Laura Spiekerman of Alloy joins Nate to discuss What Does the Future of Fintech Hold? Insights on Growth, Fraud, and Community Banking. In this episode we cover:
- Alloy’s mission and the role it plays in fintech
- The importance of community banks in fintech design and development
- Challenges of scaling a go-to-market business in fintech
- Laura’s insights on the future of fintech, including concerns about fraud and blockchain technology
- The impact of fed now on fraud prevention in fintech
Transcript:
Laura Spiekerman joins us today from Oakland, California. Laura is President and Co-Founder of unicorn startup Alloy, which is backed by top investors such as Eniac, Bessemer, Lightspeed and Felicis. Prior to founding Alloy, Laura was the first employee at ACH payment startup Kopo Kopo and head of Business Development at Knox. Laura, I’ve really been looking forward to this one and have heard so much from Alex, welcome to the show!
Thanks for having me Nate.
Can you tell us a bit about your background and your experience growing up?
Sure. I’m from the Bay Area originally and from Berkeley, I ended up in New York for college. And after college, I was on a track to go to law school. So I was in New York working in a law firm thinking I’d go to law school and just do the only job that I knew existed. And when I got into law school and started looking at the loans that have to take out and how much it would cost, I sort of rethought things and said, If I really want to do this, I’m gonna have to if I do this, I’m gonna have to get a really high paying job. Those aren’t necessarily the last jobs I want, even if I could get those jobs. So I sort of rethought things. And I decided to join a very early stage, I was the first employee. So super, super early stage FinTech company. In Kenya, I had been really interested in the proliferation of mobile money and what that meant for financial services access around the world, particularly outside of the US. And so that’s kind of how I got into fintech. I ended up back in the United States working eventually for an investment firm, and did that for a few years primarily focused on emerging markets, investing impact investing in particular, and I just increasingly found myself wanting to be an operator, I guess, like be a founder and sort of be jealous of the people I was meeting with, like, their jobs are more fun than mine. And so I eventually left and was kind of bouncing around between California and New York, got an early stage operator job, which kind of led me to to the people that I started out with,
What made you interested in mobile banking, Rewinding back to that exit out of law school, like why specifically mobile banking, and why specifically in emerging market like Africa?
Yeah, I was really interested in the way that cell phones in particular could change someone’s financial life. So in places where we didn’t have where there weren’t bank accounts, there was no formal banking infrastructure that was used by the majority of people. There were cell phones, so that this was messed up in 2010, when I joined, and there were cell phones all over in East Africa. And more importantly, one of the mobile network operators had started their own p2p payments system called M PESA. And that was really compelling because it was infrastructure that had been built. Nothing really like it in the United States existed at the time. Eventually, Venmo was built and became successful. Of course, there’s been other p2p applications built since then. But really, it was a little bit novel. And what was compelling about it was that there was infrastructure had been built, people were using it. And at this company, we were building a software layer on top that would make it accessible by merchants, so merchants could get paid or pay out via NPS as well. Those are sort of this beginning idea of building building blocks on top of this basic infrastructure could actually really modernise countries, a whole markets, financial ecosystem, even if they were starting from a place behind the US. And then that result is they built a really interesting ecosystem, that when I came back to the US, it was like, I still couldn’t do p2p payments very easily. But I couldn’t never be
interesting. Was there anything that you took from the African FinTech market that you applied to founding alloy, or I guess what ultimately led to the founding of alloy?
So when I came back from that experience, I wanted to join a really, really early stage FinTech company, similar to what I had been doing in East Africa, where I was the first employee and I ultimately found a company where the founder was, were my current co founder. So we’re the management team was interesting, but it was really what what I found compelling was that it was a new was trying to modernise payment rails in the United States. And that case, ACH payment rails. There were so antiquated and I had seen in East Africa, if you can bring modern payment systems to everyone, there’s this huge amount of financial access that can follow. And so that was really compelling to me is like if we can modernise some of our infrastructure in the United States, there’s a lot of people who would benefit from it a lot of new applications to be built a lot of new services and products to be built on top of them. So when I joined that company we were trying to modernise Ach, and ultimately, we came to was this conclusion that ACH payment rails desperately needed to be modernised. If that’s a whole nother podcast, but identity was critical to getting this part to modernising any sort of financial service product, and any exists and the underlying infrastructure. So we spent time thinking about what a best in class identity system really would look like. And that’s what we ended up building having left, left the company. That’s where we started.
In for those that have never heard alloy, I mean, you provided the one liner, but how would you describe what the company does? And maybe your mission behind what you’re building?
Sure. So alloy is an identity decisioning platform that provides identity tooling and data to have a best in class, you know, identity decisioning product. So we provide KYC AML, risk fraud data and decisioning in our platform for the FinTech market, which includes both banks and fintech companies.
And it’s API first, is that right?
It’s an API platform exactly, API first.
So even though it’s a b2b product, how does the company help improve the lives of consumers? I mean, I think consumers touch alloy a lot more than they realise in the grey areas. How How does it impact them?
Yeah, so I was very much in the background. We’re the API that powers a lot of the identity decisions that happen both at onboarding so when a user is signing up for a bank account or wallet, or alone. And we’re also providing an ongoing identity verification system or identity decisioning system for the FinTech company, that bank for transactions, subsequent products, etc. Without us, these FinTech companies, for example, have a tension between onboarding a lot of customers and kind of safety, security and compliance. So they can get defrauded, they can have huge regulatory liability, if they don’t make the right decisions. And so often, that tension means that they just don’t onboard customers, right? They slow their growth, they constrict things, that means that consumers don’t have as many options. And it can really be a huge cost and burden to have to create a reasonable onboarding and sort of identity decisioning system. So alloy takes that choice off of your plate, we just give you this great API driven platform that gives you access to all the data you need. And so what that means is that these companies are making much better identity decisions, they’re going to get defrauded, far less often, they are going to have their compliance in check, they’re gonna have a great compliance programme that will meet their regulatory and compliance needs. But they won’t have to build big teams and expensive systems to manage that themselves. And so well this means is that consumers will have access to a wider variety of products and services. And we just believe that fundamentally getting consumers better and cheaper access to financial services is going to be driven by competition in a really flourishing financial ecosystem where lots of products and companies can be launched. And grown quickly.
Well, you guys have had a tremendous amount of success. I mean, congrats on the most recent fundraise, I believe the company is valued at now. 1.5 billion, if I’m remembering correctly. So as I was talking to one of our mutual friends, Alex, who relayed on to me that the path to becoming a unicorn was anything but an overnight success. And I was curious to hear more about the out the early days of the business, your maybe a good first place to start would be talking about your first few customers. How did you guys at alloy, acquire your first few customers,
We definitely just relied on our network to begin with. And so for me, quite literally as the kind of sales person business development person on the team, I was cold emailing holds linked in networking people asking anyone I knew for an intro to someone else. So it was a lot of sort of internet stalking and trying to get people to meet with me and convince them that they should take a look at our product. The early days were really tough for a few reasons, I think one was that it took more money and more time to launch a great safe, secure compliant infrastructure products than what we had initially anticipated. And I think that has changed since 2015. So I think it’s a little bit easier now. But it’s took all it takes a long time to get to market when you have to build in all sorts of security and you know, sort of make sure that what you’re doing is going to meet a bank’s compliance requirements and get through their procurement process. So the first few clients we tackled were early stage FinTech companies, who for all the obvious reasons have an easier time adopting new technologies. And that was great because it allowed us fast feedback loops, kind of quick implementation times all that stuff, even if they didn’t scale. Luckily, we actually found a few ultimately did scale like brex for example, I think we signed when they were probably 10 people, right. And so we sort of got lucky that we got to ride their wave of success as well. But it was like relying heavily on cold outreach, or networks, investor introductions, stuff like that. And so we really just kind of pounded the proverbial pavement pavement to find all those conversations. And then I think the other reason it was hard is that the market wasn’t where it is today. If you think about 2015, that was a little bit of a lull between when all lending had its boom and bust, consumer FinTech was was not that exciting. In 2015, we’d sort of seen that first wave come and go, we had yet to see the boom, the infrastructure products, embedded FinTech banking as a service that kind of came around a couple of years later. And so it was a weird time, in retrospect, to start a company that served SMB and consumer FinTech use cases. I’m glad we started. And when we did, of course, we had you know, we we managed to hang on for dear life, really and make it work. But it was not. It was about four years from our seed round, or our pre seed round to Series A, which I think at the time was like we had we had earned the distinction of our seed investors as being the longest to series A and their entire portfolio.
Wow. Okay, so what is it what is hanging on for dear life? I mean, were you guys almost out of cash, or what was the closest that you caught it,
We kind of pretty close, I actually don’t know that I should go back and look at you know, our bank account statements from then it would be a fun exercise. But we will Yeah, we definitely ran low on cash, it meant adding on some extensions, and asking existing investors to print a little bit more money, it meant cutting our salaries way back, it meant just spending very little and most importantly, not being able to really hire or invest in much, unfortunately. So being super, super scrappy, and just kind of making it work with what we had. It also meant just paying it like because we couldn’t grow, we couldn’t acquire a tonne of new customers, we had a small, but dedicated because they were founder product team working on making the product incredible. And then we had a few customers that we had the you know, I guess luxury is probably not the right word, but sort of the time to really invest. And so I actually think in some ways, the long period of time where we were just hanging on for dear life, actually let us invest quite a lot in those first few customers and making them really successful. And making some of them able to grow and be kind of success stories in their own, which helped us raise our next round. So I’m very grateful for that time in retrospect, even though it was not a fun three, four years. Yeah, painful.
I mean, prior to the show, we were talking about how those early customers have an outsize impact on the business. I’m curious around the product, like was there anything specific that you point to in terms of how your early customers impacted the journey behind alloy, whether it was direction around the product or anything specific that you can point to?
Yeah, we had our one of our very first customers was a actually not a customer, because they never signed something with us, which was one of our big mistakes. But they were a huge, important part of our design, feedback. They were sort of hand picked in certain ways, because they were going to have to build the thing that we were building if we didn’t exist, and they were super smart FinTech founders who had thought a lot about this exact problem. And so we were very aligned in what the solution was. And they were committed to making a best in class KYC fraud kind of platform for themselves, even if we couldn’t do the job. And so I think that was great, because it really informed our thinking and provide an excellent feedback. Unfortunately, that product never even launched. So we never got to see the kind of full circle with them.
I was gonna ask you if you’re if Apple was bigger than them today,
You know, so it was a product being built inside of a bank. I don’t think we were larger than a bank, unfortunately. But yeah, but that and they both went you know that the two founders of this product inside the bank went on to go do incredible things in FinTech. But it was a it was an interesting experience to be able to sort of build something with and for them, even though it never saw the light of day. That’s my only regret about it. But yeah, we really like that was an important first customer. And then I think also just we just spent a tonne of time understanding how these people thought, we spent an absurd amount of time with our first bank customers. Because that was a segment we didn’t know we knew FinTech people. We knew FinTech founders, FinTech operators, from our previous lives, we really did not know what banks thought how they viewed this as a competitive advantage or not how they viewed working with compliance people on this kind of problem. And so spending a tonne of time there was helpful to build something that they eventually would actually buy, which is a tough thing for a bank to do.
I’m sure they weren’t using API solutions too frequently back between 2015 2018 Or I mean, what is the most technology still on prem today? For them?
I’m sure that Yeah, I think if you looked at the like number of you know account It’s opened, I’m sure the vast majority are still on prem in the US. It’s getting word that’s changing quickly. That’s a huge change. We’ve seen even since 2015, we started alloy, but they’re adopting cloud products much more easily. I think the other thing that’s been Oh, it was a little counterintuitive to us. But now it’s been fantastic is that community banks actually are much faster to adopt technologies and become more advanced than the largest banks, the United States, because they can move faster, and they don’t try to build anything themselves just sort of know their limits. And they go, Yeah, we got to partner with XYZ companies to do our online account opening or to do mobile banking, they would never dream of building this themselves where the big banks go, yeah, we can, you know, we have developers on staff, we can build this. And then, of course, they build not the greatest products in the world.
I’m sure educating them on how to implement API technologies. And on the implementation side probably wasn’t the most fun, as if selling the product wasn’t challenging enough. So how do you know that you had product market fit. And I’d be curious to hear about that moment where the founder, the founding team, you guys knew you had to tiger by the tail.
It’s funny, I think, with alloys a little different maybe from some other people’s journeys to product market fit where I think of other companies often as trying five different things, you know, and then the fifth one works. In our case, we sort of always stuck to the vision, there were differences along the margins, like I remember discussing whether or not we should try to serve a user that would be a key compliance analyst type. So someone who’s sitting in a back office making decisions about a user’s application, reviewing their file, etc, versus just being a platform and API first platform for developer. So there were things like that, but ultimately, we still had the same product we started with, and even you know, eight years later, almost, it’s still largely the same product and vision, I really think the market had to change and come to us. And so product market fit, I would say it was a it was probably early 2019, when we started seeing a lot more consumer, FinTech come around some of the embedded banking stuff come around banking, as a service platforms get launched. And so our usage on our platform started growing. So that was both existing customers who again, maybe like a brex type of customer, we got in early and they really were taking off, or we were just seeing more companies get created, and or more community banks launching products that needed something like what Allah was offering. And so it just, it just clicked one day, and you could see it in our API usage. We just had these charts that went up into the right. And then I think the second thing for us is we started seeing a very large bank want to use us, and we ended up signing them in 2019. We started those discussions in 2018. But that was something that we were like 10 or 12 people at the time I never dreamed would have been possible, then they could have built this, they have tonnes of money, they could have built this. And for them to go, this is what we need. And we’re willing to take a risk on you, you know, 10 jokers in a room in. Like, I think we were probably still in Bushwick at the time, like the fact that they were willing to entertain us as a real possibility was sort of shocking and meant a lot to me that we had really made some strides and maybe hit product market.
And I know the early days were tough. But as you think about the journey to where you’re at today, is there a particular stage that was the most difficult, whether it was zero to one, you’d like getting to that product market fit or the initial scaling of the go to market or where you’re at today, which is, you know, on the path to I’m assuming an IPO at some point down the road.
I think the funny thing about this is people always say, it’s always hard, it never gets easier. And that’s sort of true isn’t that you’ll always have some new challenge, whether it’s zero to one or one to 10 or 10, to 100. But it’s all easier when you’re not existentially thinking you might die next quarter or next year, because you’re going to run out of money, things are just easier when you know you’re going to continue to exist, and so zero to one. From that perspective, those three to four years were definitely the hardest without question. In part also, because you get no external validation, at least now, when needed. We have things that are really challenging, we still know that there are customers who love our product, and you sort of get that little bit of, you know, pat on the back, even when other things feel crappy. And I think in that zero to one when you you’re just trying to convince anyone that this should be a company and a product that needs to exist in the world and no one’s really buying it. I think it’s really demoralising. So zero to one for me is always the hardest part. The challenges still exist. And scaling, scaling go to market, I think actually is probably the second biggest challenge, especially when you’ve been founder led for a lot of it and then trying to transition that and figure out people who can be founder and like in certain ways, be scrappy, get in front of the right people, be creative, have a feedback loop with product, etc, etc. But they can also translate that into hiring, you know, scaling a team putting in some process that’s really hard to do. And so we’ve tended to hire kind of player coach types. And actually often former founders, particularly early in our scaling go to market journey. But it’s it’s not an easy task.
For founders that reached that product market fit stage and they failed to hit the escape velocity to really scale and scale the business. What do you commonly see going wrong on the go to market? And is it just the lack of building repeatable channel ahead of series? A, I can imagine a number of things and we see things in our own portfolio.
You know, it’s a really good question. I think, I bet we’ll learn a lot after the last 18 months in FinTech, where things got funded without product market fit, often without product even. So I think we will see what is the thing that kills you, when you’ve raised like $50 million, and you barely have a product, it will be interesting to see, I think in financial services, it is you can come up with the best possible product in the entire world. But if you don’t figure out how it’s going to get integrated, that can kill you. And that can be true, both from a good amount of market perspective. So like, what partnerships in your ecosystem do you need for a bank, for example, to Doctor technology that has a whole stable stacks of software, you have to figure out like your place in there, and how you fit into that ecosystem. So therefore, who do you need to partner with? And then it also matters from a get integrated means also, does the procurement team sign off on all the ways in which you are compliant? And do you have enough money in the bank for them to feel comfortable with you? So it’s a little bit unique to financial services, you can skip ahead five steps to like what is your dream product look like? And not thinking about how you’re gonna get there?
I mean, you and LOA are established now. And you’ve been thinking about the future market and where we’re headed. I’m sure we’re dealing with turbulent times. But how do you how do you think the next 10 years is going to look different than the last 10 years and fintech?
Well, the last six months looks completely different from the six months before, so maybe I’d be stupid to make any sort of predictions. But if I get to look on a 10 year horizon, I ultimately completely believe that we’re still in the early days of modernising financial services. And so if you take this like 10 year view, I don’t think even valuations right now should matter. It’s like look at just look at the these pockets of opportunities that are still so under leveraged. And so basic rights, I think about my own financial life, I still spend, I still do a tonne of my financial activities with check a chequebook and I send wires by calling my bank and spending time on the phone with them to call them back to actually initiate I do a little PDF like it is a crazy antiquated system, even for someone like me. So I still think we’re really in the early days of FinTech, from a long term perspective, I think in the short term, we’re going to see a lot of companies die out the last two years was insane. And we hit this year, and companies are going to run out of money companies that never raised money, but never got product market fit, maybe never even launched their product, like I’m not sure I think they’re gonna we’re just gonna see companies die out and some m&a happen, I think we’re seeing a much more rapid pace of technologies being built around fighting fraud, for example. So I think there are some things where just the speed at which we can accelerate the development of those products and the adoption of those products is really different and will be will be different. So we’ve seen new biometrics companies, we’ve seen a bunch of new companies come out around, like how mobile phones are used, companies like neuro ID companies like prove super interesting technologies that I think are really game changing. And I think we will see a lot more of that. And then lastly, I think we’re seeing a lot more founders who have more traditional financial services experience, who therefore have an appreciation and an understanding of compliance and the role that compliance plays in building fintech. And I think that will make first stronger, more resilient companies, even if maybe they are getting funded at the same rate as they were last year.
What worries you about the future of fintech?
So fraud is on the rise frauds been on the rise already. It rose more during COVID. And it’s rising even more now, in an unstable or kind of uncertain economic environment, we need to figure out how to fight it. And one of the biggest threats to the FinTech ecosystem is FinTech companies shutting other FinTech companies off so you can’t get your neobank A account funded if you’re sending it from neobank B. That’s one of the most dangerous things and it’s they’re doing it to try to limit fraud, but instead of handling the root cause they’re just shutting each other off. And that will be the death of our entire FinTech ecosystem. And it’s kind of promise we’ve been trying to deliver to consumers of cheaper, better access to financial services. If that’s the path we go down. And so I actually think we need to address the root cause with each other and probably work together on the solution. So kind of cross these competitive lines to say we’re going to try to work together to fight fraud and treat it like it is being regulated. They may eventually be regulated. There’s some talk about that. And so maybe this will force the issue, but we need to treat it like it is today.
You know, given that you’re so embedded into fraud, where do you realistically think we can get fraud rates to.
In terms of fraud rates? You can’t I don’t believe you even should try to get to zero fraud. Maybe someday, that should be a goal once we’re much better at it. But right now, if you’re seeing zero fraud, it means you’re not seeing enough people. And it means you don’t know what progress looks like, you should try to know what fraud looks like. And you should see some amount of fraud because that means you’re probably taking on some customers that you want to be taking on. You don’t want to turn those good customers were, I think, a little bit like being a VC, right? It’s just like, if you never lose $1 on any deal. Taking enough risk. Yeah. Now, obviously, there’s a balance. I’m not sure what it depends a little bit on where you are in your journey as an FinTech company, right? Because you can take on fraud losses probably a little bit earlier before you have to super, super worried about unit economics. But at a certain scale, you really do have to think through how much fraud you can take on and so the answer is different at every stage of your journey. But you absolutely should always know what fraud looks like. And then most importantly, for the ecosystem, we all need to be thinking about it and working together on it.
So you mentioned the root cause what is the root cause, though? Like as you think about increasing rates of fraud, and the connectivity between Neo banks and other financial services, fraud rates are going up? Why is that?
Why banks are going up because fraud startups basically now exist, because it’s so lucrative to be a fraudster. And so they’re being backed, and they’re getting more formalised, and more organised as as groups. And so they’re making a tonne of money doing this. It’s just a really lucrative profession, quote, unquote, to be in right now. And so there and of course, there’s, there’s like, sort of like unorganised fraud to right, there’s plenty of one off fraud. But in general, there’s a lot of it. And in a FinTech ecosystem that was booming over the last couple of years, where maybe you didn’t care as much about how much you were losing, you just cared about top line growth or growth at all costs. Maybe you weren’t paying as much attention as you probably should have. So I think there was a number of things that have happened that led to this. But either way, the answer can’t just be like, stop onboarding customers. That’s not a way to fight fraud.
Reminds me of cybersecurity in a way, like as solutions are constantly changing, hackers are always finding a new path in a new angle to attack systems. Fraud strikes me is very similar, right? Like as technologies are evolving, there are always going to be new schemes, you always need to be one step ahead of the fraudsters.
That’s really right. And I think maybe for too long, we took this approach, or the financial services industry took the approach of okay, we’re gonna solve fraud with this like silver bullet algorithm, or this silver bullet, data source or biometrics tool. The reality is fraud is outpacing us at every second. And so you cannot rely on one single solution. Because next year, it’s going to look different. And so you have to build for that particular piece, which means building in a flexible, dynamic infrastructure. So an unalloyed case, what it means is installing a set of tools that where you can add data sources really, really quickly and easily. So you don’t have to rely on a month long engineering sprint to add a new data source by then you’re going to, you’re going to be taken to the cleaners. So you need to be able to do things really, really fast and flexibly and you have to be able to build for that. So I think everyone needs to be thinking about how they’re going to deploy changes that will stop fraud or mitigate fraud in seconds, not in weeks or months.
Does crypto or blockchain plays a major role, in your opinion in preventing fraud?
Not as far as I know. And that’s why I say I’ve seen other than to escalate the issue, I think it’s like they’ve made the issue a lot more visible, right? You see people losing tonnes of money for lots of reasons. Of course, this is not just fraud, but I do think they’ve made it a little bit more visible, they have demonstrated that users have to take care of themselves a little bit more right, rather than just relying on the platforms. So I think if anything, they just demonstrate the problem to everyone. But I have not seen better technologies get adopted there than in our tried fi use.
I guess I mean, do you think blockchain will be a component technology that could help reduce fraud given that everything is on chain? Or I feel like that’s commonly something that’s pointed to in payments, for example, where if you have?
A chain? Yeah, yeah, we haven’t seen that come to fruition in crypto payments, we’ve seen that obviously, you want to use on chain behaviour to sort of dictate like, if you can see what they’re doing. You want to use that information to look at them for crypto use case, but we have not seen that used outside of crypto use cases.
I guess, turning our attention back to neobanks because we didn’t really get to dive into that. And we talked about some statistics are eye opening even to me, I didn’t realise that neobanks have nearly tripled the fraud rate of debit cards, double that of credit cards. I mean, where do you see the future going for neobanks is this sustainable and They’re being closed off by a number of merchants. I’d be curious to hear you just speak to this. And what’s next for?
Yeah, sure. I think Neo banks have the problem we just described, which is that they’re going to be shut off by merchants, for example, for this fraud problem, so they don’t address the fraud problem, they are going to be kicked out more or less of the ecosystem, then I think there’s a sort of profitability question, right, they were all funded for the last couple of years. Now, they’re not because we’re in 2022. And I think a lot of them that didn’t focus on unit economics and growing profitably will have a really hard time. And they may not survive, I think you’re also seeing that some of them were increasingly commoditized. And if you couldn’t ship product fast enough, you couldn’t get into your second, third, fourth product product line, you’re not differentiated enough to sort of sustain what you’re spending on market, acquiring customers, for example. So I do think that there will be a push both to get to better economics, but also to sort of fulfil this promise of being a full fledged new bank with all the bells and whistles that users are asking for. And you’ve got to be able to do that fast, and just not it’s hard to ship products, not all of these companies will be able to do it. And to get past, you know, deposit accounts, you got to get into lending, you got to get into all these other products quickly.
And one of the areas that was specifically cited in the article that we’re talking about describing the fraud taking place in do banks was bank to bank transfers. And I know within the next couple of years, and I’m sure you’re gonna be more well versed on this than I am, but fed now is that coming out the advent of the way that banks transfer money and consumers being able to access their funds nearly instantly, do you see that having a significant impact on fraud, if you could speak to fed now and what that means for the financial services.
So NACHA, for years talked about getting getting to same day payments, starting in real time, and it never really happened. Now we have real time payments are in sort of fed now coming out. So I think I first just expressed a little bit of scepticism over the timeline, although it seems definitely more real now than it did five years ago. But you know, these things always just take a lot longer. And so I think we can’t expect that this is going to be like next month. The second is if you are not thinking about how to mitigate fraud as almost like task number one, for implementing RTP, you’re going to be totally screwed. I just had a conversation with evolve Bank and Trust, for example, that’s really thinking about this, they’re to me the right example of that’s like their first and second thing they think about as well as compliance as a how to make sure that that is tight. Otherwise, it’s just never going to work in you’re going to be you’re going to launch the product, and then 24 hours later, you’re going to shut it down. And I think we will see a lot of that for banks that are totally unprepared. I think you can see a proxy a little bit in Zell right there is a tonne of fraud on our platform. And so I think we need to sort of build all of our RTP implementations and applications with fraud being the number one thing in mind, and then I think we’ll be fine. But just think about the idea of sending your money into the ether. And there’s really no recourse today that two to five day or whatever it is two to three day wait periods of ACH is annoying and a terrible experience as a consumer. But it does mean that fraud is a lot more catchable,
What else will be brought about with the change the Fed now, whereas fed now becomes an integral piece of the way that banks transfer money, other opportunities that arise from that transition that are exciting, too?
I just think the consumer experience gets a lot better at my last company at the company, we all met at a co founder site, that was sort of weird, we were trying to turn ACH payments from a two to three day period into an instant. And so it is something that for us had a lot to do with consumers signing up and actually using their products, what we found was that if a user can sign up and start using your product in a matter of minutes, they’re much more likely to actually go on and use it if they sign up. And they can’t do something instantly. So even in most cases, today, you deposit funds, it’s going to take two days for you to start trading on your new platform or whatever you’re doing, you’re much more likely to drop off about 80% more likely to drop off. And so if we want to see users adopting new FinTech products, we have to make it as instant as possible. And I think RTP will be a way to do that. I also think just again, the banks that are successfully adopting RTP will make it so that the competition increases and everyone’s going to feel like they have to do that. Right. So I think these these things tend to be just good for consumers to create that as a baseline expectation. The way that we saw you know, some of the Neo banks who have like dropped fees for certain checking accounts, that for us the big banks to do so I think there is some of this stuff that is just good for everyone if it can be successfully adopted.
Laura, if we could feature anyone on the show, who should we interview and what topic would you like to hear them speak about?
You know, Sophia Goldberg. I should interview Sophia Goldberg and asked her about payments. She is incredibly bright on the topic. She wrote a book on it recently, and she’s the founder of a FinTech company, but I think if you sort of think through like someone who knows the legacy, why things are the way they are for good and bad in the US, and then what we can actually do. She’s the expert on that topic.
What resources whether it’s a book, a blog, an article, etc. Have you found particularly valuable and you would recommend to listeners?
I always like the First Round Capital blog. They’re not every single blog post of theirs is relevant to me. But I’ve liked ones, for example, on annual planning for an early stage company. So if you’re more of like an operator type or a founder, that’s a good reset of resources for FinTech, specifically Alex Johnson’s newsletter, yes, the best newsletter that exists.
And Laura, what do you know that you need to get better at?
So many things? I need to get better at self discipline, I sort of am opportunistic by nature. And I say yes to a lot of things. And I want to do everything. And I don’t prioritise and hold myself accountable for you know, the three most important things in my day, I need to get better at that.
What were the three most important things in your day to day?
Probably the thing I’m doing next, which is maybe my most important, which is going over the ally product roadmap for next year and making sure I understand why we’re doing what we’re doing provide input with our with our head of product, that’s probably one of them. Oh, we’re talking about two very important hires. So those are my second third most important things today is these two recruiting exercises we’re doing.
Got it, and more of what is the best way for listeners to connect with you?
At Laura Spiekerman on Twitter, although that’s becoming slowly just a hellhole who knows how long we’ll be there. I’m laura@la.com.
Awesome. Well, thanks again for coming on the show and we appreciate your time.
Thanks for having me.
Transcribed by otter.ai