Fintech Insider Podcast by 11:FS
00:24:27 · Sarah Kocianski
[00:24:27] S3: So I think one of the things that has already, again, been alluded to on on this podcast that we underestimate is people's personal resources. Do I have the do I have the time? Do these people have the time to try and understand what this is and how it works and what might be better? If you're particularly, you know, it's as often said, if you're a small business or if you're self employed, I I need to be making money every minute I can be making money. So four hours spent working out, which is the best accountant for me or which is the best, you know, bank account for me or which is the best international payments for me is is is almost wasted time. And if I have the physical time, I have the mental capacity to actually sit down and think, okay. I've got to do all this research myself. And I do think that that extends all the way through. I think, you know, if your job is within the treasury team, your job is CFO, there isn't that much time, very rarely, is allocated in your time to actually sit down and work out what the problems are that aren't currently being solved. To the point you made and, you know, the point about spreadsheets, spreadsheets solve a problem. Do I have time to work out a different way of solving this problem? No, because right now I'm trying to keep my business going. There's a lot of businesses right now that are going, I just need to keep going. I just need to work out how to keep going. I think there's potentially an opportunity there in certain areas. We've mentioned hospitality and retail. How do I save money? How do I work more efficiently? So, if you and that's to go back to Davao's point about jobs to be done. If you can present innovation as a solution to doing things more efficiently and you can prove it will be more efficient or it will save money, then that is an opening. I think unfortunately, lot of innovation is presented in a way that everybody looks at it and goes, that's too big a job. I don't have time or energy to do that. I don't have a dedicated team within whatever my organization is to think about innovating payroll. I just need to make sure people get paid or I just need to make sure we have enough money to pay people. So I think, again, that kind of like carries through as to whatever size of the business is.
00:26:30 · Sarah Kocianski, David Barton-Grimley, Pranav Sood, David M. Brear, Valentina Kristensen
But I do think it's that's one of the major blockers to innovation innovations being adopted within large organizations, even if they're presented up on a platter by a fintech or or even, you know, an incumbent bank. [00:26:41] S0: It comes down to making that tangible efficiency change to to the business and and moving the dial. Brilliant. On that note, we're just gonna take a quick pause here and back very shortly. [00:26:55] S3: Hello, and welcome [00:26:56] S2: LFG people. [00:26:57] S3: To Fintech Insider. [00:26:58] S1: Watching Insider. Eleven FS Spotlight. [00:27:00] S4: Eleven FS Explores. [00:27:01] S3: Open mic night. [00:27:02] S1: After dark. Through our podcasts, videos, newsletters, and live events, we have a direct line to a truly global fintech community. So if you're looking to sponsor and collaborate on content that connects with everybody from fintech beginners to the biggest VCs, then chat to our team at sponsors@11fs.com, or visit 11fs.com to find out more. [00:27:24] S3: Long live the community.
00:27:24 · Sarah Kocianski, David Barton-Grimley
[00:27:24] S3: Long live the community. [00:27:31] S0: Alright. Welcome back. In this part of the show, we're going to take a look at how commercial banking can continue to embrace digital solutions for the better. Can we build on the infrastructure and systems we already have, however legacy they may be, or should we throw out the playbook and just completely start again? So I think the the the first thing to talk about here is that no banking can can exist within a silo. It needs to keep up with what's going on in the global shifts and how people live and how people bank and the evolving needs, of of the customer. Valentina, what are the major macro trends, I suppose, that that that that you're seeing, and is is banking at the mercy of those trends?
00:28:12 · Valentina Kristensen
[00:28:12] S4: So I think, I mean, I think there's a few things. There's macroeconomic trends. So that's things like, you know, inflation, interest rates, the cost of living crisis. And I think there, you know, it's important for the customer, but it's also so important for the banks that are servicing those customers to have that real time data about how the customer is performing. Most banks tend to sort of lump businesses into one of a dozen or so categories, right? Or hotels, restaurants, bars, golf clubs, private members clubs would kind of go into hospitality and leisure. And obviously, those are all completely different businesses, right? And we saw that through COVID. We've seen it through Brexit, right? The hospitality sector is much more at the mercy of the labor shortages in hospitality than you have in other businesses within that sector. We recently completed a loan to Third Space, which is a sort of luxury health and fitness company. Now most banks would probably think right now lending to a luxury business that relies on discretionary spend probably isn't a business that is doing very well. I mean, ThirdSpace is incredibly profitable. They've got wait lists at most of their clubs. So, I think that just speaks to the fact that there is always going to be gems and unique cases in every type of business and subsector. So having that data as a business, being able to present that data to your bank, because that can then open up a number of new products and services for you. It can obviously open up credit lines, give you the ability to get a loan. But it's also great for you as a business, because then you can see other things that we should be doing, that our peers are doing. Are there certain parts of our business where we could be making the savings? Could we be being more efficient with, for example, our team, with our spending and so on? So having that access to that real time data can be incredibly valuable. And so I think there's a sort of the macroeconomic trends that banks and also their commercial customers are at the mercy of. I think in terms of broader macro trends, I mean, the fact is, ultimate business owners, entrepreneurs are people, and their expectations have changed as a result of the, you know, huge strides we've made in retail banking.
00:30:24 · Valentina Kristensen
And I mean, you know, I say huge, the first bank I ever worked with was Metro Bank back in 2010, with the launch of a new bank that was a bricks and mortar led model. Here we are thirteen years on, and if you were a new bank coming to market saying, We're doing something completely revolutionary. We're going to make a bricks and mortar led business. People would probably laugh them out of the room, right, and say, What are you doing? No one goes into branches anymore or shops, as Metrobank calls them. So I think, you know, that just shows you how much things have changed in just, you know, a decade or thirteen years. And those individuals then run businesses and have those same expectations. So yes, banks are absolutely at the mercy, because if you're being able to freeze your card on your personal account, you want the ability to do the same on your business account. If you have the ability to see real time spending on your personal account, you want the same thing on your business account. So, you know, absolutely banks are at the mercy because businesses are run by individuals.
00:31:28 · David Barton-Grimley
[00:31:28] S0: Yeah. It feels like we've gone from bricks and mortar to data. And you're right. As some of those macro trends like inflation and interest rate increases impact the bottom line of the business. All of a sudden, the business is is even more hungry in in some ways for that data around how the business is performing, where they can squeeze out the margins. It was really interesting what you said about being able to present the data to the bank to show that actually maybe maybe we are more profitable, in fact, that we we thought, or maybe we have more better cash flow, in fact, that we we thought, and therefore, a better valued loan. I think that's very interesting. Pranav, I'm gonna come... I'm gonna come down to to to you on data and the availability of all of this real time data. I'm very aware that Airwallex, like, works in this space. How how is this how is this availability of real time data creating either both issues for some of your customers and opportunities as well?