Fintech Insider Podcast by 11:FS
00:47:38 · Pranav Sood
[00:47:38] S3: I think they're still quite early on the journey of rolling this product out. From what I've heard, the number of customers using it is still relatively small. The one thing I would say, Kate, to your point is that we have to believe that there are platforms out there who understand the needs of their customers better than traditional banks do. And so if you can find a way to use the data that you have on transactional behavior or usage to offer contextual credit, to offer things that are relevant, to offer things that are, you know, hopefully also very price competitive, then you've gotta hope that that's a that's a good thing and and hopefully a better one than than sticking with the status quo.
00:48:14 · Jeremy Balkin
[00:48:14] S4: You know, if I if I maybe can drop a proverbial bull in a China shot moment here, I think I think the bigger picture to this is sort of a point I made much earlier on about the sort of the proverbial proverbial battle over the last decade between the merchants and the issuers and the merchants are winning. And this is proof of that. If you're a merchant now, who's essentially outsourced their checkout of the last decade to buy now pay later companies, digital wallets, you know, you've basically given free access to your most valuable real estate, which is your online checkout to all these third parties. Merchants are like, we don't need to do that anymore. We can just issue our own credit. And it's another threat to co brand credit cards because a merchant doesn't necessarily need to go through historically a co brand credit card. It's like three parties. You have the network, the merchant and the issuer. One could argue that that's also can be disintermediated by the merchant essentially offering, it's not the card itself, the card's irrelevant, it's the access to the credit. It's just the format of the credit, It's the access, not the ownership. So you could easily see merchants creating their own sort of paying for BNPL installment type point of sale solution for their customers, whether they're premium customers or every customer. I think this could be hugely, hugely transformative, makes a ton of sense. And now like anything it's gonna be about proof is in the pudding and adoption. And I think in The US, I could see this thing taken off in a material way quickly.
00:49:48 · Benjamin Ensor
[00:49:48] S0: So Marketo of course is not a credit issuer. So it would be partnering with banks, providing banking as a service, etcetera. So in effect, what we're looking at here is potentially some of the banks that are offering banking as a service displacing the big banks that have got some of those, as you say, of those co branded credit card programs and so on. And the really interesting piece is potentially this piece, all three of you, I think we're talking about tailoring the credit based on data that perhaps the merchant has about who this customer is and so on. So interesting. Does mean people get credit at a better price potentially?
00:50:26 · Jeremy Balkin
[00:50:26] S4: If I could jump in there, I think it's possible. Although the one thing I would say, and this is for those who are less acquainted with just what is involved with the card scheme and issuing a card, the card itself and all the fancy bells and whistles that we heard from, just before, that's like the tip of the iceberg. The actual iceberg itself is the compliance program, KYC, AML, in The US alone, the amount of regulations around consumer finance, it's called Reg E, SOC two compliance. There's a whole bunch of rules around having customer service, phone numbers to call, dip and pin chain, like that itself is the engine for a successful program of any kind and credit where it's due, Marketa not only built the awesome technology piece to this, but they realized that to build the rest. And I think that's a huge competitive advantage. Once you've got the building blocks of a program ready, then you can do all these fancy bells and whistles on top of that. And I think that's just the one bit of advice I would say to a lot of potential fintechs out there who are thinking, oh, let's go and issue a card, whether it's debit or credit, make sure you get the foundational pieces of a program right, because you don't wanna have problems with the regulators later. And more importantly, you wanna have a compliant program so that it's ultimately successful. So whilst it's very easy to compare which sexy platform to work with, Just know that's just the tip of that iceberg. You've got to see the rest of it, the servicing part, the compliance part of it, get that bit right first.
00:51:58 · Benjamin Ensor
[00:51:58] S0: Yeah, that's spot on because we've seen a number of firms getting a slap on the wrist in North America and indeed in Europe for not doing all of those crucial pieces well. Maybe one last thing, there's this point here about loyalty schemes that Randy Fernando was making. Kate, how important is that? I mean, if a merchant has already got some kind of loyalty program going on or points going on and so on, tying a credit into that seems like a logical extension. That not a killer app, but is that really compelling for customers, you think?
00:52:37 · Kate Moody
[00:52:37] S2: I think again, it's one of the next big areas where I think we should start to see proper innovation is again, we've got all these very old world loyalty models about collect five stamps or, you know, all these kind of very basic programmes. Actually, what you're looking for is this dynamic way for a merchant or someone that you have a relationship with to incentivize you to interact with them. And that might be through some of the stuff that Jeremy's building out, know, it might be that you can have complete confidence that you can buy and get your money back if it's not the right thing. It might be through a loyalty scheme. It might be through all sorts of other components. Yeah, I think loyalty as a whole space again, I suppose if we go back to what I saying earlier about you have lots of conversations with banks about global expansion being really hard, lots of banks are now sort of saying like, Oh crap, what do we do about loyalty? So I think that's definitely a space where these types of offerings, again, as we start to move some of the power back towards merchants, will put some of those big loyalty providers under the cosh to try and do more interesting things to compete with that.