Ion, thank you for taking part in Sikoia Unified interview series - You've had an impressive career spanning large institutions like Deutsche Bank to entrepreneurial roles at fintech startups. What initially sparked your interest in financial services and drove you towards the innovation happening in fintech?

Thank you for having me! My journey began with a degree in marketing and management. I entered Deutsche Bank through a graduate program and soon found myself in brokerage and trading—a sector that didn't resonate with me. I was more drawn to roles involving people and technology, which led me to equity capital markets. There, I took on a consulting role with investment banks, focusing on structuring IPOs leveraging data and technology.

During this time, I noticed a heavy reliance on legacy technology within financial institutions. Transitioning to fintech was initially a culture shock, but it gave me valuable insight into the technological challenges these institutions faced. Their processes and daily tasks were generally effective, long, hard to change, but they were hindered by outdated technology. This experience ignited my passion for driving change and accelerating innovation in financial services through cutting-edge fintech solutions. This passion has guided my career path to where I am today. 

Amazing. You’ve held various leadership positions across multiple fintech companies, each at different stages of development. Could you share some pivotal lessons from these experiences that have influenced your strategy at Finca? I’m particularly interested in how these insights have shaped your approach to innovation in fintech

Throughout my career, I've observed a recurring trend in both large corporations and fintechs: ambitious plans to enter new markets and drive growth often outpace the readiness of their products. Even when the product is in decent shape, market trends and customer demands typically shift, leaving offerings outdated. This common dilemma prompts the question: Can we add more customised functionality? While customisation might address a client’s short-term goals, it doesn’t resolve the underlying technology issues that impact how solutions are positioned and supported in new markets. This presents a significant challenge.

In my previous role as Chief Commercial Officer, I was responsible for launching an SME lender in the UK and Europe. Despite having great ambitions and a clear vision, there was a disconnect between strategy, product, and technology. Our market entry strategy targeted a specific audience, but product decisions were often reactionary, influenced more by competitor actions than by thorough research. Moreover, the technology was inadequate for developing a fresh proposition. These challenges shaped my approach at Finkr. 

Reflecting on my past experiences, I’ve come to believe that without a visionary strategy, well-researched and designed products, and advanced technological support, any ambitious endeavour is likely to falter. At Finkr, we see similar challenges with our clients today. This understanding has shaped my philosophy and approach—hence our name, which signifies that we are thinkers in finance.

While our discussion has largely centered on technology, it’s clear that pricing also presents significant challenges, especially in your roles with early-stage startups and Series A and B companies. This brings me to my next question about your advisory role at Finca, where you work with financial services companies. Could you discuss the key challenges you encounter in this capacity?

Indeed, many businesses we collaborate with have experienced substantial investment growth in recent years, enabling them to aggressively enter new markets. However, they often lack a well-defined go-to-market strategy. For example, one of our current clients, despite having a robust product and innovative technology that competes well with next-generation offerings, is struggling to make inroads in the tier-one sector. They haven’t fully strategised their market entry or explored various growth marketing approaches such as thought leadership, marketing, distribution channels, or partnerships. This oversight in aligning their product capabilities with market entry strategies leads to issues with perception and positioning. 

This scenario isn’t unique to large clients; smaller clients face similar challenges. They develop a product and set a pricing model, but then leave money on the table because they don’t understand how to effectively position themselves against competitors who invest more in building perception through marketing and public relations. The recurring challenge across these scenarios is the lack of a comprehensive strategy that covers essential aspects such as sales, competition, pricing, and positioning, especially when targeting new markets. These dynamics underscore the complex and varied challenges businesses face, highlighting the importance of a well-considered strategy for achieving successful market penetration.

Thank you for sharing that insight. Embedded finance is a topic that’s widely discussed and has significantly transformed the delivery of financial services. In your previous role at Channel Capital, how have you seen embedded lending models specifically disrupt traditional borrowing processes?

There are two main areas where embedded finance is becoming popular - consumer trust and the need for speed in borrowing. If I were to break those down - when it comes to trust, embedded lending really leverages the trust consumers already have in those platforms they regularly use. If a consumer is familiar with an e-commerce platform, they may be more willing to explore the lending options available on that platform. This also offers the lender and the platform access to more information on the spending habits and behaviours, and they can give those consumers access to finance much quicker.

The need for speed is another factor. If you look at the traditional lending model, there's an application, an approval process for a loan, which can be significantly time-consuming. If you have to face lengthy paperwork, background checks or approval processes, that can essentially take days or even weeks when you're looking at SME lending as well. So embedded lending disrupts these fronts where technology is leveraged, and they're able to integrate with other advanced technologies to learn better about the customer profile. I think those are some key points as to how embedded lending is starting to disrupt traditional financing.

Considering your experience, are there noticeable differences in the models for embedded lending when it comes to business or commercial lending versus consumer lending?‍

There are distinct differences in lending processes between markets, particularly noticeable in SME lending versus consumer lending. In the UK, SME lending at the point-of-sale gained popularity around 2020-2021. This process involves a more thorough screening that isn't instantaneous. Even when SMEs provide their open banking data, the financial documents must still be reviewed, and company directors are assessed individually, which can lengthen the process.
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Conversely, consumer lending has seen significant advancements. For instance, Amazon has offered an option in the UK and the US for about one to two years to pay in five instalments without undergoing a traditional credit application. This method leverages Amazon's own financing solutions, utilising technology to assess spending habits and other criteria such as residency and linked payment methods, enabling a swift financing option that supports their buy-now approach. This is more advanced than many other embedded finance solutions currently available.

Furthermore, on Amazon's checkout screen, there are also financing options available from Barclays, such as paying in six or ten instalments. These developments indicate a greater advancement in consumer lending practices compared to those in SME lending.
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Given Amazon's extensive data on user habits and payment methods, do you see potential for their model to be white-labelled? Specifically, could something like an 'Amazon Pay' button become commonplace on various merchant sites beyond the Amazon ecosystem?

‍Depending on their strategy, Amazon could certainly leverage this opportunity. For instance, if a consumer buys an air fryer from Amazon and later purchases a washing machine from another provider through open banking data, Amazon could share this information with the other provider or even act as the finance provider themselves. It all depends on how Amazon wants to position itself: as a bank or lender, or simply focusing on selling their own products and those of their merchants. 

Traditional lenders often do not consider this type of alternative data. Amazon, on the other hand, analyses a range of data points: login times, cookie verification, integration with other platforms including social media to track behaviour, and geolocation information. To do this, they deploy multiple technology solutions that traditional lenders would need to tap into to access alternative data, thereby reaching a different customer segment.

In terms of customer onboarding and screening, traditional lenders automate about 60-70% of the process, with the remainder requiring manual intervention. If an applicant’s profile does not meet the criteria set by the credit decision engine, certain regulatory data points must be collected. Consequently, lenders often hand business over to alternative lenders with more advanced technologies. These alternative lenders tap into diverse data models, such as payment system connections, social media activity, Google ads, cookies, and digital wallet information. By incorporating AI tools, these lenders can increase their automation and conversion rates beyond the 60-70% mark.

This highlights the parallels in how technology adoption differs between new players and more established ones. Newer players like Amazon can seamlessly integrate and utilise a variety of data sources and technologies, positioning themselves to outperform traditional lenders who lag in technological advancements. 

It seems you're already leading into the next topics I wanted to discuss. First, regarding consumer duty—this is a significant issue in the UK and elsewhere. Given the rise of alternative lenders, how do you see consumer duty obligations influencing or penetrating this sector more deeply? Additionally, concerning data privacy, there seems to be a delicate balance required. Could you elaborate on how this balance can be achieved?

Certainly, data privacy is a critical issue, with regulations like GDPR in Europe and CCPA in the US requiring financial service providers to maintain transparent data practices. This transparency involves clearly communicating what data will be collected, its purposes, and with whom it will be shared, along with providing consumers control over their data preferences, including options to opt-out of data processing. The principle of data minimization mandates that providers collect only the data necessary for legitimate business purposes. Despite these regulations, large providers such as Meta have faced significant lawsuits for non-compliance.

In terms of technology solutions within financial services, personally identifiable information is increasingly tokenized, meaning this sensitive data is not stored directly on systems but is instead assigned a unique ID for processing, enhancing security. Choosing technology providers with robust security measures and adhering to strict data governance frameworks are essential. Such frameworks should detail the policies, procedures, and roles for data management to ensure compliance.

Regarding consumer duty, the financial sector is guided by laws like the Consumer Credit Act in the UK, underpinned by FCA regulations, which mandate certain protections for both lenders and borrowers. For example, lenders must provide borrowers with accurate information to help avoid defaults and ensure there are mechanisms for resolution if defaults occur. This is particularly relevant in embedded finance, where offering financing options to potentially uninformed borrowers might increase default risks.

Lastly, the regulation of buy-now-pay-later schemes is an evolving area that hasn't been fully established yet. This sector requires thorough assessments of a borrower's financial stability, possibly incorporating alternative data sources such as payment systems to verify a borrower's ability to afford loans. These considerations are vital in ensuring fair market conduct and competition.

That's interesting. Both regulators and consumer lenders are increasingly focused on ethical and responsible practices. We've touched on new data sources, but looking ahead, how do you foresee AI and machine learning models transforming the underwriting process over the next 5-10 years?

You're touching on a subject I'm very passionate about, as I believe we need a next generation of credit underwriting. It's no longer acceptable for businesses or consumers to face significant delays in data checks or fund provisioning. This isn't necessarily due to AI tools providing incorrect outputs. In fact, companies have developed technology to control these outputs and ensure lenders comply with regulations surrounding AI.

One such company is Omni. They provide hybrid intelligence solutions that allow lenders to design more effective data capture in their credit underwriting process while maintaining regulatory compliance. The AI controls the mathematical processes, but the outputs are designed and overseen by compliance or product experts licensed by bodies like the FCA.

The real challenge isn't the deployment of AI tools or controlling their outputs; it's the legacy technology many financial institutions and lenders still rely on, especially in their back-end systems. This outdated technology inhibits the integration of real-time data processing capabilities, which are crucial for leveraging AI effectively. For instance, even if an SME lender uses AI to enhance front-end processes and improve customer interactions, they may still face significant delays in fund provision due to slow back-end systems.

To truly revolutionise credit underwriting, financial institutions must transition to cloud-native technologies and adopt a microservices-based architecture. This would enable seamless API integrations, allowing diverse data sources to be easily incorporated. Once these foundational changes are made, AI tools can be fully integrated, harmonising data access and enabling controlled, efficient outputs. Currently, about 60-70% of the credit underwriting process is automated. I hope that in the next 5-10 years, this figure will exceed 90% by implementing these advanced tactics and practices.

Considering the widespread interest in digital transformation within financial institutions, many recognise the benefits of innovation but find themselves limited by existing core banking or origination platforms. How do you envision Finca's role in addressing these challenges and facilitating the integration of new technologies into these platforms?

Our approach revolves around three core pillars: strategy, product, and technology. When we engage with a financial institution—whether it's a lender or a digital bank—we begin by assessing their strategy. This involves defining how they should compete and differentiate themselves in the market. Many companies that have been operating the same way for years have lost market share to newer propositions simply because they cannot offer the functionalities their consumers now demand. 

We focus on understanding how to reclaim that market share or differentiate against competitors. Once we've established the strategy, we examine how the products will be designed. Our support extends beyond competitive analysis; we actively engage with end-users and gather insights directly from them. This research is crucial because it informs the design of features that borrowers actually need.

With a clear understanding of market requirements and a solid strategy, we then advise our clients on the necessary technology components to build a robust system architecture that supports the new product proposition. This comprehensive approach provides a significant competitive advantage, avoiding the pitfall of merely applying superficial fixes—a concept often referred to as "putting lipstick on a pig."

We often encounter clients who believe they can lead with technology but want our help to enhance their market profile. We typically refuse such engagements because they don't address the root problem. These clients often return six months later, having generated demand through improved marketing but failing to support it due to inadequate underlying systems, resulting in rejected applications and lost customers.

That's why our methodology consistently emphasises the importance of addressing all three pillars to remain competitive. This holistic approach is how we strive to work with all our clients. Interestingly, a client from Australia recently told me, "The way you ask questions really gets me thinking." Hearing this made me proud because it encapsulates Finca's mission. We aim to challenge our clients to think differently and recognize that they need to address multiple areas within their business, not just the one that appears faulty today.

Well, thank you. I think that leads me nicely to the next and last question, which is - if you could go back and give your younger self one piece of career advice, what would it be? And what guidance would you impart to aspiring fintech entrepreneurs?

‍I would advise taking risks much earlier. Often, we hesitate, wondering if it’s the right moment, worrying about what others will think, or doubting how we’ll stand out among competitors. These doubts can dampen your ambitions, especially when you consider the established players who seem to know the market well. 

My experience has taught me that embracing risk and maintaining focus on your goals are crucial for overcoming obstacles. A quote that has resonated with me is, "Winners focus on winning. Losers focus on winners." This means that if you're constantly looking at what others are doing, you're not concentrating on the most important aspect: what you are creating yourself.

This realisation empowered me to decide, "I want to do things differently. I'm going to venture on my own, and I will get the right people to join me on this journey." This approach has led to a beautiful journey so far. 

My advice to younger entrepreneurs is to take more risks and focus on what you're building. Dedicate all your energy to your vision, and it will take shape.
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Nicely put, and bringing in people with you - that team, collaborative approach. 

Yes, for sure. People that are willing to stay with you on the journey will be there. And those are the ones you want to keep.

Couldn’t agree more. Those are fantastic insights and thoughts all over. I appreciate you taking the time to share your experiences.‍

Thank you, it’s been great to take part.

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