521 Fintech Visionaries Reimagining the Future UAE Informed Credit Decisions

Welcome to Breaking Banks, the number one global fintech radio show and podcast. I’m Brett King. And I’m Jason Henricks.

Every week since 2013, we explore the personalities, startups, innovators, and industry players driving disruption in financial services. From incumbents to unicorns and from cutting edge technology to the people using it to help create a more innovative, inclusive, and healthy financial future. I’m J.P. Nichols, and this is Breaking Banks.

Welcome back to Breaking Banks. This part of the show is actually sponsored by our friends at MasterCard. It’s a part of a multi-segment series we’re doing for them.

I spend some time diving into how MasterCard helps fintech visionaries reimagine the future of finance. As fintechs look to build, launch, and grow their businesses around the world, obviously MasterCard is a strategic partner that can help them drive smarter decisions, better outcomes for consultation, consulting rather, innovation, insights, analytics, loyalty, personalization, and marketing services. And not to mention, of course, their core capabilities for supporting payments rails and authorization structures and all of that.

So I know one of the first strategic partnerships that I had to take on board when we founded Moven back in 2011, 2010, 2011 in the States, was one of the most important relationships we had was getting our BIN number from MasterCard because that meant we could issue a debit card. So we’re going to be talking today to a challenger bank out in the UAE market. And we’ve got two people joining us on the cast today.

Today we’re joined by Jayesh Patel. He’s the CEO of a bank called Weo Bank based out in the UAE. And Thomas Conceria, who’s the EEMEA Senior Vice President for Advisor’s Client Services at MasterCard.

To Jayesh and Thomas, welcome to Breaking Banks. Thank you for having us, Brad. Thank you.

No problem. Well, first of all, Jayesh, you know, much respect, you know, Elon Musk says about, you know, the whole SpaceX mission, that he’s always, you know, complimentary of other rocket companies that get their spacecraft to orbit. And as you know, because he knows how hard it is to do.

And as a neo bank, you know, as an early neo bank founder and pioneer, I know how hard it is to set up a new bank. So you know, props to you for that. But you know, tell me about Weo.

First of all, just tell me a little bit about Weo as a bank. You know, your market is obviously the UAE, but you know, where are you at in the stage of development, just to give us that. And then I’d like to dive back into sort of the foundation story to some extent.

Yeah, sure. So we’re fairly young. Brad, as you know, building a bank is, it seems easy, but it’s incredibly challenging.

We started about three years ago, we’ve launched about 14 months ago. It feels like 14 years on some days, but we’re fairly new, growing rapidly with some exciting stuff in the UAE. Awesome.

Yeah, I know, like the UAE is a really interesting market, you know, by sort of nature of the fact that, you know, even though it’s quite a small market, but you have a very high technology adoption rate. What, like, what’s the smartphone adoption rate? It’s something like 180%? Because most people have two smartphones. Yeah, I think it’s about 200%, yeah.

Like, I mean, why wouldn’t you pick UAE as a mobile banking market, right? Because, you know, if you’re talking about mobile adoption at the core, and of course, you’ve got amazing services there like Careem and other things that are coming along. So people are starting to, they’ve really jumped into the mobile commerce space. And this is one thing we see in terms of the MENA region, where it’s different from, you know, what’s happened in the West is, you know, and even more so in Africa, but it’s sort of like we, yeah, we did have a bit of an e-commerce revolution there.

But most of it is now this mobile commerce revolution is creating sort of boom of these startups, you know, in places like the UAE. Of course, you’ve also got the crypto environment in the UAE, which is, it’s very friendly to that environment, and from a regulatory perspective, quite advanced. So they’ve had a fintech charter license available in the UAE for a while, haven’t they? Yeah, they’ve just passed regulations so that crypto companies can actually apply for a license and there’s very clear governed rules, which they need to abide by, which I think is great, puts a lot more structure and credibility to some of these companies.

Yeah, you know, like in the US, it’s getting much harder for crypto companies to work at the moment. So that creates a lot of uncertainty. You’ve also got, you know, a fair bit of access to funding now in the GCC, the Gulf region.

But tell me, you know, what made you decide to start a bank? So, you know, previous life before we started a digital bank for an existing bank. And I think the key driver for it was consumers want different propositions. And you know this well with Moven, is I think consumer behavior is changing.

Technology is enabling us to do things in a different manner. A few days ago, I was speaking to somebody and I said, a few years ago, it was the privilege for a customer to to get a bank account. Yeah, I think with digital, it’s the privilege of the bank to be able to serve a customer.

And I think that mind shift is critical because the banks that don’t follow that, I think will struggle. The genesis of WIO is slightly different. As you know, the UAE, I think it’s fairly strategic, longer term focus.

They have a digital strategy. And one of the things they realize is as they want to become a digital hub for the region and broader markets, they realize that one of the key things they need is a digital financial or banking platform to enable the digital economy. So that’s the genesis of the idea.

How can you build a digital platform that enables a digital financial platform that enables the digital economy? So I thought it was a great idea and I decided to join. And I said, hey, I’d like to take a shot at this. So we started about three years ago with this idea of building the next generation of a bank.

And what’s the derivation of the name WIO? Yeah, it’s interesting. So, you know, in this AI age, I think we were slightly ahead of the curve. The name was actually generated by an algorithm based on various criteria.

Yeah, it was. It was one of five names shortlisted, generated by an algorithm based on a set of attributes we wanted. After that, we had a brilliant marketing team who then created purpose for the name.

So if you look at the name, the W is a path. It’s your path of life. There’s ups, there’s downs.

It’s not straight. So W is the path and IO is one and zero. So it’s your life or your life path enabled by digital.

So that’s that’s what we stand for. Yeah, the URL WIO, it’s funny, but that’s that’s cool. You know, I think you hit the nail on the head that the design element of what it means to be a bank is actually fundamentally changing right now.

It’s not just about the fact that we can provide you with these tools that enable you to manage your money better and do so in real time, things that we could never do with the branch infrastructure, for example, or even Internet banking and ATMs and so forth in the past. And so, you know, and you see, obviously, adoption of mobile wallets around the world is accelerating. So you now can have this sort of view of how do I design a bank optimally for a phone rather than trying to take all these banking products that I built for the branch and retrofit them onto the phone, right? So I think that’s very clear.

Thomas, you know, you guys are part of this process of adaptation. You know, you’re you’re a core infrastructure partner and technology partner for startups in the space. But, you know, where, you know, when we look at the innovation that’s happened in the retail banking market in particular globally over the last 10 years, most of the innovation that has occurred, particularly in terms of feature set and design innovations, have happened in challenger banks and neobanks and not from the traditional players.

Is this part of the driver for MasterCard, you know, if you want to be on the cutting edge, you have to be working with these types of players? Yeah, that’s right, Brett, actually. So MasterCard is a payments technology company, and we work with our partners to get our products out to our end consumers, right? And to ensure that we get these products right, we collaborate and a lot of times even co-create with our partners. And as you can imagine, fintechs come with less restrictions, less constraints and can be more innovative in the kinds of products that they could launch.

And we collaborate quite closely with them. Right. And one way we do this is, you know, we’ve got this Labs as a Service capability, which is the MasterCard lab that we lend out to our partners to actually co-create and come up with a new product that we bring to the market together.

And the other point I would just bring out is also that for fintechs or even for traditional banks, getting digital banking right or even mobile banking right, you have to get digital payments right. Right. Payments is the most frequently used product of or the most frequently used banking product that’s out there.

And getting that right is extremely important. And MasterCard, you know, is the right partner for that. Absolutely.

Jayesh, is this mainly retail or you mentioned crypto before, you know, you’re doing B2B, you know, what’s what’s the type of customer you guys are looking for? Yeah, so, you know, we want to build the digital bank for tomorrow. I think we’ve seen the evolution of the banks. Yeah, you had the branches, you had the Internet and then you had this digital banks that came and I think brought a significant shift to the way consumers engage and propositions are created.

So in our view, the next generation or the next evolution of the bank is slightly different. So we have three kind of businesses we engage in. One is we build consumer apps for SMEs, for retail and eventually for corporate.

Yeah. So that’s just one part of our business that we look at. The second big part of our business that I think is evolving interestingly is embedded finance.

We believe in the future, customers will not come to a banking platform to access banking services. We believe we need to work with partners to create custom offerings on their platform that are smart, comprehensive and are updated regularly to serve that platform and that particular need. So that’s a big second vertical that we have.

And the third vertical we have is BaaS, banking as a service. And the reason we have this vertical is we think there’s going to be a democratization of finance. We think you don’t necessarily need to have a banking license to embed or to have a card in your retail brand.

So we think there’s going to be a democratization of banking services. We want to lead it in the UAE, building robust capabilities in this. So we’re going to open up services that can be consumed by various qualified players that can enable them to engage in this business.

So we call ourselves a platform bank. That’s our positioning. And the reason we position ourselves as a platform bank is we see the importance of being this platform layer more important than just focusing on delivering apps for consumers.

We think that’s the next iteration of banking. Well, it’s even, I think, one of the things we’re looking at now, which is going to blow it all open again, is AI and AI agency. So we talk about ChachiBT, but I don’t think people understand that once you have a conversational AI that can act as your agent to help you manage your money, that the role of apps themselves decline, just like apps have exploded in terms of the design premise, the next phase of this.

And that’s where embedded banking is to understand, again, the design premise. Embedded banking and AI go together like, you know, I’m in the States at the moment, so it’s peanut butter and jelly, right? But it goes together in a unique way because now I can get real time contextual advice wrapped in with the utility of the bank, including payments and capability and stuff like that. It’s a very interesting time, disruptive for banking, you know, but yeah.

You know, interestingly, we were having a chat on the same topic. Right now, we design apps and we design a flow for you as Brad when you download any of the apps. I think with AI and things like ChachiBT, you will decide your path, you will decide how you hop and you no longer need the wheels that are defined by a bank to define your journey.

And I think that makes it very interesting from a bank perspective. How do you serve a customer? Yeah, no, I think there’s opportunities here to talk about some of the core product capability and stuff as well. One of the really interesting aspects of embedded banking and finance is a switch away from, you know, what I would call long form or complex credit products to contextual real time credit products.

And Buy Now, Pay Later is one of those that we’ve seen. And despite all of the protestations during the pandemic that Klarna and Affirm and these guys were sort of done, we’re seeing Klarna’s IPO happening right now and they look far from done in that respect. Right.

But you guys, one of the innovations you’ve guys been working on is sort of this more contextual credit offering, I understand, to something called Credit Plus. So, Thomas, let me come back to you on that one is, you know, in terms of when we see these different types of products and maybe, Jayesh, you can tell us about Credit Plus first and then, Thomas, I want to get your input into this in terms of how you see these types of sort of pioneering products emerge. So, Jayesh, first, what’s Credit Plus? Yeah, so Credit Plus is our product in partnership with MasterCard that allows our customer to have one card and flip it between credit and debit.

For us, it’s more how a customer behaves. I either want to spend my money or I want to spend money I don’t have. Yeah, I’m going to borrow short term.

But it’s a conscious decision at that point, right? It’s a conscious decision. Yeah. And you can manage money across.

Right now, once I swipe my credit card, I can’t, the decision’s taken, there’s very little I can do or my debit card, yeah, because I can’t move money easily from the other part. So we want to bring uber flexibility to the customer when it comes to spend, but we want to keep it super simple. Yeah.

So we’ve got this awesome, innovative product from MasterCard and we’ve really simplified how the product works. Yeah. We’ve eliminated 80 percent of the fees.

As a customer, you will be able to tell exactly how much fee you will pay to the bank and you can choose not to by paying a certain percentage. So we think it’s a really interesting product. Great.

So, Thomas, tell me about, I mean, this requires some fairly interesting thinking, but tell me about the process of bringing that product to launch in the UAE. Yeah, sure. So, look, I mean, and maybe I can take a step back, right? This is probably a good time where, you know, MasterCard and Brett, you mentioned this as well.

So to quite a few years ago, we had made a decision where we don’t just want to provide the payment products that we’re all very familiar with, right? So credit cards, debit cards, but we want to go beyond and support our partners as a technology partner by by building several capabilities here. So that’s where, you know, where one of the things that we’ve done is make sure that we bring in some design thinking and helping all our partners to think through what’s the next disruptive sort of product that they can come up with and also have the technology behind it to actually support them with that as well. Right.

The capabilities to make sure that we can do a lot of this heavy lifting for them instead of them having to build this in-house on their end as well. So that’s yeah. So this was this joint thinking that we actually did together in terms of coming up with this the one this disruptive sort of first to market or new to market launch that we wanted to do with Veo and also making sure that we can actually bring this capability to them in the right way as well.

Right. Jayesh, I mean, does someone have to apply for the credit card as a traditional product in this instance, or it’s something that you handle from a sort of dynamic KYC perspective and just the credit facility is something you add on to the customer, you know, their access to the utility stack. Yeah.

So once when a customer opens the account, we do the KYC. You do need to apply for the credit. The way we look at credit is slightly different.

We look at products like a card or a loan as channels to utilize credit. The underlying product is credit. Yeah.

The rest are all channels. The core utility is the credit. The core utility is credit.

Yeah. So we we underwrite you for credit and then you get the flexibility to choose which channel you want to use it with. Yeah.

So you apply, we pull all the data digitally. There’s very little you actually have to submit. If I’m not wrong, I think right now it’s just your IBAN and that we’re going to go away from soon.

And we run the algorithm and you have a card that is provisioned in your app, which you already had as a debit card. Now you just click on credit. A button comes up and you can switch between credit and debit.

Yeah. So it’s fairly simple, fairly easy. And you can start using it without necessarily having multiple cards.

And to me, the big advantage of this is as a customer, if I want to find out how much I spend on food, a simple thing that most customers should kind of know, how much do you spend on food a month? If you look at the traditional offerings, you get four different statements. You have to aggregate, categorize, figure it out. Here, when you have a consolidated product, you fundamentally elevate everything.

And now you can provide insights to customers that can help them make better decisions. So we see the innovation, a huge enabler for customers to better understand and manage their money. You know, one of the first really epiphanies we had with Muven is that it’s not just the categorization, but when we attach the category of spend to the digital receipt, that was a massive behavioral shift, because there’s a very big difference to you looking at your statement at the end of the month and seeing that you’ve spent, you know, $500, you know, US on food or, you know, 3000 dirhams on food or whatever it is, yeah, you know, let’s say whatever it might be, versus being in a, you know, a Starbucks or, you know, whatever, whatever Costa Coffee is popular in Dubai, walking in there and seeing that, holy crap, I’ve already spent this much money, and it’s the 10th of the month already.

And we would see immediate behavioral change. And when we had joint accounts with a husband and wife, immediately we would see the entire household change their, you know, financial behavior over the next couple of weeks when they had that real time information. So they weren’t waiting until the end of the month, and they had that contextual information and it changed their behavior, which is like the Fitbit analogy, right? If you want to get fitter financially, then you need the right data in real time, you need to see the steps you’re doing in real time, rather than, you know, at the end of the month or whatever the case may be that there’s a lot of power in that sort of data visibility.

So, you know, can you give me a sort of scenario where someone might switch into the credit offering based on what you’re seeing in terms of behavior or data right now? So, you know, we’ve just been in beta, which is launching it in the next two, three weeks here. But what we are beginning to see is, because customers are setting up simple rule, either I’m going to spend big ticket items on my credit card, or I’m going to spend it all on my credit card. What we see them do is stick to one product.

And as they go through the spend cycle, because they can predict exactly how much the fee is. So if I have a thousand dirhams that I’ve spent today, I can go to the fee section, click on it, and it says, Jay, till the end of November, you’re going to pay zero. Yeah.

But when your bill is due, say, December 5th, you have a 100 dirham fee if you don’t pay anything. If you pay 80 percent, it’s five dirhams. Yeah.

So we start seeing people toying with the fees to understand how much should I pay? And if I’m paying the bank 20 dirhams, is it worth for me to pay the 20 dirhams because I have more need for the money than the 20 or I don’t want to pay the 20 dirhams? It’s not worth it. So we’re seeing this behavior where customers are beginning to judge what they want to pay and what they want to pay off. Yeah.

I think, like you said, as consumers get more insight into where they spend, I think we’ll start seeing shifting decisions, which to us is the eventual objective, is how to get you to make the right decisions for your money without necessarily judging. Yeah. A really easy example to illustrate this and why this sort of product is so advantageous for a bank compared with competitors in the wallet with the plastic card is imagine someone walking into Carrefour at Ibn Battuta Mall and you get a message on your phone.

It looks like you don’t have enough money for your grocery shopping today because I know how much you spend on groceries. I know what the balance is in your account is. It looks like you need to switch to credit and giving you that same conversation as a competing bank that has a credit card offering.

Your hope is that when they get to the checkout, they’re going to choose your credit card. But you’ve just circumvented all of that in that one moment because of data and contextuality. It’s pretty, you know, that’s where these contextual opportunities are.

So I haven’t trademarked that scenario, but I’ll give that one to you. So, Thomas, let’s talk about credit risk in this environment. You know, this is sort of much more dynamic thinking about credit.

How do you how do we handle the credit risk models in this instance? Yeah, that’s a good question, Brad. So I think there are two ways. One is what Mastercard does well is, you know, for us to think through spend data and looking at those transactions to figure out how can we come to a good decision about the customer, utilizing the spend data that’s out there that the customer has.

And this could be, you know, debit card spend, giving us a bit of a prediction on how they might behave on credit card as well. Right. The second way is actually we’ve got a lot of experts in this space who have a lot of global knowledge and making sure that they understand what’s working well in different parts of the world, who’s coming up with new models that can be leveraged.

And we bring that to our partners as well. Yeah, no, I get that. You know, I think generally speaking, we’re learning a lot about how data can be used to you know, behavioral data in particular can be used.

Cash flow metrics is a really simple way. But I remember speaking to Scott Sanborn as a CEO at Lending Club at one point. He’s saying, you know, we figured out just one data point is like 90 percent more effective at predicting default risk on credit versus a traditional credit score.

And it was whether people pay their phone bill on time. You know, it’s like those sort of insights are quite powerful and we don’t have to be restricted by those traditional views of credit risk models and so forth today. But I think what we hear is I think to Jayesh’s point is when you put both of it together, right, the debit transactions and you’re seeing the transactions on the other side, you can actually make decisions much better as well.

So to wrap up, but Jayesh, you know, in a best case scenario, where do you see we are being in five or 10 years in the UAE and in terms of carving out a space in the digital finance space in the UAE? Yeah, so look, we think locally and regionally we want to be one of the top retail and business banking providers. We want to be the number one embedded and best provider in the region. We think this is going to be a huge area of growth.

My hypothesis is the revenues get split a third, a third, a third as the market grows. But I think the key objective is we enable individuals, businesses and companies to provide better, to make better decisions or better financial decisions and become healthier. That’s what we want to do.

We want to become an enabler. This is the term, the platformification of the bank rather than just providing the bank utility. Yeah, no, I think that’s key.

You know, Thomas, obviously you’re seeing more and more strategic partnerships like this as MasterCard. But how are you ensuring that within MasterCard that the experiences of working with players like we are is populated throughout the organization in other regions and jurisdictions, too? Yeah, sure, look, I mean, I think the good example here is we we’ve already done that right and we’re already doing that. For example, LAC is actually quite advanced in this space with all the banks that you’ve got out in Brazil with the new bank, et cetera.

Right. We already see the biggest, biggest bank in the Latin American market now. Eighty five million plus customers quite closely.

Right. So it’s I think that that’s where the globality of MasterCard comes to play and one of the unique strengths that we have. Right.

So when you’re trying to launch in a particular market, making sure that you have somebody who’s a global partner who not just has read about this in the paper, but knows truly what are the things that’s working in that market. Right. By understanding that market pretty well and bringing it locally as well.

That I think is where we play a good role. And that’s something that we focus quite a lot on within MasterCard. And I think the advisors group does a good job of this, of bringing all of this together.

Right. Bring that knowledge and make sure we share that across some of our key partners as well. Right.

All right, Jayesh, you know, I know you’re going through beta right now, but is there anything that keeps you up at night? Yeah. Is there anything that lets me sleep is the bigger question. I’m going to I’m comparing notes with you right now because I’ve been through this.

But no, you know, I think for us, we think it’s an incredibly exciting time. Yeah. We’re beginning to see customer adoption on retail in the past three months.

It’s been phenomenal. We’ve seen customers appetite to try new products and just engage with us. Yeah.

Tell us how it works. Give us some of the scenarios like you were giving us earlier, Brad, on how it would work for them. I think that’s incredibly exciting.

Yeah. So for us, we need to be able to run as fast as the the appetite of the consumer is, which I think is a big challenge. But we think it’s going to be incredibly exciting.

Yeah. We’re super excited about this product with MasterCard and I think customers will appreciate it. Initial results.

We’ve got some very positive feedback. So we’re excited about this. Fantastic.

Well, keep us informed. We’d love to hear how the launch goes and how acceptance is going. And, you know, as is is fairly evident, you know, right now we’re looking around the world and we see some extraordinary examples of success in the challenger bank space.

New Bank is obviously one clear example of that. We bank in Shenzhen, you know, even the the UK challenges and so forth. I saw a stat the other day, 40 percent of salaries in the UK now are paid in the challenger banks, which is an extraordinary statistic.

Yeah. Which, you know, people always said at the start, a couple of things we’ve learned. They said, oh, people are never going to put their salary in a challenger bank.

That was one. And, you know, they have they might be able to design a really cool app, but, you know, they’ll never be as good at credit risk, you know, as as a traditional bank. And we we know that’s just now not not the case.

You know, New Bank has a 30 percent lower delinquency rates on their credit card than the industry average is an example. Right. So we are breaking all of the rules of what it means to be a bank and all of the assumptions that we had about how these new banks would fit into consumers worlds is really changing.

So I get your excitement, you know, I’m just disappointed we were a bit too early, you know, in 2010, you know, and that’s that’s our real problem with moving. You know, if we’d started four years later, I think it’d be a very different scenario. But but Jayesh and Thomas, thank you for joining us on Breaking Banks today.

I’m every time there’s a new breakout, you know, challenger in the space like this, it’s exciting, particularly if you can put some unique local market flavor on it. So Jayesh, are you thinking after you sort of conquer UAE, you’re thinking about a broader stance across the region or you haven’t thought that far yet? No, we absolutely can. You know, we’ve invested a lot in building flexible, modular technology.

So we’re very keen to we want to succeed in the UAE and then take it to other markets. Yeah, I think digital behavior is similar. We just need to localize it.

Well, we need to make sure it makes sense to the local consumer. Excellent. Well, thank you both for joining today.

Thomas, how can we find out more about the MasterCard partnership program? We just go to MasterCard.com or if you’re a fintech and you’re interested in reaching out, you know, what’s the best way to do that? Absolutely. So we’ve got multiple programs. You can find that on, you know, MasterCard fintech programs.

If you just search for that, that’s out there. And I’ll just go through some of these programs. One is the fintech express programs.

And this is essentially our rapid card issuing program that’s tailored for fintechs to help them launch a card product very quickly with speed to market. The second is the fintech engage program. This is our network of partners that help customers to build and scale new value proposition.

The third one is our start path program. This is more for early stage startups and helping them get more exposure to all of the partners that we have as MasterCard. And the last one, look, if you’re an established fintech, we even have our account managers supporting the fintech, right? And that’s out there.

But all of these programs are out there on, you know, if you just search for MasterCard fintech programs. Fantastic. Well, we’ll make sure to put that on social media to support as well.

And if you want to check out WIO, it’s wio.io is the website, and you can find out more about them. And Jayesh, all the very best success with your venture. It is tough getting to orbit, as they say, right? Thank you.

All right, great. Thanks for joining us. And we once again, thank you to MasterCard for their sponsorship and support of the show.

And of course, the support of the fintech market. You can hear more about this in our ongoing series with MasterCard. But thanks for joining us.

And we’ll be back with you next week. See you then. Become a disruptor in the emerging fintech space through NYU Stern’s Master of Science in Fintech program.

This is a one-year part-time program divided into one online and six on-site modules that take place in New York and in rotating global locations. The MSFT program is designed for experienced working professionals who want to strengthen their fintech skills or transition to fintech leadership positions. The final application deadline for Stern’s Master of Science in Fintech program, class of 2025, beginning May 2024, is March the 1st.

GMAT and GRE scores are generally not required. To learn more about the program, submit your resume for a candidacy review at stern.nyu.edu slash msft dash rakingbanks. Well, joining me now is Ron Benegbe of Uplink.

And Ron, tell us the Uplink story, which is tightly woven with your own story. So start there. Well, first of all, JP, thanks so much for having me.

It’s a pleasure to be on the show and, you know, myself and my colleagues follow it. So we’re excited just to have this opportunity. So yeah, a little bit about me.

Yeah, I’m a serial entrepreneur. Uplink is my fifth. And as I’ve been exclusively told, it’s my last startup.

OK, so that’s it. Who told you that? My wife. But we don’t need to get into all of the gory details around that.

But what is relevant to that and how Uplink plays a role in that is I’m an immigrant. My family migrated to Canada in the early 70s. We were poor.

We had no money. My dad was actually baking bread at night to put food on the table. And he went to a bank in 1973.

So yes, I know I’m dating myself because I look a lot younger. By the way, thanks for acknowledging that. And he asked them for a small business loan.

And the banker told him, you know, Mr. Benagby, you really don’t qualify. We don’t lend to small business like that. We have certain credit policies and procedures.

However, I believe in people. And here’s $5,000. And my dad was able to take $5,000 in 1973 and start a small business, which eventually turned into a medium-sized business.

But more importantly, it really became the springboard for our family’s lives in Canada, which is a wonderful country. So where in Canada? Toronto. Okay.

So I share that because we’re a very mission and purpose oriented at Uplink. We don’t lend money to small business. That’s not our core product.

But what we do is we work with lenders. And we support them by providing them a lot of data, a lot of information in which they can feel empowered to make a credit decision within the context of their comfort zone as related to a specific loan application. So, you know, I would tell you that everyone at Uplink has a similar sort of motivation, both not just professionally, but personally tied to a small business.

So what are some of the ways that you’re able to create different outcomes for financial institutions for dealing with maybe some of those non-traditional or underrepresented small businesses? Yeah, so we bring in a lot of data, data that goes beyond just the traditional old-fashioned legacy way of lending. So give me your self-reported financials. Let me run a credit score on your business.

And then let me, as a lender, make a credit decision. So we bring in the U.S. alone 12.5 billion different data series to the conversation that ties into the ecosystem of the small business. So community, market, demographic, information.

Now we distill it for the bank. We don’t just dump data. We’re not actually a data provider that way.

And it allows the bank to then make a more informed decision. So as an example, if you’re, let’s say, a retail store on the corner of Main and 4th Street, if that even exists somewhere. Retail traffic patterns would be a value.

Cell phone usage would be a value. We’re actually working with a bank in Mexico who lends a lot to small business manufacturing. And they get told how often these plants are running.

We’re actually pulling satellite imagery from NASA to see heat signals as to whether or not those specific plants are running. So who determines what kind of data? Is that the institution? Or are you saying, hey, here’s something you haven’t thought of before? Maybe this is helpful. We do, but it’s a collaborative conversation.

And what I would tell you is we’re a bit of an unusual story, JP. I don’t want to say unique because every fintech is unique. God bless us all.

So I like to think of our story as unusual. It’s different. And what we did at Uplink was we took an existing platform that had been built over 15 years, that had connectivity to over 10,000 data sources in 150 countries, and that ultimately that had translated to over a trillion and a half in booked loans during that time.

And we brought the insights and intelligence, and I don’t want to use buzzwords like AI, but we brought the real- Well, it’s a state law as of right now in Nevada. You must say AI. I’m glad to tell you you’re in compliance.

So go on. Yeah. So we brought really the experience of such a platform to not only tell or share with the lender in a collaborative way what types of data would be more predictive than other, but we also bring an experience and a methodology to how to use that data that’s highly novel and highly unique.

So what’s an example of- Tell me a story about somebody, a non-traditional that’s not a family member. Yeah, so what kind of- Well, I think I could tell you just sort of a general story if you like, and I’ll pull one- So listen, I will tell our listeners if Ron and I sound distracted because Dave Birch just stole my charging cord to plug in his phone. Yes.

Borrowed it, he says. He’s going to be sent an invoice for that, I hope. Of course.

Right. Yeah, put it on his account. All right.

Well, Ron, tell me a story about somebody that’s not a family member that was able to get a loan uniquely because of- Well, you know what? There’s an interesting story, and I will give full credit to my co-founder, who’s candidly the smartest human being I’ve ever met on this planet. This guy is like- If you’ve ever seen the movie A Beautiful Mind? Yes. It’s the reincarnation of John Nash.

Yeah. But anyways, so he- Do you have a chalkboard with crazy formulas all over it? Oh, yeah. Yeah.

Oh, yeah. He really does. I’m not joking.

Yeah. I’m going to make an intro to you one day. You will see this.

So he shared a story with me recently, and it’s leveraging the platform I’ve talked to you about, and it was in a highly rural environment, and it was so rural. It was actually Mongolia, and it was this woman who wanted to expand her sewing business. She was like- A lot of people in Mongolia live in tents, and so she put in an application to the biggest bank there, and they were working with the biggest bank there at the time for a loan to buy different sewing machines and products, and in her application, what they noticed was specific behaviors where she was so prescriptive and detailed, and she explained how much she wanted, what sewing products she wanted exactly, what model numbers she wanted, and then she went to the point was, if you can’t even give me the full loan, then give me a partial loan, and this is what I’ll do, and what they noticed was they modeled that type of behavior in that type of environment, and there was a correlation between applicants who were that descriptive and prescriptive and repayments, and sure enough, they were able to issue her a loan.

She had some struggles up and down, but she made it through, and it was great because it was able to create new jobs and employ additional people, and it was just a nice story, and the story really ties well because there’s a little picture of a Mongolian boy who for the first time in his life was shown a picture of himself, and his mom actually got a job with this lady, so it was a nice feel-good story. So the implication being that understanding to an intimate level the unit economics of the business, is that a part of what drove the credit decision? Yeah, I think it went beyond just unit economics. It was specific behaviors as related to the business owner.

In this case, it was the level of detail that was found in the application process, and what they noticed was in that environment, for applicants who did that, they tended to be more successful than applicants who didn’t. And do you remember the loan size? Because this sounds an awful lot like microfinance. I think it was a little bit bigger than maybe I would have expected, but I think it was around $15,000 or $20,000 US, so a little bit bigger than $1,000 or $2,000, but certainly definitely more of a micro situation.

Yeah, well, and I’m curious about that, because when I think about small business lending, I have a very simple two-by-two matrix, right? There’s large and small, simple and complex. And when things are complex, as long as they’re large enough, we can probably figure it out. And when things are small, we need to make them simple.

And so it seems from what you’re telling me, that you are leveraging data and technology to try to tackle that small and possibly complex. Yeah, I would say our technology has served FIs over the last 15 years, but our brand is still relatively new, and we can get a little bit more into the detail if you like, has served FIs who have lent as little as a few hundred dollars. To as much as $30 million.

So that’s a pretty big gap. So that’s definitely microfinance, and that’s commercial, where somebody’s, you’ve got human beings on it. And everything in between.

Right. So there’s a lot of flexibility in, again, it goes back to not just the data, but the experience, the intelligence that our technology has, and candidly, that our team has. And in delivering this technology, that helps lenders make better decisions at the end of the day.

So how are you finding lenders’ receptivity to this idea? Because let’s go back to where we started. Give me your self-reported financial information, fill out our forms. We’ll use some standards, formulas, and ratios, and we’re going to make a decision.

And here comes this guy telling me, oh, we’re going to bring you a bunch of other data. How do you bridge that gap? Yeah, no, it’s not easy. And the gap is, it’s not an uplink gap.

It’s a gap that’s existed forever. If you look at small business as a category, JP, it’s always been underserved. And it’s been between corporate commercial and consumer and retail.

The World Bank, your friend Mac Gamzer calls it the missing middle. It’s like, where does it really sit? And the problem is, if you look at statistics like GDP output per country, I mean, small business, every major economy is around the 50% number. I think it’s a little bit less in the US.

I think it’s like 44. But then you compare that to the average bank balance sheet. 3%, 3% of their book is small business.

So you’ve got 44%. You’ve got 3%. That’s a pretty big gap.

So are we finding resistance? I would tell you yes and no. I would tell you that, first of all, like everybody wants to think that they’re the champion and hero, especially in their local communities. And they all talk a great game.

And also highly unique. Yeah, yeah. Different than every other bank.

We love our community. We had like hot dog day last week and we gave out a barbecue. And that’s why we’re the best.

Therefore. And we all know that talk is cheap. At the end of the day, you decline 95% of all small business loan applicants.

So some banks are more, some lenders are more serious about it than others. So I would tell you it’s kind of a mixed bag. But what I will add to that is when we go in and have a conversation with any lender, we make it very clear upfront.

Look, we’re not here to tell you that you don’t know your customer. We’re not here to replace anything you’re doing. We’re not here to tell you, you need to think about credit or risk differently.

That’s not who we are. We’re here to send, we’re a tool that sits alongside exactly what you’re doing today and compliments. It’s an additive.

And we present you with a bunch of information that ultimately empowers you to make the decision that’s within your own credit comfort zone. So think of us as just an information source that you can trust and don’t even believe us. We always said like, my partner is famous for this.

You’d love him. His famous words, all FinTechs are liars. And he said that on stage at Finnovate two years ago, out of the blue, I nearly, oh my God, oh my God.

There was like two, 300 people in the room and like all FinTech are liars. But the additive to that is, look, don’t believe us. Let us come in.

Let us prove ourselves. Let’s do a proof of concept. Let us take your information.

We’ll have to go back in history and let us prove how we would have performed. And then you can make a decision. And if you’re comfortable, we move forward.

If you’re not, we shake hands. So that proof of concept is kind of backtesting existing data? Yeah, exactly. Well, it’s kind of hard to say, hey, you declined this.

Can you do that on declines, right? You’ve declined this loan, but we’re going to tell you it would have performed. Yeah, what we can say is, yeah, you declined, I don’t know, I’ll make this up, 90% of all applicants. However, based on your own, the way you think about risk, you could have approved 50% of that population.

And here is why. And we’ll get into, it’s a very scientific methodology that candidly is way over my head about statistical modeling and the use of Gini scores, and it all ties into regulatory approval. So it’s pretty sophisticated.

When we go through that process with a bank and they bring in a chief risk officer, it presents us with a level of credibility that most regular fintechs don’t necessarily have. What kinds of interactions have you had with regulators? Because one thing they and the chief risk officers don’t like is a black box, right? Trust us, we have amazing technology in here and you’ll get good outcomes. That’s a great question.

So our final models, they’re all white box. They’re all run through these two to 300 page statistical reports that a regulator can look and see exactly what’s gone into developing the models and they can sign off on. And let me expand on that again, going back to my partner, Patrick Reilly, aka John Nash.

Two years ago, the US Federal Reserve got wind of some of the stuff that he was doing two, three years ago, and they brought him in. And they initially questioned him. Now, he told me many times when you see 40 banking regulators in a room, you start to sweat.

And then they invited him to come back for a two day seminar. And he spent two days with the Fed, teaching them how to develop underwriting models for small business lending that do not have bias tied to them and that meet their regulatory requirements. And the individuals within the Fed that he did the seminar for over two days were actually the people who trained the banking regulators themselves.

He was training the trainers for two days. So that’s what the Fed thinks of Pat. And we apply those methodologies to everything we do.

So we’re very embracive of regulators and wanting to work with them and showing them that everything is to your standards and requirements. Well, how can people find out more? Yeah, I mean, uplink.co. And spell uplink. Yeah, U-P-L-I-N-K-U dot C-O.

I am the only Ron Benegby, B-E-N-E-G-B-I, in the world on LinkedIn. So if you Google that, there’s only one. And that’s me.

Reach out. And yeah, you’ll see us at a lot of events and conferences along the way. Great.

Well, anything we should have asked you we didn’t think of? No, you know, the only thing I would share is we’re working on something very, very exciting in collaboration with a friend of yours, Mr. Ron Shevlin at Cornerstone. And we’ve commissioned them to do a research study on fair and accessible lending practices for small business. And we’ve got contributing commentary from the likes of Visa, the World Bank, Equifax, and many, many others.

And so we’re excited to be able to share that in the new year, probably late January. It’s no cost to anybody. And like I said, it’s Cornerstone’s completely independent research, but sponsored by Uplink.

So I’d add that and, you know, hope that many of your listeners will download the free white paper. Well, let us know when that’s out, and we’ll be happy to share that link. Okay.

All right. Thanks so much for having me. Ron, thanks for being here.

All right. Thanks. Okay.

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