Fintech Insider Podcast by 11:FS
00:23:49 · Merusha Naidu
[00:23:49] S3: Yeah. I think when we look at, you know, how financial institutions are going to start competing effectively, is they really need to focus on how do they make themselves visible. Right? Because that visibility is key to making sure that AI agents, a, can actually access the information or the services, products, features, everything from commercials to what makes the service better than any other. Right? And I think that's one of the areas. I mean, even if you go on ChatGPT now and try to, you know, look for a holiday, if you ask the same question a couple of times, you're gonna get different answers. Right? Now you can't afford for that to happen when it comes to your banking infrastructure or your banking services. You need to have... You know, you need to trust that the AI agent is bringing back the best results. Now when it comes to the banks that we're working with... So for example, we have Mal Bank in The Middle East. They are an AI native bank. So they have built in AI agent capabilities from the start. Right? And so what they've made sure is their bank is visible at all times. They specifically built it in a way that AI agents can receive the data that they need in the best way possible to give them the best scoring. Right? And so they've typically thought through an agent being able to access information by an agent. Right? So optimizing the way the data is actually transferred, accessible, and visible. Right? What they've also done is they've looked at what are the key decision makers or drivers that AI agents usually use when making a decision around ranking rating. And so when we look at their proposition, we can already see outstanding results from the way their agents are operating, from the search results that we're seeing. So I think it really... There... There's a big difference between AI native banks and banks that are adding AI agents onto their propositions. Because the banks that are adding AI agents onto their propositions, they are a lot more nervous, and their guardrails need to be better than an AI native bank because there are so many moving parts within a traditional bank. Right? There are so many different rules, configurations. All of those things need to be, you know, reviewed. They have to have guardrails around the actual product service features, commercials, then put an AI agent on top of it.
00:26:17 · Merusha Naidu
Whereas AI native banks are actually doing that doing that correctly from the start. So I think that's the kind of competition that we're seeing. But I think the other thing that we really need to focus on is, you know, when we'd start to enable these different services or these different services that AI agents can find. One of the things that we're doing when it comes to our digital experiences is we have a whole project around how do we make products features more visible by using API first led... API first infrastructure, making sure that we have SDKs that you can plug in and gain access or information very quickly, but also, again, making it very easy for the agent to actually trigger these payments or these transactions. So it's it's a combination of factors, and it just depends on what type of institution you're you're at right now. Are you AI native? Are you, you know, more legacy and trying to add in an AI feature? Or are you really just looking to enable certain products? So for example, what we are seeing with some of the more traditional banks is they are saying, okay. We want to we want to attract a certain demographic, which is, you you know, the more tech savvy individual. And so we're gonna spin up a specific proposition that AI agents can use specifically for these types of transactions. So more traditional banks are saying, okay. We need a virtual card. We need to be able to tokenize it and add a token for a specific agent. Now that can be a completely different spin off from the more traditional products that the bank has. So there's different ways that banks can actually enable agents be able to compete and offer a a bit better value proposition to customers.
00:28:03 · Ross Gallagher
[00:28:03] S1: I do. I mean, I love that point about building these native experiences with agents in mind, obviously, rather than it being a sort of bolt on or even an afterthought to to sort of what you're already doing. Aurelien, one area I'd be really keen to get your insight because I think it's going to be an area where people within financial institutions everywhere are going to be sort of noodling this question is, you know, when you start to think particularly about something like customer acquisition, and when banks are, you know, competing to be selected by AI agents, That's quite a difficult thing for a lot of people I think to get their heads around, it's quite a fundamental shift. What do you think about that?
00:28:46 · Aurélien Bonnel
[00:28:46] S4: Yeah, so the traditional model of acquiring customers no longer applies here, right? So free coffee at the branch, the agent doesn't really care about this, can't drink it. So you have to basically put the promotional material in a way that is understandable by agents. That means first of all, a brand new wave of marketing that banks are not used to. Right? You need to hit the channels that you would not normally see banks touching, Reddit, x.com, you know, your x Twitter. So all of those channels that are used as sources of data for the agents basically need to become the marketing channel that the banks are touching. And then you need to make a case that other banks are not doing. If you're just competing on interest rates, it's basically a race to the bottom where everyone just loses their margin progressively over time. So you need to find something that is compelling to an agent. They all think in the same way, that's the point of the commodity tool. So you just need to find something that is more niche, that is more applicable to a specific class of customers. And instead of seeing marketing campaigns that are just shooting from the hip and trying to get as much of a demographic as possible, we're gonna see banks, financial institutions generally finding the pressure points for specific ecosystems, like shipping and logistics, like your courier van, your milk delivery person, and try to find aspects that are interesting to them that they need help with from a financial standpoint, and generally try to become more and more niche. That means the bloat of marketing is gonna become bigger and bigger and bigger, unfortunately as well.
00:30:32 · Ross Gallagher
[00:30:32] S1: It's kind of back, Conrad, to your point about the sort of cost of operations, but I'm interested in like how how are you guys thinking about, I suppose, differentiating in this new context, but also then sort of avoiding that race to the bottom that I think Aurelien quite quite rightly mentioned?
00:30:53 · Conrad Ford
[00:30:53] S2: Yeah. I mean, my starting point would be that we don't face the innovators' dilemma that the incumbents would face. So, you know, at the moment, we've got, what, 5,000,000,000 or so of of asset... Of liabilities on our balance sheet. And and our total market is $253,100,000,000,000. That's how much SME deposits there are in our segment in The UK alone. Right? So why does that matter? Means if you think the world's going a certain way, you have the option of actually accelerating that move rather than it attacking, you know, because one of the big incumbents will have tens of billions of that chunk in their existing customer boats, on which they're pretty bit of pain, they'll fall in no interest. So we don't face the innovator's dilemma. I'm sure the big banks would claim that they're gonna they're gonna think they're not gonna think like Kodak, right? But it never happens that way, right? In in the end, people get fired for thinking thinking like the innovator. So in big institutions. So so we do have that option. So first and foremost, we're building that kit for our customers and and for non customers as well. So in other words, the kind of the the sound bite I always say is that if you if you imagine Allica customer is a business full of £2,000,000 or euros of turnover, okay? And what and they're quite sophisticated, quite complex. They will have often subsidiaries. They'll have significant payroll, lots of staff. I say our customers are big enough and complex enough they need a treasurer. But they're not remotely big enough to afford a treasurer. In fact, they won't even typically have a strategic finance person at all. Right? They'll have a... Have an external accounting firm or maybe an internal bookkeeper. Yeah? So there isn't really somebody who thinks about money as a as a day job. So why can't your bank think and act like a treasurer on your behalf? Why can't it think ahead and say, well, okay, well, there's a big lumpy tax bill in April. We haven't set the money aside. Let's set it aside and earn some interest. Or it looks like payroll is tight in May, so let's actually pre approve an overdraft. So why can't your bank do that? So you can probably guess what Allica is gonna do, right? And we don't just have to do that for existing customers, right? Why not do that for non customers?