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hello everyone and welcome to my talk on product management in the world of fintech I'm noer chaam I'm a group product manager at PayPal so today I want to talk about what is especially fintech what makes fintech special uh we'll dig into a couple of items on uh things that are especially important to fch such as trust and regulation ecosystem as well as value chains uh we'll finally talk about what makes a great fintech product and how you can make one and then I'll leave off with a few key takeaways so what is fintech uh fintech the word is a portanto of the words financial and technology and the textbook definition of fintech is the use of technology to deliver or accelerate the delivery of financial services to Consumers ands businesses now you may ask in this day and age how is that different from what every other company does who's offering financial services and the sort of the fine point there is that you have old players who are offering things in a new way and you have new players who are offering which were what were specifically sort of old things now um for example Banks uh and credit unions and other financial services companies are offering their services through apps through uh various technology channels and you have new players which are mobile first who are for example mobile native who are especially on the technology side who are offering now what are previously services that were only offered by Banks and financial services companies so there are few things I believe are very core to a fintech product um at the very core the number one thing is when you're offering to to deal with other people's money uh ideally foundationally you're offering a trusted intermediation service um this is something which is critical and your users expect trust to be at the core of a financial product uh whether it be that the money is being sent to you for savings for um spending for investment the primary uh function of a fintech product is to provide uh trust in addition to whatever value ad that it brings the second core important thing about fintech products and financial services is the outsized economic impact that they have uh not only in the US where the Federal Reserve is responsible for example for licensing all banks and financial institutions but worldwide it's always a central bank or a state regulator or a central federal regulator who's responsible for licensing the um the promulgation of financial services this is primarily because monetary policy is a tool uh for most governments and they use Banks as well as financial services companies to set interest rates to set monetary policy and uh other um economic tools a third important thing with fintech products is the the importance of Financial Health to the product and how the user experience itself is tied to Financial Health a product that helps improve your users's financial health is going to have a huge impact on how your users um View and use your products uh for example if it was a product that helped your users save money at the end of every pay period and help this money grow uh this would have an outsized impact in the lifetime of your users and a lot of the reason why there's a lot more regulation is also because of the impact to Financial Health of most consumers and finally I think the most important thing about fintech is the time- tested ecosystem that exists there's a long history with regards to money and the exchange of value and there have been complex networks and Partnerships that are already exist they help move money help uh underwrite most activity and and also provide data as well as as it pertains to fintech products uh in the real world a lot of business is done on a handshake and in some ways FTE companies aspire to do so uh in the online world or in the virtual world as well or in the digital world with regards to trust you're largely handling other people's money now um that quote reminds me of a movie by Danny DeVito with the same name where uh his character has a code which goes the only thing I love more than money is other people's money and it's those kind of characters and that thinking that you would want to keep right outside your platform or your product if you have a financial services or fintech product as we discussed earlier trusted intermediate is foundational and a lot of the regulation that exists within the financial services industry largely exists to ensure that trust and fairness is maintained and people can trust uh the financial services to um hold their money to help them grow it and help them spend it another important factor as I said was the criticality of regulations and compliance when offering a financial services or fch product uh for example a product that meets all your customers needs has um is extremely Innovative it may still fail if it fails to meet the requisite rules and regulations required uh by the state and uh country that you operate in so as a fintech PM uh it's important to be aware of the regulations that may apply to your specific domain well it's not necessary that you know all the regulations and uh in effect become sort of a a regulatory lawyer but it's more important to just have the expertise the knowhow and to a large extent just the intuition which sometimes is developed with a lot of experience to know when a certain aspect is going to be uh is going to require compliance or um any regulatory approval as a fintech PM your work will span the front end the back end and the back office now let me explain what I mean by this um everyone's likely aware of consumer PMS growth PMs and the different uh specialities that a product manager could have uh in the fintech world the Three core competencies that you would need would be the ability to be an application PM or a consumer PM uh a focus on platform PMs and the ability to understand and have an appreciation for risk and compliance uh as an application PM you you are looking at crafting a user experience that gives your users a lot of value and something that they can use and it's intuitive in fintech and as it applies in other domains the application may be served through various channels it could be a mobile app it could be a desktop browser application or it could be an application on a smartwatch or even on a smart speaker and in the near future on a smart class now all these different applications will not have a monolithic stack of their own but rather will make use of services that run on the cloud or in the back end uh being a platform PM gives you the view of managing these Services creating a roadmap and creating a road map that works with consumer applications of any kind an important factor that differentiates fintech PMS from Pro perhaps other PM domain is the important uh importance of risk in compliance so what regulations in compliance May apply this slide is meant to provide a flavor it's by no means comprehensive or exhaustive uh and a lot of this would defer based on which fintech product and domain that you operate in So at the very outset would be the banking and sort of payments regulations so if you're a bank or licensed as a bank you need to apply by banking regulations as a money service business or an e- mini business you'd be You' want to follow licensing requirements for those kind of businesses largely you'd also be required to follow AML or anti-money laundering policies as well as kyc and KYB which is know your business and know your consumer requirements on the consumer side uh in order to protect consumers there a lot of laws uh for example there Financial disclosures for any product on the financial services side um you'd be required to abide by data privacy laws such as gdpr in Europe lgpd in Brazil and CCPA in California and you may also be required to provide data that's stored by your application or your product through open banking apis Etc under the purview of psd2 which is the payment service directive in Europe um besides regulations there are also industry rules uh if you were to store and accept a credit or debit card you'd have to follow the payment card Industries data security standard if you're accepting a card from one of the payment networks such as Visa Mastercard Discover union pay or AMX you want to abide by the rules of those networks and if you were to use a banking system for example the national automated Clearing House in the US uh the single Europeans payments area uh banking system in Europe or Becks in Australia you'd want to abide by the rules required to submit payments in a banking system and finally while this is not necessarily a regulation or a rule but is sort of Common Sense and sort of means of doing business would be uh applications of trust and safety uh that you would want to apply for example you would want def definitely detect fraud and gaming if that's happening with your product how do you handle disputes when someone's not happy with what's happened and how do you deal with chargebacks uh this could be largely with sort of payment instruments where a bank um requests that the money uh be be refunded because of a bad Merchant experience and finally you want to ensure that your users are complying with the terms of service that you offer for your financial product we can now look at some of the value that the ecosystem brings and the value chains that exist within the fintech domain Financial transactions by their very nature always have at least two parties um so an institution and the consumer where the consumer may be saving the money with the institution or sending or using the institution to grow the money or more parties but in addition to those explicit parties there are other entities that may be involved and these are entities that are providing uh processing of that transaction providing data to support that transaction they may handle risk or fraud and provide underrating and much more there's a pretty large and well established ecosystem of companies that provide Financial Services by utilizing the power of Partnerships you can focus on having a product that provides Innovation and unlocks new value instead of focus using on things that have already been done and Reinventing the wheel when it comes to financial services in the next couple of slides uh we will walk through a processing flow for a card payment and a bank payment uh these are at a high level and the purpose is actually to illustrate the different partners and actors that are involved in a simple payment that happens almost every day at a huge volume and the reason is just to illustrate it's by no means a comprehensive explanation or primer on all Financial transactions so we can start with a payment card process so this would be either a credit card or a debit card um there are over a billion uh cards in the US and globally uh last year there was over 500 billion transactions so half a trillion transactions where a card was used globally as well the payment starts with a customer going to a merchant uh this could be either physically at the store where they use a POS device or a point of sale device and they can swipe their card or this could be online where they go to a website and enter the card information or using an app uh a card a customer will usually present themselves with a card uh and this card is actually issued by the issuing bank and if you look at any card when you flip it around or on the front you will see the name of the bank that issued that card and it's usually the one where you got approved and you had applied either for a debit card you have a bank account with or for a credit card you applied and signed up for a credit card account when the user swipes or enters their card information at a merchant uh the merchant in turn will make use of a processor to help them process that card information uh most Merchants may not be able to store securely the card information so they do um Outsource this to processor and the processor will work with an acquiring Bank uh this is a bank at which the money will be uh sent for the merchants um benefit and from the acquiring Bank a transaction goes to a card Network so this would be Visa Mastercard MX discover or union pay the card Network as its members has both the acquiring Bank as well as the issuing bank so the cart network would then be able to reach out to the bank that issued the customer the card in the first place they can ask the bank to authorize this payment so the bank can confirm that this card was actually issued to this customer run a few other checks and they can authorize that this payment can go through uh at a later point of time when the money gets settled the money will be moved from the issuing Bank to the Merchant's Bank account at the acquiring bank now we can look at a bank processing flow um this last year there were 27 billion payment transactions using a bank which works out about 80 Bank transactions for every uh US citizen now in case of a bank either a customer will present a check at a merchant which is highly unlikely in this day and age but still possible with certain stores or they can more likely provide their Bank routing number and bank account number at a merchant website uh the merchant will forward this to a processor again uh the processor will work with a bank uh which originates this transaction the origination here refers to the fact that this transaction this debit transaction from a consumer's account is being started or originating from a specific bank account it's not necessarily indicating the direction of funds flow but rather direction of this request being made uh the request is then forward to a Clearing House house depending on each country they have their own automated Clearing House systems and this will be forwarded to the receiving bank which will then go ahead and look at the consumer bank make sure it has the right amount of balance and then go ahead and debit the consumer bank and notify that the Merchant Bank can now be credited with the money that was required most Bank flows currently operate in a offline batch system so there's different cutof off Windows um they do not operate at least in the US for now in a real-time fashion but in countries around the world and also in the US in the near future you would start seeing Bank payments that are real time now that we've looked at the sort of importance of crust intermediation regulation and the ecosystem we can now start focusing on how can we use that information to create a ftech product that works and is successful launching a successful thch product re requires in a way getting all your ducts in a row but sort of the three important things that you want to make sure that the boxes that you check are one you need to have your product improve the long-term Financial Health of your customer a product that does not do so or does does do this only on a short term may not be sustainable you do want to make sure that your customers keep coming back and the the product adoption grows uh largely because of how you are improving the the finances and the financial health for your customers the second important thing is balancing Innovation with regulation uh while you could have a very Innovative product that works for your customers and ases wonders if it's not compliant with regulation it won't see the light of day at the same time a product that abides by all regulations but does not offer anything Innovative uh is not likely to be adopted very well and finally your product needs to be able to achieve product Market fit it is a product that that has a need in the marketplace so while there are different Frameworks that you can use to achieve product Market fit for example there's the lean product process or the 40% rule the one that I'm most fond of is the jobs to be done framework by Professor clay Christensen at HBS and we can talk about that framework in the next few slides another thing that I believe is extremely important as you design a product is to know where your customers are in their financial life cycle as well as which product space or which financial domain your product will operate in your customers may be really early in the financial life cycle where they need help with either managing payroll uh and they're basically earning money and getting payouts for the jobs that they do the customers may be saving money and they need a checking uh savings account or a balance account in some cases your customers may need to borrow uh in addition to their savings for large purchases such as a home in which case there's a mortgage or a car loan or even for short-term purchases such as um products which they may opt to buy with a buy now pay later loan your customers may also be looking to spend which includes sending money at a to a to a merchant uh or to a friend or a family through P2P payments or maybe even making a remittance overseas to friends or family that live overseas and your customers may be looking to invest their money and grow it uh whether this be investing in stocks investing in bonds and other Securities or real estate and even cryptocurrency or in this day and age you can only invest in art as well as sneakers and I like to talk about the jobs to be done framework um a at a at a very high level you're looking at three steps so the very first step is to State what's the job that the customer needs done for them so when I'm at the store so for example this a situation when they are at the store they want to do something so for example they want to purchase an item and get out of the store as quickly as possible and then what's the expected outcome well they want to purchase but they want to do so so it's frictionless it's fast and it's easy the Second Step would be to find out what kind of job they want to accomplish is this a functional job job which is doing a specific activity is it an emotional job where it serves some sort of emotional need or it could be making a decision um so in this case if somebody was to make a purchase at a store uh they're looking at making a functional activity basically it's a purchase for their daily life and then finally we could start drilling into what can substitutes exist right now and what do these substitutes lack um for example going to the store a a substitute right now is using a point of sale device and swiping with a card or paying with cash now paying with cash in in a covid environment uh that we are in may not be preferable because they have to handle cash um even with the card users may feel that the whole process of um pulling out a card from your wallet uh inserting it into a POS device that's been used by multiple people may not be the most henic or the most appealing in which case perhaps an example a an alternative would be uh the use of a QR code to scan and pay for the purchases which speeds things up and is at the same time completely contactless with that we're at the end of the talk and I'd like to leave you with a few important key takeaways um as we spoke earlier at the very Foundation is trust and your product needs to provide uh trust to your users in order be functional in order to be sustainable second you want to have a product that balances Innovation with regulation uh so that it abides by all the required regulations in order to be sustainable and at the same time provides Innovation that users are lacking right now in the market it sometimes may help to start with Innovation at the edges rather than the core of the product offering that you have and finally you want to make sure it's a product that gets the job done for the user so the user has a a specific job that they're seeking to accomplish having a product that accomplishes that specific job is going to get you a lot more traction in the marketplace well thank you for being an amazing audience if you'd like to connect with me or have any questions or comments please feel free to reach out to me uh through these social media handles it's been my pleasure today to walk you through uh product management in in the world of ftech thank you [Music]