Reshaping Financial Services with Daria Dubinina

The financial landscape and ecosystem as a whole is under pressure. Regulation and security, challenges of collaborations between financial institutions, increasing role of consumers and technology are fueling the Fintech transformation.

Our Guests:

Michał Grela (MG): Hi, welcome to another episode of IT Leadership Insights by Future Processing. Today, my guest is Daria Dubinina from Crassula, and we’ll be talking about reshaping financial services, and we’ll review the FinTech landscape.

The FinTech landscape and the ecosystem as a whole is definitely under pressure now. Regulations, constraints, security, challenges of collaborations between financial institutions, the increasing role of consumers and technology, these factors are fueling the FinTech transformation.

Things as open banking, APIs, and platforms are deemed to be the most important influencers on the new FinTech reality and the new FinTech landscape. Businesses could use facilitation in creating financial products for sure, but how to leverage that? These questions will be the ones that I will definitely ask Daria today.

Before we’re going to dig deeper into this conversation, Daria, could you please introduce yourself? Thanks for being here with me today.

Daria Dubinina (DD): Yeah Michał, thank you for having me. I’m a CEO of Crassula. Crassula is an open banking platform. We help main financial institutions to build their own either banking services or payment services. We work as a fully white label system, and we create what is called composable banking, or cloud banking, or banking as a platform.

MG: All right. Can you tell something more about that?

DD: Of course, so about the banking or about the products that we have?

MG: Yeah, the banking platform.

DD: Okay. So, as you know recently, the world has changed and specifically the world has changed in the FinTech industry. Since we’ve experienced the platformization trends and the platformization movements during the last five, seven years, it is the latest trend, and it’s the latest way of doing business because today, companies want to launch fast. Today, companies want to have their main expertise in one place and not think about other puzzle pieces.

When we are talking about composable banking or we are talking about the platform banking, it means that the companies whose main business would be communicating to people, providing them with financial services, putting their innovative solutions in terms of communication with the customers, and in terms of creating new customer experience. Such companies would rather choose platform banking to be their core banking system, but then to work with user interfaces and create those experiences as their main expertise on top.

That is actually what our company does, and that is actually what different companies around the world do. On the difference scale, some of them are working with smaller companies. Some of them are working with banks. Of course, banks have their own legacy also and that’s the thing that drives them down. There are some groups of companies which are working specifically prefer banks complying with all of their restrictions and regulations, which banks have to face with.

There are companies which are working with faster companies with either startups or middle range companies who value the speed, who value the technology, and who value the new customer experience as their main USP. Crassula belongs to the second working group of the platforms.

MG: Thanks for clarifying that. That’s super interesting, and you already touched on a few things I’d like to cover today. Before we perhaps should give our audience a bit of a context explanation, we’re recording this episode end May 2020.

DD: 2020, yeah.

MG: Almost forgot what the day is because of this quarantine thing. The world is already almost three months in lockdown because of the Coronavirus pandemic. It’s definitely a mistake to believe that the business, and the markets, and the financial vertical amongst them will be as it used to be previously. I guess that’s the fact that we’re in the midst of creating a whole, new different environment that is still yet to be revealed and it’s still unknown. So huge market uncertainty, huge market volatility, so very, very interesting times.

My first question would be regarding that. What sort of market observations do you have when you see the current situations? How did the whole virus thing affected daily operations of FinTech businesses? After this three months, I guess we can have some sort of maybe observations on that one.

DD: Yeah, of course. So I would say the companies, we turn it B to C sphere, which are working directly to consumers providing the payments, providing the FinTech services, which are connected to online activity of people definitely increased. Definitely, we see from we have our clients are working either with clients, with private clients or with business clients.

So, we definitely see that those who work with private clients are in growth right now. Why? Because we are all sitting on lockdown, we’re all ordering online. We’re trying to stay normal and to get some products, some services which can be received while we’re still at home.

Those who work with businesses, they experienced a decrease of course. Those companies might be looking for different business models or might be starting to address their services to different category of customers. Why is that? Because the business models that were working for them before do not work right now.

So, some of the companies which we’re planning to expand to other markets, and we’re looking for companies who were supposed to open accounts, who were supposed to opening, to creating events and to making cards and scheme for such companies, they do not have this in agenda anymore at least for the next several months.

There are some companies which managed to survive in such environment and which still working with business customers, still experiencing a good growth. I think that’s the main thing here is the right marketing and the right messaging to the companies and to the people within these companies which are on the lockdown.

Also, what we see is a decrease in the cryptocurrency services, just because people today are more … They’re more careful about spending their money and to investing them into cryptocurrencies. So, we definitely see a decrease within the previous two, three months.

From our perspective in terms of the customers, we actually see more projects which are created. More companies decided to start up just because they have more time for reinventing, just because they have governmental support in many countries like the UK, Canada, most of the European countries. They have the governmental support, so they have the starting capital and they have time for implementing the new projects.

Also, as soon as they do have that, they start to be creative and to finally bring to life ideas that they had, but they didn’t have time to do that.

MG: Yeah, definitely. I guess after this three months, you can already tell that there are with conclusions that there are obvious winners and obvious losers of this situation, where of course, traditional brick and mortar businesses suffered the most. Whereas, as you’ve mentioned the retail or e-commerce is doubling if not even tripling the incomes.

If you were to not predict, but if you were to name a trend that will stay with us, emerge now and stay with us when it comes to technology or FinTech, what would that be in your opinion?

DD: In European markets, I would say that money remittance is growing definitely. We’ve seen that. We’ve seen the interest by the way from the emerging companies like Southeast Asia or Africa before, but we now see that they were doing the business on the local markets, and they were trying to launch something on the local markets. Now, we see that they want to still want to build the bridges between their region and Europe, their region and America for example. So, definitely more interest in that direction.

What we also see still with the cryptocurrency business, more companies are interested in not just building the exchangers for example as it used to be, but more companies are interested in building something more sustainable like crypto banking with all the traditional instruments connected to digital banking that we see today, but with cryptocurrency, the injection to it.

MG: You’ve also mentioned in the introduction around platforms, around open banking. You’ve also said that we now have … There’s space for our creativity and that enables business to create products, financial products as well. How does that affect the market industry? You at Crassula have the experience of enabling businesses create financial products.

DD: We see more increase in PSD2 projects because again, people have more time for implementing those projects. The projects that used to be in the R&D molds are now more actual. They’re on the top. We also see that not only the big banking structures have opened their APIs, but we see more AI space actually releasing the products which can work directly to consumers, and which consumers are choosing as their solution because again, they are experimenting their … For example, opening accounts in multiple banks and they want to see their accounts all in one place, or want to manage all of their accounts in one place.

So, this is something that they start to seek, and can touch, can use. I’ve seen many projects which are doing that.

MG: You’ve briefly touched on, on user experience, user satisfaction. That makes me want to pivot towards customer satisfaction. Before the lockdown started, definitely it was already a huge trend anyway in managing customer satisfaction. Managing customer expectation is even more important than ever when we all just sit at home. We don’t go high street banks. We do everything via mobile apps and facilitating that process is super important.

I’m keen on understanding what’s your take on customer satisfaction and the market landscape on that one.

DD: Yeah, of course. So right now, you’re right. It’s used to be important, and today it is even more important. What is specifically important for the service to be invisible, as invisible as possible, to ask us legal questions as possible, to be out there without appearing there. Just because if everything is all right, the customer doesn’t notice it. If something goes wrong, the customer go pissed out.

If something is wrong, the customers are negative. They think that there are lots and lots of services out there that they can use as an alternative. As long as they have alternatives, they will be easily jumping from one provider to another. So providing the service, which doesn’t bother the customer, which doesn’t say that, “Hey, I’m FinTech. You’re using FinTech. You’re so innovative. You’re using FinTech.” At some point it will be fun, but at some point it will become very, very annoying.

MG: Yeah, usually.

DD: I have some services for example, which are very active in marketing. First, when they start to update you on some of the changes or on some of the changes which did not influence me as a customer, but maybe the changes about the company, maybe first two are fun, but then it becomes really, really annoying because we are in this informative stream.

MG: Yeah.

DD: It is very important to be invisible. So, that’s the main line.

MG: At the same experience, it all reminded me of the situation when GDPR was introduced. Then you got shot with dozens of emails an hour with different services you sign up for years ago that they were informing you now how we’re going to comply with GDPR, et cetera. Now, everybody’s shooting you information with how are we now compliant with Covid resistant, Covid resilient, whatever.

DD: Webinar, webinar, webinar.

MG: Yeah. That’s true. So, that’s not really increasing the satisfaction. It’s rather causing the frustration. In your previous answer, you briefly mentioned that governments are backing businesses, FinTech businesses as well. My view on that is that before there was plenty of noise around Rec Tech, is the market over regulated, or maybe under regulated? How are different markets regulated? How is that affecting the performance or the opportunities on the market?

Is Rec Tech, is that still a threat or an opportunity? Is it not changed at all? What would you say?

DD: Yeah. I would say that it is still an opportunity. Honestly, I think that those guys are one of the coolest ones. Why? Because they are turning something very, very boring, something connected to lots of paperwork, to lots of checks into something very digital, something that works fast, and something that can save businesses’ real money.

When the customer is coming to open account in the bank or to make payments, it has blank, blank page. So, they have to understand in a very, very short period of time whether that would be a fraudster, or that is a good customer, and a good payer, and they have a very big price of the mistake also. So, I do think that there’s still an opportunity.

We work with several companies which are doing verifications. Specifically, I think that they’ve reached pretty high success in KYC, but there’s still an opportunity in KYB and financial monitoring. So, why KYB is important? First of all, again it is very hard to work in a KYB space. First, because not all of the countries have open resources to understand-

MG: Yeah, that’s true.

DD: … to understand whether the company has a good track record, or even if the company exists. Second of all, when the company is opening account, sometimes it is not that straightforward that the company has one owner or two owners that is the company. It is registered in country X. That is a European company, and everything is good for that.

In many cases, there are complicated structures. Trusts, when one company owns another company and so on. These are very complicated cases, and that is definitely a room for improvement to the companies which are in the verification, identification space, KYC, KYB.

What else I can say about that is that AI is important in this space here also. Not only the what’s so-called AI, which is just recognizing the page and comparing that to the data or to the picture or selfie. The test to be the smart AI, which can differentiate twins, which can understand the high technology of now creating the fake documents because that fear, it is also developing. So, the fake documents look exactly like the good ones. So, I think that and I believe that such companies are going to grow in the future.

Another direction is financial monitoring. When you actually checked someone and everything is all right, but then working with the behavior of this particular customer, whether that would be a business customer or the private customer, understanding his behavior and flagging him when something is going wrong and doing that on a scale that doesn’t influence your conversion too much. That is also art and science, and that is also something that is going to be trending as long as the banking exists.

MG: Thanks. So, we briefly went through the almost whole FinTech landscape. We started from current market situations. We touched on enabling the businesses to create financial products. We went through customer satisfaction. We went through Rec Tech, KYC, KYB. Well, that was quite informative.

I’m wondering if we can somehow touch on reshaping the FS scene some more. The world is going to go back to some sort of normal, I guess. It’s not going to be as it was previously, but it’s going to be quasi-normal. Do you think that these dinosaurs, this incumbents in the financial services scheme, will they be able to adapt to the new situation, or will they challenge on banks or disruptive FinTech startups is that … There’s definitely a huge chance for them right now. Do you think that they’ll be able to use it or will the dinosaurs adapt?

DD: I do believe that the dinosaurs will adapt, and also we will see the wave of acquisitions because one weak thing, and the main weak thing that the startups or neo banks have is that they are not profitable. They do generate revenue, but they do not generate profits.

If this happens, it means that lack of financing for such companies will lead to their bankruptcy, or they will be too big unicorns that will cope with that. However, we already see the neo banks closing, and the bigger ones, smaller ones. So, I would say that we will see the acquisitions from the bigger banks towards the neo banks.

I do believe they will survive, and also they have a big, big plus and big thing that’s on their side is that they have the trust. Smaller companies, which are starting out, they have to work very, very hard on gaining the trust.

MG: Thanks for sharing your views on that one. Thank you, Daria. That was really cool, really interesting. I had a lot of fun recording that one. Thank you, our listeners for listening to yet another episode of IT Leadership Insights by Future Processing.

If you liked it, please don’t hesitate to share it. Please do drop us an email if you’d like to have a topic covered in one of the another episodes. That was IT Leadership Insights with Daria Dubinina. Thank you.

DD: Thank you.