How To Sign New York Banking Presentation

How to industry sign banking new york presentation now

thank everybody for sharing your morning with me I appreciate that my name is Susan French I'm head of product and client operations for BBVA open platform and I appreciate the opportunity to talk to you about banking as a service the one thing you are left out of his presentation on convergence was how she pays for the services that she got which is where I come in I read an article well first let me say this is probably your obligatory business API session so I appreciate those of you who are business oriented staying around to listen and I will I think there's a tad of technical content coming up but most of this is about the business of banking as a service why it's important and why it's changing the landscape of banking a few weeks ago I read an article by KPMG where they were talking about the level of FinTech investment in 2018 and their estimate was that it's just south of a hundred and twelve billion dollars in 2018 and just north of 50 billion of that was here in the US and many of the folks in this room probably work for some of the companies that were the recipients of that investment bank partnerships are key to those fintechs in almost every cases and API platforms are crucial to delivering that historically those API platforms have been custom built or private or otherwise not a platform based API service for banking but now that's where the industry is going at a conference in New York a couple weeks ago CB insights posed the question is banking having its AWS a moment I would argue that we are and that banking as a service is providing the way for fintechs who need to build banking or payment services into their application to be able to do that nearly as quickly and easily as AWS enabled us all to launch infrastructure so what do we mean by banking is service for us at BBVA what banking is a service means our open ap is that allow companies like yours to white-label banking services and payment services integrate them fully into their applications in a way that enables you to deliver banking and payment services to your customers but still retain complete control over the user experience and over the design of your product so whether you need to verify the identity of a customer who's signing up for your product or service whether you need to open a bank account for them or otherwise give them a way to manage a pool of funds whether you need to give them the ability to have a debit card to access those funds with and to pay for those prescriptions and those doctor visits or whether you need a way for them to move money from one place to another from one of their accounts to another account to pay a bill to move money to cross-border transfer there are now banking as a service api's that enable you to do that under the covers in a white labeled fashion inside your product and service so you can manage what your user your customer experiences you can manage the flow you can manage the branding you can manage everything that you need to to create unique and clever news or experiences without necessarily being tied to the way the bank would typically do those functions so companies have you know complete control of their branded and customer experience and there are betting banking capabilities via API is under the covers allows those companies to operate within the bank's regulatory framework which is critical if you are going to enable your customers to have access to the US banking system well-designed API with comprehensive documentation is a way to gain access to that information or of those api's and those services and it provides a single point of access to a bank's wider set of services in the case of BBVA our global preference footprint and the global services that we offer as a company how does that change things if your bank if you're a bank like we are like our other banking companies are to meet customer demand you need to rethink the way you deliver your banking services and are typically two ways you can think about that from a strategic point of view you can think about it as a distribution channel here's another way to deliver your branded Bank services to your customers instead of sending your ACH files in through batch you can now do it real time through an API alternatively you can think about banking as a service and your API platform as a product platform that enables all sorts of businesses to do all sorts of things on top of your API when you are delivering white-label products to a fin tech or another business who is in turn delivering that product or service to consumers small businesses corporations sole proprietors whatever their customer constituent might be the reason why that is a good thing for a bank is that it brings us customers that we wouldn't otherwise get because they're not in our geographic footprint or they're not the customers who would open a retail banking relationship with us but because they are part of a fintechs product they are in fact a customer of the bank the network effect allows us to create relationships with people in businesses that wouldn't otherwise exist and allows us to enable fintechs to rapidly build a business that would be much more difficult for them to do if they didn't have api's to gain access to the banking system so what are the kinds of businesses that want to do this kind of thing when we think about who the likely consumers of banking is or service api is they kind of fall into what we think of as five categories the most obvious one is digital banks of which there are many a couple of them like CH I'm just recently joined the unicorn unicorn Club but if you're a digital back and you want to offer a digital banking services to whatever your demographic constituency is you need a bank sitting behind you who can open accounts issue cards and move money for you on-demand services are one of the fastest-growing segments of the FinTech population whether you're driving or picking up scooters or picking up bicycles or walking the dog or mowing the lawn or doing property management for people there's a whole raft of fintechs that are growing up around on-demand economy and the fact that they need to have embedded banking services within their application so they can pay people for that so they can pay people so that they can finance the expansion of their side business if that's what they're doing online marketplaces there are growing number of both closed and open market places where entrepreneurs and context are bringing together related parties of buyers and sellers to be able to exchange valuing with each other one of our clients is building a closed marketplace for of all things private jet aircraft service where they're bringing it together a portal that will enable brokers and flight operators to communicate with each other booked trips deliver trips pay and be paid with each other through a closed ecosystem that's designed specifically for that function and with banking API sitting underneath it to manage the flow of money more and more enterprises even large enterprises think insurance companies healthcare companies large merchants are increasingly moving from slower electronic payments to faster electronic payments or from checks to electronic payments they're still an enormous amount of commerce than today on paper with paper checks that can be done electronically if you're an enterprising you want to distribute b2b or b2c payments in bulk you need a banking service underneath your covers in order to do that finally there's a growing list of what I call financial management applications these are fintechs who are building applications for both people and businesses to better manage their money and to improve their financial wealth wellness and wealth whether it's helping millennials pay down their card debt are there student loans or whether it's helping businesses sole proprietors manage their business more effectively invoice their customers manage their their money save for their vacations since they don't get paid vacations anymore if you're a sole proprietor there's a whole raft of those and there are many others but do you think about where the best opportunity is for banking as a service API is to add value these are the kinds of businesses that we think of so I promise there would be a teeny bit of technical stuff and it's pretty teeny so you guys will get your business API merit badge for this session and lots and lots of technical content and the other sessions to come at BBVA we have two sets of api's we have a set of external facing api's that our clients consume and they're optimized for developer experience simple straightforward well-documented easy to use api's that are designed for clients to consume on the other side there are internal API is that communicate with our core banking system there are a huge library of micro services that do all sorts of small pieces of the overall movement of money or the creation of accounts and there are there is an integration layer that talks to all sorts of third party providers whose services are embedded within the services that we in turn offer to our clients whether it's connecting to the Visa and MasterCard networks working with account verification services any number of third party services are bundled with in the overall service we offer to our clients so that they don't have to do that they can consume it from us in a single API and one sort of final plug for api's and I suspect this will come up in other sessions as well I had I spoke recently at a customer experience conference and one of the things I wanted to make sure everybody understood is that developer as customer is just as important as consumer as customer and it's important that the api's that you do expose our well designed designed with the developer in mind self-documenting if possible easy to understand simple to use so if this is so great why is it so hard and why is it still an emerging set of api practice part of it is because banks live on legacy infrastructure which is often old and rigid and bachelor ended and not very fertile ground for the creation of api's and just as banks infrastructure is legacy rigid so are their back office processes that go with it and there's a change of both technology and process that have to go along in order for banking as a service api's to be successfully delivered and easily consumed by clients digital authentication and authorization is still a challenge we have an obligation as a bank to verify the identity of every one consumer or business who we give access to the financial services financial ecosystem of the US and that's not always easy to do in a fully digital experience particularly when you're doing identity verification of businesses rather than people in particular when you're doing it for non-us citizens regulation and compliance is a reality if you're going to build banking services into your application if you're going to move money through your application there are compliance and regulatory requirements that you have to comply with and your provider like us has to comply with and sometimes that makes it a challenge to create api's that are easy to use and to create an onboarding process that is rapid and simple fraud and risk management is a challenge when you move from legacy sort of bachelor unit processes where there's plenty of time to look at the data that's coming in and plenty of time to look for fraud when you're in a real time environment where money it's moving instantly it's much more difficult to do and the exposure grows consider that commence really cyber security and privacy people especially when they're entrusting you with their money want to make sure that your environment is secure that you're managing the privacy of their data and that anybody are sharing it with such as their party service providers are managing their obligations for privacy and security as cleanly and as thoroughly as the bank is and culture banks don't speak FinTech and fintechs don't speak bank and there's a real cultural difference if you're as a bank going to be delivering banking's of service and promoting FinTech innovation you really have to think about the culture of your business and develop empathy and understanding for the interests and needs of fintechs especially startup fintechs if you're working with them and educate fintechs and others on the importance and of the regulatory and compliance obligations that the bank has the cultural is critical you can break great technology that if the culture of the business doesn't encourage outreach doesn't encourage partnerships and collaboration with fintechs the technology doesn't do any good so where are we now in terms of the things that you can get in a banking as a service api not just from BBVA but from many other providers typically today you can find api's from banks that will do automated no your customer and identity verification screening for consumers depository services of various kinds you can open checking accounts savings accounts you can use for before benefit of accounts for aggregation most debit and credit cards issuance it can be done now by banking as a service api is and certain payment rails so ACH for sure bill payments domestic international wires and not so much relevant here yet but if you're a multinational or you're doing business in Europe PSD to compliant accountant transaction access api's are becoming more and more critical especially with the PSD to September demand date coming up fairly soon we will start to see API based integration of more faster payment options whether that's card based paym card network based payments for things like push payments and disbursements whether it's better integration with the real time payment system that the Clearinghouse is offering now simple digital loans that don't require a lot of paperwork and that can be handled electronically employee services different ways to pay people whether its traditional payroll services or push payments to debit cards of contractors and occasional employees and seamless integration more seamless integration of third-party services whether it's account verification fraud management billing services into your overall structure things that are farther away are things that are more heavily paper driven or for which there isn't abundant electronic data available to manage through an API such as kyc on businesses in the US it's difficult to establish the identity and legitimacy of a business without looking at paper in some form or another receivables and payables integration with motion most of the ERP systems that large companies use more and more data everybody wants more data and they want to integrate more data into their process which means you need api's that can go and grab it from Weber's got it and incorporate it into your process complex loans trade finance financial advisory services all things that will come they will get a API of fied and as part of a banking as a service platform but not in not in the near term they said in my opinion so one at closing with a shameless plug for vvv I open platform if you want to see what banking is the service api's look like please come visit us our AP eyes are open and you can sign up for a developer account if you want to play with them so at this point we have six minutes or so left are there any questions I think the I think then you hit the nail on the head which is consumer in small business if there are unsecured he was asking about why I think a lending may be a little bit farther away I think things that need paperwork or things that need in bank that legacy bank infrastructure to transit through multiple systems there's a underwriting system there's a booking system there's a paperwork system those things need to be knit together in the back office to create a fully digital experience with consumer loans and with small business loans that are basically consumer loans that is happening more quickly with corporate and commercial lending it'll be a while before all of those pieces resolve themselves especially if there are secured loans and there's collateral paperwork involved any other questions so I work for a big bank where do you see the challenges in FinTech companies intera ting with banking services is it with PII is it with understanding how they're able to use the data where's the stopgap there in challenge I think they're there and from the fintechs point of view I think the primary issue is most other fintechs that we work with particularly ones that are in early stages of their development really don't understand the complete come the regulatory environment that we live in and all what that means in terms of what's required of them the technical onboarding is actually pretty straightforward and if the api's are well designed the technical integration is fairly straightforward but understanding why you have to have AML policy and you DAP and you're notch audit and your your InfoSec policy and all of that the very first version of onboarding we did with one our clients had 35 different documents in it the client was supposed to provide as part of onboarding and most of our fintechs are focused on building their product getting it out to market finding their customers raising money and these things were like alien language so I think looking for ways to both comply with our requirements as financial institutions but also to find ways to make that easier and cleaner and more easily understandable is probably the biggest single challenge in large-scale adoption of banking as a service I think most banks have a good handle on managing the PAI and the PII and have processes in place for fintechs who need to do a good job of managing that it well but compliance and regulation is a challenge do you agree okay one more question there so is there any sort of special support in the api's for merchant accounts the one thing we don't do yet and our platform is is Merchant acquiring although it's one of the things that were working on part of the reason for that is that there are already many many providers of API based merchants acquiring particularly for EECOM I expect we will get there eventually so what we've been focusing on now is kind of the other aspects of banking as a service that aren't typically available through api's and that's the account creation the depository relationships and the cart issuance two more minutes anybody else we've got one more no not yet so thank you big thing very mad you [Applause]