍🦺 The emergence of as-a-service companies will reduce costs and complexity, enabling thousands of experiments and innovations.
• 🐕‍🦺 Incorporating financial services can help companies better serve customers, drive revenue, and retain loyalty.
• 🐕‍🦺 Access to affordable financial services will become more widespread, benefiting consumers globally.

Transcript

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Questions & Answers

Q: Why is it important for every company to consider leveraging financial services?

By incorporating financial services, companies can better serve their customers, retain loyalty, and drive more revenue.

Q: What are the challenges startups face in the financial services industry?

Startups in financial services face regulatory hurdles and a complex infrastructure, but the emergence of as-a-service companies is making it easier to enter the market.

Q: How are companies like Uber, Lyft, Shopify, and Mind/Body already leveraging financial services?

These companies are not only providing their core services but are also offering financial services such as banking and credit cards, which can increase margins and retain customers.

Q: How will the future of financial services benefit consumers?

Consumers can expect more choice, better products, and affordable prices as companies in different industries enter the financial services market and compete to serve their customers.

Summary

This video discusses the importance of leveraging financial services to better serve customers and drive revenue. It highlights the current poor state of the industry and the challenges faced by startups and existing financial institutions. However, with the emergence of infrastructure as a service, similar to what Amazon Web Services did for software companies, the financial services industry is undergoing a transformation. This change is not limited to startups or financial institutions, but also to companies that are adding financial services for the first time. The video explores various examples of companies providing financial services as a service, addressing complex layers such as regulation, integrations, fraud prevention, and more. This infrastructure provides opportunities for startups and existing financial institutions to innovate and improve their offerings. Ultimately, the goal is to provide better financial services to consumers, regardless of their socio-economic demographic, and make them more affordable and convenient.

Questions & Answers

Q: Why should every company be thinking about leveraging financial services?

Every company should be thinking about leveraging financial services to better serve their customers, retain their customers, and drive more revenue. By offering financial services, companies can provide more convenience and choice to their customers, leading to increased customer loyalty and higher profits.

Q: Why is innovation in the financial services industry difficult?

Innovation in the financial services industry is hard due to various challenges. Existing institutions have a large retail footprint and long-term leases, making it difficult to cut costs quickly. Rolling out new products also requires training thousands of employees across the country. Furthermore, a significant portion of IT budgets in large banks goes towards maintaining existing products that customers are dissatisfied with.

Q: Why is there optimism about the future of financial services despite the challenges?

There is optimism about the future of financial services because infrastructure as a service is bringing about a significant change, just like Amazon Web Services did for software companies. This infrastructure will reduce costs, complexity, and unleash thousands of experiments. The innovation will not just come from startups or existing financial institutions, but also from companies adding financial services for the first time. This shift will ultimately benefit consumers with better products, more choices, and affordable prices.

Q: What are some examples of companies adding financial services for the first time?

Apple is one example of a company adding financial services for the first time with the launch of its credit card. Ride-sharing companies like Uber and Lyft are also providing banking services to their drivers. Companies like Shopify and mind/body, which provide website services and help manage businesses, respectively, are making almost 50% of their revenue from financial services. This trend shows that companies from various industries are recognizing the opportunity to expand into financial services.

Q: What is the significance of infrastructure as a service in financial services?

Infrastructure as a service is transforming the financial services industry by providing companies with ready-to-use infrastructure, similar to what Amazon Web Services did for software companies. Instead of building complex integrations, companies now have the option to use infrastructure providers like Plaid, Synapse, and ComplyAdvantage. This reduces the need to spend time and resources on building infrastructure, allowing companies to focus on creating new and innovative products.

Q: How does ComplyAdvantage help with compliance in financial services?

ComplyAdvantage helps companies with compliance by providing integrations with various databases and regulatory agencies. They monitor hundreds of lists, including sanctions and terrorist lists, to ensure compliance with anti-money laundering laws. Their service reduces false positives and enables more granular risk controls, allowing banks to focus on potential money laundering cases efficiently. This improves the customer experience, lowers costs, and increases success rates in catching fraudulent activity.

Q: What is synthetic identity fraud?

Synthetic identity fraud involves creating completely fabricated or synthetic identities to obtain loans. Fraudsters randomly pick non-nine-digit numbers and apply for loans. Though initially rejected, repeated attempts at getting loans may eventually succeed, allowing them to escalate their activities. This type of fraud is difficult to catch but can be significantly reduced with services like Synapse, which focuses on identifying fraudulent patterns and preventing synthetic identity fraud.

Q: How does infrastructure as a service benefit startups and financial institutions?

Infrastructure as a service benefits startups by reducing the complexity and cost of building their own infrastructure. Startups can focus on creating innovative products instead of spending time on integrations and compliance. For financial institutions, it offers an opportunity to replace legacy systems and allocate resources towards launching new products or improving existing ones. Additionally, partnering with startups can enable faster product launches and provide access to new technologies.

Q: How is the financial services industry undergoing a transformation worldwide?

The transformation of the financial services industry is not limited to the United States; it is a worldwide opportunity. Each country has different regulations and payment systems. For instance, in countries like Mexico where cash payments make up a significant portion of transactions, there is a need for infrastructure that facilitates the transition from cash to online payments. Infrastructure providers will need to adapt to different markets globally and customize their offerings accordingly.

Q: What opportunities does the transformation of the financial services industry present?

The transformation of the financial services industry presents numerous opportunities. Startups can leverage the new infrastructure companies and launch innovative products in the market. Existing financial institutions can replace legacy systems and allocate more resources towards product development. Additionally, companies from various industries can now add financial services to their offerings. Overall, this transformation aims to provide better financial services to consumers, making them more accessible and affordable.

Takeaways

The financial services industry is undergoing a significant transformation driven by infrastructure as a service. This change opens up opportunities for startups and existing financial institutions to improve their products and services. It also allows companies from various industries to add financial services for the first time. The transformation promises more choice, better products, and more affordable prices for consumers worldwide. By leveraging financial services, companies can better serve their customers, retain them, and increase their revenue. The future of financial services looks promising, with the potential for widespread access to affordable financial services for all.

Summary & Key Takeaways

• Every company should consider leveraging financial services to better serve their customers and drive more revenue.

• The current state of the banking industry is lacking in terms of trust and customer satisfaction.

• The complex infrastructure of the banking system has hindered innovation, but new as-a-service companies are changing the game.