Fintech Insider Podcast by 11:FS
00:35:49 · Ross Gallagher
[00:35:49] S1: And and and I love those. I love those examples because it does actually start to bring to life a little bit how you can start to differentiate some of these offerings in a sort of agent native context. Picking up Conrad as well on your point about the innovator's dilemma, And, you know, we are already starting to see some tension around, who controls access to customers' money. We referenced obviously JP Morgan, earlier on sort of restricting access to those AI agents. And obviously, they're citing things like security and liability concerns, and all of that stuff has to be worked out. And of course, we want all of that stuff to be prioritized. But I think for me, it raises, I suppose if you're if you're going to apply a slightly more cynical lens, it raises questions around sort of protectionism. If you're not quite ready to sort of adopt that sort of AI native approach, then sort of lock things down, you know, how long can we preserve preserve the status quo? I mean, think there's an obvious comparison there as well with Amazon restricting access to the likes of Muse on the basis of sort of similar concerns. But I think then when you start to dig a little bit deeper, is it because they're trying to protect their advertising revenue because agents don't care about advertising and all of those sorts of things? What's your what's your perspective on that?
00:37:14 · Conrad Ford
[00:37:14] S2: Yeah. I mean, there's obviously a lot of noise right now because agents have been detected within bank accounts, so certainly in The US. I think to some extent, this is what happens in these very early stages, right? And by the way, we've seen this movie before, right? Because early days of what became open banking, right? There was screen scraping. And there were many people and businesses that found that screen scraping of their bank account to be so valuable that they were they just kind of ignored the Ts and Cs saying you're not allowed to do this, and they did it anyway. And then over time, the kind of use cases became so well understood by the incumbent banks that they kind of began to see that this was actually something that they should probably lean into. So a real a real example in my world of SME banking is that it's table stakes now to have an integration with accounting software, what they call bank feeds, which is just a variant of open banking, where basically you no longer have to type manually type in your bank transactions into your accounting software because there's an automated feed. So I think there's been a lot of noise about this and lots of people angsty about what this means for competition on Twitter or exit, I think it's now in this. The reality is right, this is this is normal stuff. An FYI, you don't want your bank just saying, hey, you know, go fill your boots, right? There's a lot, as I said before, there's a lot of thinking that needs to be done. But I do think the winning banks are gonna be those that kind of lean into this, Right? So kind of, you know, constantly trying to trying to block this and stop this rather than actually try and come up with constructive ways to make this work. I I think we'll be the winning winning players. And and and I'd certainly like to think that we'll be in that category. So I think that's the way to think about it. But a lot of the noise and angst at the moment, I think is massive. It's like you can't just allow agents into an account without any rules or guidance or principles. It's just not a thing. Right? Whatever we might think.
00:39:03 · Ross Gallagher
[00:39:03] S1: And Merusha, I think one of the the interesting shifts here is, you know, particularly when we sort of rewind a little bit to where, the sort of digital arms race was was was really flying. And I think, you know, the the the the one of the worst things that sort of a bank exec could could fathom was this idea of sort of not owning the customer relationship disintermediation, but I mean, what we're talking about now takes that to a whole another level. Right?
00:39:34 · Merusha Naidu
[00:39:34] S3: Yeah. Absolutely. And I think there's a real shift from, you know... Now the question is who is the customer? Right? What is the customer identity versus who is actually making the payment? Right? So now you actually have two components where you have to satisfy both. And so that balance is really important. Right? Because the bank still cares about the customer identity. They still care about the profile of the customer to say, is this a high revenue customer? Do I need to keep them happy? If I need to keep them happy, I have to help them to simplify everything that they do within the banking service. And, actually, it's not a... It's no longer about how much time do you spend on the banking app. It's about how many transactions. And whether that... Whether those transactions are being enabled by an AI agent is actually going to help the bank to create a better, you know, a better relationship with that customer and actually make that customer identity a more successful one. Right? And so I think what the banks want to do is... And and we hear this every day. Banks are saying they want to enable AI agents. They want to create an easier way for customers to make payments, which is more autonomous. The challenge that they have is the guardrails. Like Conrad was saying, the most important thing is how do you give the agent the flexibility to make the payment while also giving the customer identity the control to say, you're not allowed to buy a dog. Right? But you can buy me a box of chocolates if it is below 50 pounds and if it is at these MCCs and... You know? So giving those... Giving the agent the guardrails, a, satisfies the customer need of, you know, control, but also flexibility that the agent can make those payments. And the bank is still happy that they own the overall profile. They are satisfying the customer's need to be able to make autonomous or to... The customers need to allow agents to make the autonomous payment still be in control. And now what happens is I trust my bank more. They give me what I need. I still have control, and I trust them more, so I stay. And you know what? I'll use that bank for other services as well. So that's where banks need to get to.
00:41:54 · Ross Gallagher
[00:41:54] S1: Yeah. Mean, I couldn't agree more. Aurelien, one thing that I'm I'm really keen to sort of touch on before we close, because I think we've probably talked around it. We've talked about things about, you know, sort of leaning in, embracing that challenge, as well as all of the other things that we've talked about in terms of like technology partners, architecture, guardrails, you know, in terms of determining who wins here, how important is like culture, like organizational culture and just how, you know, sort of open minded they are and sort of brave in terms of how they take on some of these opportunities?
00:42:35 · Aurélien Bonnel
[00:42:35] S4: Absolutely, that's a great question. I actually think we saw a little bit of this here in the answers that were given, right? We asked the West Side Of The Atlantic and the East Side Of The Atlantic kind of clashing on some points. So I'll take the West Side Of The Atlantic, and more The US centric side, you know, innovation is something to be embraced. We don't necessarily wait for regulatory approval. In fact, what we see a lot of is the financial companies are pushing regulators for changes to make it work for them. I think as technology changes faster and faster, and it's not going to slow down, it's only gonna get faster. What you need to see in companies is an adoption of the unknown, and not fear of that unknown, right? So MCT came out, AI came out, so then MCT, now we're talking about agent based workflows everywhere. Waiting for the regulator to have an opinion doesn't really suit the customer, right? The customer wants to make use of that technology. And if they don't, fine, they don't. Give them a way to opt out. But if they do, you know, talked about giving them permissions to move money. There is something that has existed for the past thirty years, maker approval workflows, right? The agent can create the money movement and it requires a human hand to approve that payment. So that can happen. So I think we just need to find a way to marry the innovation with controls that have already been vetted, already been in existence and have worked for people. And then we need to find a way to get to the customer faster. The reason why those tools are being talked about now is because clients actually wanna use them. It's because there is an adoption. And if you just wait and don't try things out, you're not gonna get to a model that is a good landing point for the end customer. It's just gonna end up another status quo, like you've mentioned, where the banks make money on lazy deposits and no one gets challenged. So what we really need is embracing the innovation, banks need to hire people probably that are younger or more native in those AI worlds, and put them in positions of leadership and power. And then finally just need to be a marriage between the regulators needs and wants and what the clients want as well. All that facilitated by the banks, not just the banks pretending like, oh no, we're only doing this because x y z.