In our latest fireside chat, we spoke to Lyndon Subroyen, Global Head of Digital & Technology at Investec, about how FinTech partnerships help drive digital transformation and innovation at the global asset management company.
Find out more about how Lyndon is thinking about the future of FinTech in Africa and beyond in the video, podcast or transcript of the discussion.
Transcript of the discussion:
Anthea [00:11]
Good evening, everyone, and welcome to our Future of FinTech fireside chat with Lyndon Subroyen. My name is Anthea Hartzenberg, and I head up external engagement here at OfferZen. For those of you that are joining us for the first time, at the Future of FinTech events, we talk to entrepreneurs and leaders in the FinTech industry about what they are thinking about the future of FinTech in Africa and beyond. This is our third event in the series, and we’re very excited to see the community grow after each event. If you want to check out any of our previous webinars, you can find them on the OfferZen YouTube page, or simply go to OfferZen.com.
Anthea [00:49]
We have about 104 people that have joined so far. And while we wait, we are going to run a quick poll just to find out a bit more about you – our audience. The poll will be up on your screen momentarily. There we go. If you want to take about two minutes to answer the poll, there are three questions while we wait for the others to join. This is very interesting. On the first question, where are you currently working? – it’s currently at about 88% most people are still working from home, which is very interesting. And that’s climbing fast. I know here at OfferZen we are all still working remotely, so definitely mirrored here. The second question is actually very interesting. I don’t know, Phil, if you want to weigh in on that. How many coffees do you average a day?
Phil [01:50]
Are you picking on me? Why do you think I’m an expert on coffee consumption?
Anthea [01:55]
The other day we had a meeting at eight o’clock in the morning, and it was actually very interesting because Lyndon is an hour behind South African time. And I had to fuel myself with two cups of coffee before that session. I was just wondering how you made it through all of that.
Phil [02:12]
No, I am a one-cup-a-day, man. Otherwise bad things happen. It becomes regrettable. Mistakes get made. Yeah, it’s not good. It’s not good. I spiral as well. What about you, Lyndon?
Lyndon [02:26]
Yeah, I’ve become a one-cup-a-day kind of guy. I used to drink many, many, many more. Bizarrely, being at home has reduced consumption, even though I’m working longer days. And I feel like I’m at least 40% more productive. It’s been interesting. I hope that this continues actually. It’s been good for my sleeping habits.
Anthea [02:51]
That’s good to hear. And definitely some lessons in there for all of us. In the third question, the best music to code to? Lyndon, I don’t know in your day-to-day job these days, do you spend any time coding anymore?
Lyndon [03:04]
Anthea, I don’t think they’ll allow me, period. I do still consider myself an engineer by trade, but unfortunately, I’m not allowed near the keyboard. I dabble a bit. And for me, I’ve got quite an eclectic taste when it comes to coding, the dance and EDM stuff is still my preference.
Anthea [03:27]
Well, it seems like most of the audience is agreeing with that. EDM is about 15% of the audience – which is very interesting – followed by classical music at 12%. And then we also have rock at nine and dance at nine too. So, very cool. I’m going to give you about 20 more seconds, and then we’re going to close the poll, and I’ll share the results with you guys. So, click on those buttons.
Phil [04:01]
I actually like recorded bird songs, but you didn’t list that.
Anthea [04:06]
We have the ‘other’ section, Phil.
Phil [04:09]
I’ll just put that one down as ‘other.
Anthea [04:16]
I will end the poll at that for now. And looking at the results, the first one – ‘where are you currently working from?’ – 94% of respondents are still in their lounges and in the bedrooms and the spare bedrooms. ‘How many coffees do you average a day?’ – 29% say one cup, two cups at 21%, three cups at 27% AND there is an extreme of 9% of people who have five cups a day, which is crazy. And then, the third one is ‘what music to code to?’ EDM leads the pack with that and R&B – 10 votes for that. And then we also have classical at 14% and under ‘other’ about 21%, of which at least one is for recorded bird songs. Thank you very much, everyone for participating in our poll.
Anthea [05:09]
Before we jump into the Q&A, I just wanted to share a few housekeeping notes with all of you. This is a webinar format, you can see us, but we can’t see you, unfortunately. But what you can do to engage during the webinar is you can post your questions for Lyndon in the Q&A section of the Zoom. And you can also use the chat function if you have any random thoughts to banter or to share useful links throughout the session. And as always, we’ll try our best to get to all of the questions. If not, thank you for submitting, and we’ll make a plan to try and address those after the event. Some other things to note, if you do drop off the call, you can rejoin using the same Zoom link. Finally, we’d love to hear about your experience tonight, especially if it is your first time. Please make sure you fill in the feedback form, which will be in your inbox tomorrow morning. For now, I am going to hand you over to Phil who will be taking us into the Q&A section with Lyndon tonight. Phil, over to you.
Phil [06:19]
Thanks. Hi, everyone. My name is Phil Barrett. I’m Head of Product at OfferZen, and I’m looking after the fireside chat tonight. Why?
Phil [06:29]
That is a burning question, and it could be because I’m also working on Investec’s programmable banking project at OfferZen. And my duties take me to all sorts of interesting places. I’ve been involved in some discussions about where Investec’s programmable banking might be going, and how to strengthen the community, which is going great guns already, but how to make it even better so that more amazing things can happen in the world of programmable banking. This one’s really exciting for me tonight to get a chance to quiz Lyndon about what he thinks about it all. I’m chatting to Lyndon Subroyen, who is in London right now. He is the Global Head of Digital and Technology at Investec, and he’s responsible for Investec’s digital and technology strategy. We will find out what that means shortly. Lyndon joined Investec in 2001 as a software engineer, and in 2009, he was appointed the CIO of Investec Wealth and Investment. So, he did something right. In 2013, he took on the challenge to be Global Head of Investment Digital, focusing on group channels, FinTech partnerships, and new digital businesses. It’s all in there. Hello, Lyndon. And thanks for joining us from London.
Lyndon [07:50]
Thanks, Phil. Thank you for having me.
Phil [07:53]
Did I get that right by the way? Did I sort of mangle your career or did I get it approximately okay?
Lyndon [07:58]
Yeah, approximately okay. I guess the one addition is around a year ago, that remit was expanded from just digital to all of our technologies. I have the privilege of leading all things tech, data, digital and innovation for the group.
Phil [08:18]
I wanted to ask you about that because Global Head of Digital and Technology – does that mean you’re the CTO? Or are you strategic? What does the job actually entail?
Lyndon [08:31]
Yeah, I mean, the one thing, Phil, that you would have gathered in working with Investec so far is we don’t have a big fixation on titles. I suppose to the external market it would be the Chief Digital and Technology Officer, the CDO and CTO combined. It’s an executive role that is part of a team of 11 people in the group that focuses on running Investec as a whole, along with our respective business units CEOs, the Chief Marketing Officer, Chief HR Officer, CFO, and the Chief Executive CRM. It’s that sort of grouping of people. And the role is incredibly interesting and fun: It is a combination of strategic direction and operational execution. It’s all of the above. And there’s a team of business unit CIOs and horizontal leads, who support me and help us. We work as a team. Everything from our CSO, our Chief Architect, we have a combined tech leadership team that spans our vertical business units and our horizontal practices like architecture, security, risk management, data, AI, stuff like that. So yeah, it’s all of all the above.
Phil [09:51]
Wow, that’s fairly broad.
Lyndon [09:55]
I guess you are questioning a lot about Investec and putting me in this role, right?
Phil [09:58]
I can’t say! But I’m wondering – do you have to deal with everything from sort of rumbling mainframes all the way up to the future of digital technology?
Lyndon [10:10]
Yeah, I mean, not me personally, the team is incredibly well versed, and I’m surrounded by people who are far, far better than I am in all of those areas. My goal is to make sure that we have a cohesive team, and that we all are aligned on our strategy, what we’re trying to do for the organisation, the value we’re trying to create for our clients, making sure that we execute on that well. And I spend the majority of my time with our people. Earlier on Anthea asked if I am still allowed near a keyboard, I’m a bit dangerous with it. Most of my time is spent with our teams and our people, and I enjoy that. I never thought I would have a career focused on that. But that is what it is. Of course, I’ve got to make sure that I still understand what’s happening and I try very hard to keep up with all the changes taking place to help shape the future estate. And what I’m pleased about is I keep referencing this incredible team we’ve got. They keep pushing me forward. They keep teaching me a lot every day. I’ve been doing this for twenty years, and it’s been a constant learning experience. And I feel incredibly privileged to have chosen a career where that learning never stops. And as I’m sure everyone on this webinar today will attest to, if you’ve picked a career in technology, the learning never ends, and I think if you have an absolute appetite for that, this is the place to be. Particularly at the time, we find ourselves in right now.
Phil [11:40]
Absolutely. Yeah. I mean sure. The COVID-19 question is a juicy one. I guess we can have a little look at it. Have you been able to make sense of COVID-19 and the technology landscape, and what’s your take on where we’re going next then given, the pandemic is sort of coming well, I would say not coming to an end, but easing a little sometimes?
Lyndon [12:12]
Yeah, I don’t think I can give you an informed view on COVID-19 itself there. There are people out there trying to wrap their heads around it. But certainly, the impact that we felt and the impact that we see as an organisation and, I suppose, the technology sector, is that it has proven to be a catalyst for this digitalisation that has threatened for many years. For a long time, we’ve been talking about digital transformation. And I can’t imagine if you search on Amazon for a book or do a Google search, what sort of results you would get back. But what COVID-19 did was force the entire planet into a rapid digitalisation effort. We find ourselves in a fortunate position because a lot of the groundwork we did leading up to this allowed us to transition our people to work from home pretty seamlessly. We didn’t have a lot of foundational stuff to get in place. And I know many other organisations had to do a lot of that in a very short space of time. If we’ve learnt anything through COVID-19, it has proven to be the catalyst for digitalisation in a way that I don’t think many people would have understood. Speaking to peers across the industry and, of course, I represent a very narrow view of just the financial services industry, it’s interesting to hear them talk about how for a long time technology was seen as an enabler to the business and suddenly it has become a completely strategic part – as in we cannot operate without it. Why do you not have a seat at the table, those sorts of conversations are taking place when I speak to some of my peers. It has transformed not just how we operate, but how we perceive technology and the value that it can bring. Speaking to counterparts across the world, in New York, in the US, Australia, in the Middle East – that has been the outcome basically. Of course, nobody would have wanted it to happen as a result of a pandemic, and what you see happening in the world right now is just terrible. We find ourselves in this position, but it certainly has proven to be a key piece in this catalyst for the transformation that hovered around for many years. Still, I don’t know if it completely materialised in the way now, I think that has happened.
Phil [14:29]
You’ve previously said that FinTech is one of the core elements of Investec’s digital program. How does Investec make its decisions about partnering or investing or acquiring FinTech companies?
Lyndon [14:49]
Well, maybe the first thing I’ll do is step back to a macro level. One of the things we focus on, and I don’t think it is rocket science – I’m pretty sure everyone on this call working in a large firm will have a similar set of focuses, right? We think about our focus across technology in five buckets. One, what are we doing for our clients? And that is very much the digital channels, the experience we create, the end-to-end automated servicing we can pull together. When I say channels, I mean, apps, websites, open APIs, and our teams are working on one such venture robotic process automation, how can we make our clients' lives better. The first bucket is what we can do for our clients?
Lyndon [15:38]
The second thing we focus on is what can we do for our colleagues? And in that, a large part of that area is our digital workplace – how we find ourselves working now. Remote working practices, workplace analytics, the ability to collaborate with your colleagues across the group – we’ve got a footprint across many countries in the northern, southern hemisphere, and we have many teams that work together. Certainly, in our technology team, we’ve got three major hubs in South Africa, the UK and India. And our goal has been to try and create a digital workplace where all of our people can interact with each other in the most productive way. We’re doing quite a lot in that space. And that’s one of the areas that we see the benefits now with the results of what COVID has forced upon us.
Lyndon [16:22]
The third area of focus, of course, is, we’re not an organisation that’s been around for a very long time. Investec is only 40 years old and in the financial services industry, we’re still a baby. But we have acquired quite a lot of technology through that period. And we made investment decisions many years ago that have stood as well. But we find ourselves at a place now – area number three – that we must focus on how we modernise this technology. How do we capitalise on the rapid acceleration of technological improvement? How do we capture these opportunities and modernise our business and get us ready to be able to operate in a digital era? We are not digitally native like many other firms we all have come to love. Today, we’ve had to transition into that. We’ve got a big focus on how we modernise our technology estate and then that we’re making key targeted investments into Cloud APIs, core platform modernisation stuff.
Lyndon [17:25]
The fourth area of focus for us at the moment is changing how we work. Our goal here is to digitalise our DNA. What are some of the practices we need to embed to get us to operate with the best of Investec’s culture but also, what are the best practices for digital-first companies and how do we bring those things together? And that’s everything from building strong product management practices to uplifting our engineering principles and practices.
Lyndon [17:53]
And then the last area of focus, which is the question you asked me, is this FinTech world. How do we think about it? The last area of focus for us is how do we accelerate our innovation partners into the ecosystems that we are operating in – whether that is FinTech or other partner networks, peer groups or the banks? How can we accelerate the value we bring to our clients by partnering up with people who are doing things way better than us? We’re under no illusion that we’ve got all of the best within Investec. We know we’ve got incredible people, and we’re doing unbelievable stuff, but there’s a talent pool out there that is pushing the world forward. And instead of thinking of them as competitors, how can we think of them as partners? While we’ve always thought about the FinTech landscape as an area for us to focus on, I would say for the better part of five years, we’ve been building up this practice in a variety of forms. We’ve got people dedicated to scouting this network, understanding what is out there, how can we partner with them? How can we make investments in them? We’ve got an emerging company practice, the label we use, we’ve got an emerging company team in Australia, Hong Kong, India, South Africa and here in the UK, where we focus on investing into these early-stage high growth companies. In the UK, as an example, we’ve launched a fund focused on investing in FinTech with some incredible success, and we’ve got some wonderful companies in that portfolio. How do we see them? How do we choose them? Now, the most important thing for us is these must be partnerships that are mutually beneficial. What are the things that we do well, that we must continue to do well? What are the things that these partners do well that we must allow them to continue to do well? How do we ensure that we are not this corporate animal trying to overtake this incredibly fast-moving digitally native value-adding service and slow them down to our pace? Our goal has been how can we accelerate to theirs. And in order to do that, you must make sure that you’re compatible as a team. One of the first things we look at whether it’s partnering from a strategic perspective or delivering new features to our clients, or from an investment perspective, the first thing we think about and look at is the team. Is this a team of people that we can trust, that we back, that we are willing to partner with? Whether we are client number one or client number 100, is this a team – if we look at them as a unit – will they make 1000 decisions a day because that’s the sort of pace that you need to move in this space? And can we trust them to make those thousand decisions a day because they’ll operate with the same principles as we do? Now, those are some of the criteria we think about.
Lyndon [20:36]
Of course, if we’re looking at it for investment purposes, we’ll assess the business model a bit more, the financial model, and what the return could be. And if it is a strategic partnership, we want to make sure that we can get the best value from that to deliver the Investec strategy to make our clients’ lives better, to make our colleagues' lives better, to modernise our technology and just keep on going with that. We assess these partnerships with that lens. And it’s been incredibly useful – the learning we’ve got from working in the space and not seeing it as a threat. I think for me that has been unbelievable. And one of the reasons I’m based out in London is that this has become the FinTech capital of the world and what we get to see in the people we meet are the incredible ideas that they are bringing to life. It’s just the most exciting time to be in technology in financial services. I never thought I would have said that there’s an exciting time to be in financial services. Many of us perceive the financial services industry as dry, boring, slow-moving, but I just think this is the most incredible place to be and the best time to be operating the space.
Phil [21:45]
Fantastic. And in South Africa, you’ve got the programmable banking initiative, which is starting to pick up speed nicely. What’s the ultimate goal of that initiative in South Africa? And how does that sort of fit into the landscape you’ve defined for us there?
Lyndon [22:10]
I think we have the benefit of operating in multiple countries, where we can see what open banking is starting to do in transforming the industry, creating an open innovation ecosystem. We can see where this is going. We’ve got a handle on it. And while South Africa doesn’t quite have the regulations in place to push an open banking ecosystem, we can see that there’s an obvious path here. When we started thinking about that, our view is, how do we create? How do we use this concept of thinking about the technology that is available to create an open ecosystem in South Africa where we could be part of the catalyst for innovation, new products, new services and new businesses in a country that I inherently believe is extremely innovative. I think South Africa has got this real startup culture. We’re not a nation that’s been around for hundreds and hundreds of years. You think to post-apartheid, we have had a rebirth of the country. You’ve got the startup culture that still exists. And we thought that if we could tap into the brains that exist, the smartest people in the world that are out there, how do we find them? How do we give them the opportunity to do something incredible with us? While we might not have the scale for them to be able to build large retail businesses, we certainly felt that we had the ability to offer the best of what we’ve got, which is a reliable, safe, secure transactional custodial services, and tap into the creativity of this ecosystem that we’re applying to consumers of this programmable banking. I will get it right at some point. We can start to build some great functionality on top of it. Our goal is to unleash creativity. We want to get a lot of clients to realise for themselves commercial opportunities. Investec has always been a bank renowned, by the phrase, as being built by entrepreneurs, for entrepreneurs. And most new entrepreneurial ventures these days are software-based and, we just thought this is the role that we could play. The country has got a world-class financial infrastructure, robust, sophisticated regulation, and we’ve got the ability to partner into this world and provide a gateway into it. And that was the thinking.
Lyndon [24:38]
We think that we can grow the tech sector in South Africa as well. South Africa is in desperate need of stimulation and growth. And if you look around the world, this is an area where we have a right to win, like South Africa has the talent and the skill and the culture to be competitive in the tech space. What we’re trying to do is our little part here in order to help the sector generate value. Of course, it helps position Investec in a particular way that our clients see us as, as their partner of choice as well. But most importantly, our real goal is how we can grow the tech sector. How can we create new opportunities? How can we unleash the creativity in the country? And we’re hoping we’ll have more and more companies follow suit with us.
Lyndon [25:26]
A big question, Phil, for you to answer as you work closely with us on this – what have you seen are the benefits of this venture? Why are you so excited?
Phil [25:36]
I think it’s exactly like you say, right, you can see people, kind of the cogs are starting to turn, and the opportunities are starting to be unearthed and so on. And people are exploring and discovering and creating things which they literally couldn’t create before, right. This is the first time in South Africa, and I mean, the programmable card stuff is pretty close to unique in the world. It’s seeing people having quite a good time there and discovering some cool stuff. I just want to check with you – the emerging companies team that is a service you provide for clients in South Africa as well as other countries where you can assist them with business building, is that right?
Lyndon [26:28]
It varies in each of the geographies. While we run – let’s call it a virtual practice – in each of the geographies we do have particular niches where we will focus on everything from the early stage post-seed funding, all the way to series ABCDE, we’ll provide advisory services, help with their fundraising, help us connect them into larger ecosystems that we operate in. It is various services that we’re providing to that space. And, again, leveraging Investec’s, wonderful corporate finance expertise in a sector that is incredibly over serviced at some stages, sort of post-series A, there’s lots of money and lots of people floating around. And also in areas where it is incredibly underserviced, post angel funding, seed funding, there’s a gap from there to series A. We found areas where we can focus. We do have niches in each country, South Africa, and in the UK as an example, I’ll talk to those two. Our focus has been largely in the tech space in the UK exclusively FinTech or enterprise technology, whereas in Australia, the early-stage companies could range from car-hailing apps to toilet companies, all with a big tech focus, but not quite in the tech space that we would think of traditionally. The service varies in different parts of the world for us. The goal is to leverage the expertise we have – we don’t want to ever play in a sector where we can’t add value to clients’ lives. It would be incredibly, incredibly arrogant to think that just because it’s there, we have a right to be there. We’ve got to look at what value we can add, can we contribute positively to the clients that we work with and the partners we work with in that space. The emerging companies practise is one of those that we seeded a few years ago, and with a variety of teams that we pulled together, it’s been really good for us.
Phil [28:29]
And just to note for everybody out there who’s watching and listening, post your questions, it’s going to be question time coming up soon. And it is a rare and special opportunity to ask somebody like Lyndon the things you’ve always wanted to ask. This would be a chance, pose those questions. Cool. I don’t know how many questions we’ve got because Anthea is busy sorting them out but there we go. Have you got any informed guesses about what you think the future of FinTech and the FinTech community is likely to be maybe, in the next couple of years. Where do you think we’re going next?
Lyndon [29:19]
Okay, it's difficult to offer a prediction on the future. I think if we knew how to do that accurately, we would all be in a very different space. But, one thing that we’ve seen, certainly in the tech space, or anything powered by technology, there tends to be massive growth in that sector. There’s a very simple principle that we’ve always looked at the world with, which is if you take an industry or a sector, and you base it on information flow, you power it by Information Technology, what you get is a Law of Accelerating Returns. That’s a logarithmic y-axis that everybody looks for. I think FinTech is no different and we’ve certainly seen that over the last five years. We went from a hype that people were ignoring that people kept saying will never take off. It’s going to blow up. It’s another 2001 for those of you who were around and lived through the .com bubble. It’s still been labelled as a bubble because there’s suddenly been a flow of capital into that space and a flurry of new companies. But I think the reason why is because these companies found an opportunity to remove friction, where there was friction in the sector. That is critical to how the entire world operates. I don’t see it slowing down. I think there are many more problems we have to solve together.
Lyndon [30:49]
What I do foresee, Phil, is possibly some consolidation in the space. I think much of what seemed to be early-stage, fairly new FinTech has grown up quickly in 3 - 4 years, and is now at a point where you can see them becoming inquisitive. Certainly in this market that’s the rhetoric we hear at the moment. People are looking to consolidate, and whether that consolidation results in more clients onto a platform or more features being added to a service for existing clients, I think we’ll start to see some of that. I know there’s quite a big – I would call it fear or excitement – about big tech entering into the sector. The Googles, Amazon, Facebooks, Apples all making a play in financial services in some way. Most of them seem to be doing it to capitalise on their footprint, their presence – how do they have more of the audience, more of their clients’ facetime, airtime, listening space, all of that? I think that’ll be good for the sector. We’ve always at Investec believed that competition is good competition. Iron sharpens iron. The more we have in the sector that we operate in, the better it will force us to be. I think the scary thing for the FinTech, in particular, is thinking about their limited resources and competing against the big mall services groups. And now you have the big tech companies who are the biggest in the world at the moment, how can they compete? My view is they still can compete; I think they still will continue to find services in areas where there are unique problems that they can solve and at the pace that they can solve it. I’m optimistic about the future of the sector. As I said, I don’t think we are nearly done delivering on the promise of what we thought we would see.
Phil [32:49]
Fantastic. Okay, the questions are apparently rolling in, in red. I think we’ve got a lot of questions, which means we better move over to the very first question from the audience, which is, what do you think could be the advantages of AI in financial services? Okay, you’ve only got a few minutes.
Lyndon [33:13]
Yeah, I could go on for hours. Given the value we see coming out of the more strategic use of large data, which is a large part of what AI is, right? You can’t train a machine with no data to feed it, right. We, and all financial services companies, accumulate a ton of data, and I think what’s happened is we’ve not used it strategically. We’ve always thought about how we consume our data to give us a hindsight view of what has happened. We built armies of BI teams, and MIT was telling us what happened. Our focus now is to go from hindsight to hindsight and insight. Tell me what is happening and then transitioning that to foresight, which tells me what might happen, and a large part of our AI practice will help us to figure that out. I think if you look at what’s happening with most of the big tech companies, this is the way of the future. This is the next big change we will live through. I firmly believe that, and that’s part of why we decided to firm up our practice. We’ve appointed a Chief AI Officer to get the right focus in this space because we have probably been debating for a while, and now we think it’s time to catch up. This is where the world is moving. Seven, eight years ago, there was a big wave of you must go mobile, you must do this, you must go cloud, you must have big data. I think we are in that wave at the moment, where if we’re not starting to think about this, we’re setting ourselves up to lose huge value.
Phil [34:52]
Well, what sort of advantages do you think Investec might be able to get out of AI? I mean, have you got your eye on any little opportunities?
Lyndon [35:00]
Again, we’ll think about this in a variety of ways. One, how do we partner with people who can, with their access to large waves of data, provide us with the capability and quasi-AI capability even though it’s just narrow AI. And we already have some of that, right. Some of our fraud tools, some of the cybersecurity tools are narrow AIs that are in place. I think for the next while, we will continue to either consume narrow AI or build some narrow AIs that will add value in a particular space, whether it is helping us with operational efficiency or whether it is something that we think can give our clients much better value from the Investec engagement. If you can get to the point where you can help clients figure out what the next question is before they know what the next question is. In the financial services sector, no one wakes up every morning thinking about banking. I know we all want to believe that, but no one wakes up every morning thinking about their bank. And suddenly we have this fabric that exists across society that allows people to live their lives, right. We start to think of ourselves as a lifestyle enabler. There’s a huge role that AI will play in that, in following us around, making sure that it can help us manage our financial lives, our financial health and our financial wellbeing in ways that we never thought about before. Because instead of just looking at Lyndon’s transactional history, Lyndon’s financial management practices, you can tap into a much wider set of data and almost offer up suggestions and guidance. We’ll start to pull some of that stuff up, and it will be delivered through a variety of ways whether it is simple stuff like chatbots, that can help with servicing all the way through to recommendation engines that can help our clients make better decisions. I think that’s the first wave that we’ll start to see before it becomes more advanced. I think we are a way away from anything close to a jingle AI. Every time I think something is at least 15 years away, it arrives five years later, I hope I’m going to be proven wrong there. I think we’re a few years away from the general AI type capability. But no one expected things like Alexa to have accelerated the way it has. Amazon Echo has done an incredible job. I think you’ll start to see us delivering AI solutions to different channels, voice traditional digital channels, APIs. This omnipresent bank that is constantly helping me. This is what I think we will aim for now.
Phil [37:30]
I think some members of the programmable banking community agree with you there. I think there’s been at least one AI experiment in the community so far, and I think people are looking forward to getting stuck into a couple more. Okay, the next question is, what, in your view, is the biggest FinTech problem or gap that still hasn’t been solved?
Lyndon [37:56]
If I would call it FinTech or RegTech, but certainly for most financial services organisations, there are two key interactions with clients. The first is onboarding. When I open an account, and while some firms have got it kind of okay, or the experience feels pretty seamless, I think people know, behind the scenes, it’s not seamless – there’s a lot of work that goes into making it feel like it’s very low touch and it’s just flowing through. I think we’re in desperate need of some kind of unifying RegTech solution for the financial services sector that will help all our clients with onboarding. We’ve had many stops starts with this where you would authenticate yourself KYC AML, get a token for one of these IDs, and it will then allow you to transition through many organisations with that token. I can now open an account, it’s trusted, I’m trusted. I think we’re in desperate need of some kind of central issuing authority for that, that will verify that sort of stuff. I think it’s good for the entire sector, where right now it’s being seen as how can we do it better than the others in a differentiating way, where I think the entire sector will benefit from us partnering up to do that. There are companies in South Africa trying to do this; there are companies in the UK and the US trying to do this.
Lyndon [39:26]
It’s a little bit like, if everyone tried to build their own version of the internet, we wouldn’t have what we have today. What we need to do is agree that these are the basic rails that we all should partner up with, or someone do it, we’ll back you, and we will all reap the benefits of it, as opposed to each of us trying to solve it on our own. I think there’s an incredible amount of capital being deployed to solve this independently in all the financial services and insurance companies across every sector, whether it’s your mobile phone account, I think something like that is really useful that’s why I can say that’s one.
Lyndon [40:02]
I think that there’s still something around a productive use of digital currency that I think we can tap into and there’s value to be created there. If we cut through all the blockchain hype and the Bitcoin hype, you realise the value that exists with a digital currency. And I think, fortunately in South Africa, we are now at a point where I think we’ve got a sandbox available where we can start to think about this. We’ve got a team at Investec that is spearheading this with the regulators. We’re working closely with them to think about how we can create value with digital currency. The FinTech that has operated in this space has been very focused on the exchange of value, converting my real currency into digital currency, one of the distributed ledger type currencies. I think there’s still some value to be created here and creating real digital money that can flow freely will just unlock a whole lot of value in the system. Those are two examples. I know we have to make room for lots of questions so I will pause there.
Phil [41:10]
Those were pretty high-density answers actually. I mean, for both of those there definitely has been, and there are experiments going on in that space aren’t there? I mean, the various kinds of digital identities and KYC have kind of come and gone and stopped and started and so on. But it is amazing how that one has been so elusive. There’s also the idea of could you use blockchain to do it, but the answer is probably not, or maybe it’s hard to say quite yet. Do you have a preferred solution to that kind of identity thing right now? Or are you looking, are you waiting for some viable solution there?
Lyndon [41:58]
In South Africa and the UK, we’re partnering with two companies who are trying to solve it. We’re hoping, of course for our benefit and their benefit, for the sector’s benefit, for our clients benefit, we’re hoping that those end up becoming more mainstream, and they grow. But you do need to have a partnership with the regulators here. You do need to have some central authority that is willing to back this. And I think there’s just been so much change needed in the sector, there have been lots of other things to focus on and this has never got the priority. But I think we’ll get there soon. I think people realise this is one of the biggest friction points and we will try to solve it soon. We do have partners, both in South Africa, and we’ve partnered with a company called Fido, and that helped with a digital KYC onboarding solution on Fido. As an example, in the UK in the FCA sandbox we are trying to become that central authority that will provide a guarantee that this identity is real, you can trust it and go for it. But we need everyone to buy in and back it right. We’re not the kind of organisation that has got large scale investor cooperatives in particular markets. We are never going to be able to move the dial realistically; you need critical mass. I do hope that my colleagues in the High Street banks, and the Big Four, respectively in the US and the UK start to think about this, and they’re incredibly smart people who are thinking about these things. When they get to focus on it, can they help us solve this together.
Phil [43:34]
A sort of related question: Do you think the cost of compliance for FinTech’s is impacting the speed of FinTech innovation?
Lyndon [43:46]
I’m not sure if that statement is true. I think, and forgive me if I speak with some authority on the UK side as a start because I’ve spent a lot of time getting under the hood of regulations here. Post-2008, the realisation that we can’t have firms that are too big fail, really caused a wave of change across the regulators. And I think that they’ve been quite forward-looking. I think that they’ve been progressive with what they’ve done because one of the goals has been to enable more competition. They have changed the frameworks for getting licenses; they’ve created accelerator programs; they’ve created sandboxes to allow people to trial and run these things in order to promote more of this. I’m not a fan of people who say compliance is an issue and compliance is a disabler to what we’re trying to do. I believe that our regulators are there and they’re doing their jobs and they’re doing it well. Their goal is to protect the consumer. And I think they do that well. Their goal is to protect. When I say this in front of my colleagues, they think I’m crazy. Let’s put aside the requirements for capital and liquidity, I’ll park those.
Lyndon [45:08]
But if we talk about what they’re doing to promote competition in the sector, I think they’re doing well to make sure that the consumers are being taken care of, that the sector is stable, that firms themselves are well-governed and well run. They are progressive in their thinking, and I think we can do more to partner with them because we’re all on the same side here. I don’t see the regulators as if they are the referee on a pitch, I think of them as the goalkeeper, part of the team. They are there to help us and make sure that we cover all of our risks, we’re doing all the right things, we’re protecting the sector. While I understand that there is a cost to compliance, what’s important is how we interpret the regulations and how we deliver that compliance. Typically, what you find with a lot of FinTech – and I’m assuming there are some people on this call who work in that space – if you do the right things, you end up being compliant. So, compliance is an outcome of us doing things well. Compliance shouldn’t be my day job. I shouldn’t be coming in every day thinking about how I can be compliant or I think we missed something. Certainly, the rhetoric I’ve always had is, how do we make sure we do the right things and, as a result, we will be compliant because if we’re doing the right things, we’re taking care of our clients, we’re taking care of this firm, we’re not adding unnecessary risk to the industry or the sector, and we are making sure that the system is stable. We will be delivering a well-governed compliant business and solution. I suppose I get triggered a little bit by it because it’s an easy target. And I feel for my colleagues in the control functions in risk compliance, because they do tend to be seen as the business prevention units, which is a term we joked around with for a while, but they’re not really. One of the reasons you have brakes in your car is that you can go faster, not that you can go slower. And we must understand that.
Phil [47:03]
In South Africa, the landscape has shifted a little. Have you got any comments about what you might like to see there?
Lyndon [47:16]
There are a lot of things in circulation; there are papers where they are asking for comments and feedback, some serious improvements to the payment’s infrastructure. South Africa has a well-regulated financial services sector. I think it’s world-class. I think it’s up there in the top three, honestly, and you can have a look at that. I think we are held in really high regard. If you look at the improvements that are being proposed across payments, digital currency, KYC, AML, that sort of stuff, I think that we will soon see an unlocking of real value in that space. It has moved a little bit, but I’m expecting there to be quite a lot to come our way. Our goal is not to look at these regulations as, oh my gosh, another regulation that we have to comply with but what an amazing opportunity this is for us to build a new business, a new franchise, deliver new services, make this experience better because the regulations now are going to allow us to do that. I think these changes are coming. I’ve seen some of it, and I would encourage everyone to look at it with a positive light. I probably sound crazy as a tech guy sitting here really sounding excited by regulations. But, we’re a financial services organisation, and our goal is to protect other people’s money. It’s important that we see the value that the regulators bring. And I think South Africa is progressing; I think that they will get there very quickly. As I said, there’s a lot of stuff in circulation at the moment. Look out for it.
Phil [48:50]
And the next question sort of follows on nicely, I think. Peter, I don’t know who Peter is but well done Peter for asking an awesome question. Peter wants to know when will open source banking be available by Investec in South Africa? There’s a bit of a jump there, but --
Lyndon [49:08]
Ppen source banking?
Phil [49:10]
Open source banking.
Lyndon [49:13]
I’m going to ask you for your interpretation of that question, Phil, because I’m not --
Phil [49:16]
Yeah, I’m struggling. Let’s say, if we say open API banking, we can answer that more easily because we know that you are on the way, right. There are some pieces in place.
Lyndon [49:33]
Do you think that is what it relates to?
Phil [49:34]
I think that’s what we’re talking about, yeah. Will we have an open ecosystem?
Lyndon [49:38]
When the EU kicked off their shift to PSD (payment services direct), it triggered the first big wave of open banking and a requirement for all banks to make your data and your payments infrastructure open to clients. The ownership of the transactional data is actually the clients: It’s their data, (a) How do you make that available to them and (b) the ability to act on those accounts. Can I make a payment? Those are the client’s accounts, and they should be able to pass instructions in a way that they see fit. That forced the standardisation of open APIs across the banking sector, across Europe and the UK. It followed pretty quickly across the world, in Australia, New Zealand, UK, Japan, all over the world. It has either already been acted on, or papers are in consultation. I think South Africa is going to get there pretty soon. I would think within the next few years we’ll see it. But what I’ve realised is even in the absence of that, many of the financial services firms in South Africa are getting ready for it with APIs being published allowing people to access their accounts, allowing people to create an experience that they would prefer by using their bank’s data, because, again, this is your lifestyle. What can you learn from it? What can you do with it? I think some of the big banks in South Africa, Investec included, have now published APIs. And I think that in itself this will create a new industry; it will create a new FinTech, it will unleash people’s creativity to deliver solutions in ways that we never thought about before. And that’s the goal of this, right. I think even in the absence of a regulated or a mandated open API requirement, it’s already starting to happen. If you look under the covers, most of the big banks have them. Phil, you are aware of this. We’re one of those that has not just opened up the API, we’ve done it with a particular target segment to make it available to engineers who want to be able to program their accounts. They can set those rules on their cards, they can program their banking card experience, but they can also now access their data through these APIs that we’ve published. And we’ll continue to build that, that suite of APIs and make it more comprehensive for people to do more with. But again, for us to get critical mass in this, we need to make sure that everyone in the sector is doing it and it’s happening. I think what will happen when the regulation comes in is we will have standardisation of it which will make it much easier for the consumers of these APIs, FinTech’s and the like, or even just super cool engineers with a spreadsheet who want to do some cool stuff. They will have a standardised way to connect all this stuff. And I think we will start to see the end of screen scraping which has been quite dominant in the assessing thing.
Phil [49:56]
Yeah, and quite a weird business as well. Okay, next one is how do you view challenger banks like Monzo, Starling from a customer and business perspective?
Lyndon [53:01]
There are many layers on how I can answer this. One of the biggest challenger banks in the UK is a bank called Monese. Monese is an inclusive banking proposition. They’ve got incredible technology that allows you to open a bank account in the UK in 120 seconds from start to finish with a virtual card, and then your next step would be to order a physical card. Monese is one of our portfolio companies and we know Norris and the team well. I see Monese, Monzo, Starling – the term challenger bank is often used in a derogatory way as if they’re not quite there yet, but I think of them as really challenging us. In our experience, how can we make ours better for clients who still choose to bank with us and I think, most people thought that there would be this massive switch from HSBC, Investec and Barclays to these banks. What we’ve seen happen is people have opened up additional accounts. I have this, but I also have this and people are using their accounts in different ways. There are superb tools being built into these banking propositions now, and the pace at which that change is coming into the challenger banks is forcing the incumbents to accelerate their delivery as well. I think it’s really good. Competition is good. We're probably fortunate in that we don’t operate in the same segments, so we learn from them, and we partner with them. Monzo is one of those, one of those open banking partnerships we talk about. Monzo doesn’t offer savings accounts because they’re not a bank that does any lending, but the clients asked them for a savings product. We partnered with Monzo where if you open up a Monzo savings account, it actually comes to Investec. It’s a savings product at Investec. Monzo has started to, and most of these FinTechs have focused on doing one thing well and partnering into the ecosystem. What we see here is, we will play a part in that ecosystem, and we will use them as a part of our ecosystem as well. We were the first to do that. A few other banks have now gone in and partnered with Monzo in the same way. If you want to open a savings account with Monzo, because you like that experience, you like what that feels like, you can still get the benefits of an Investec product through them. And we see them, as part of our partnership ecosystem, we see them as pushing us forward to make our experience better. Again, I just think it’s incredible what they’re all doing. I’m a huge fan and a huge supporter of it.
Lyndon [55:40]
We’re investing in these companies. We’ve got, I think, quite an unbelievable company called Curve, which is an over the top banking experience where you get a single card. You can then link all of your other bank accounts and cards to it physically and digitally. What that team has been doing – they’ve pushed the boundaries on how we would have thought about payment processing, transaction processing cards, and the unified banking experience. They created a completely new sector that we never knew we needed. I’m a big fan of this stuff coming out of here.
Phil [56:15]
Awesome. Last question. We only have time for one more. Edwin wants to know if you can recommend one book or resource that can help you create winning digital strategies.
Lyndon [56:33]
I read a lot. I’m struggling to pick one in particular. And I guess what I would say to the team who are asking these questions is, try and read as much as you can. Different problems will be solved with different books. Consume as much as you possibly can. I don’t know if there’s a single one that will help you create a winning digital strategy. I think your digital strategy must always be driven by what is the outcome that you’re trying to achieve for your organisation, for the client's signature after. I think you start there. If the problem you’re trying to solve is a financial services type problem, read the Brett King books. They’ll give you a sense of what to expect and what you should be thinking about. If your problem is industry agnostic, and you’re just trying to think about how to operate in a digitally disruptive world, I’d recommend a very old book, which is one of my favourite books, by Andy Grove. It’s called Only the Paranoid Survive. Andy Grove – I am sure everyone on this call knows – is the founder of Intel, and he was the CEO of Intel for a long time. He was a mentor to Steve Jobs. It is one of my absolute favourite books. There are those sorts of things, so maybe if I had to say one, read the book, Only the Paranoid Survive, only the paranoid survive man.
Phil [57:58]
And the Brett King one, Bank 4.0, would be possibly one that might be quite a good one.
Lyndon [58:05]
Yeah. There’s Bank 2.0, Bank 3.0, Bank 4.0. There’s a series in there. And the Chris Skinner books are really good. I’m a fan of Chris Skinner. Chris writes a blog every day. He is a well-respected voice in financial services, technology and in FinTech. Every single day he writes a blog post and what he does over a period of 12 months is that his thought process ends up being compiled into a book. If you look at those two guys, there’ll be videos, you can follow them around. Those are two if your question is directed to the financial services sector, who are the people that I read up on a lot. I don’t always agree with what they’re saying, but they certainly helped me challenge my thinking and shape my view of the world. We’ve been fortunate at Investec as we’ve had Chris spend some time with us at a few conferences, and he pushed our leadership teams to think differently about financial services. Those are three recommendations for you there, the two authors and Only the Paranoid survive as a third.
Phil [59:10]
Superb. Okay, we’re going to have to wrap up there, I’m afraid. Thanks, Lyndon for giving us your time this evening. This has been totally awesome. I think the audience has enjoyed it a lot from what I can see. Thank you, audience, for your questions. I think you’ve kept Anthea busy and kept Lyndon on his toes. That’s great. I’m going to hand back now to Anthea, but thanks very much indeed.
Lyndon [59:36]
Well, thank you to you and the OfferZen family for having me. Appreciate this.
Anthea [59:42]
Thank you, Lyndon. Thank you so much, Phil. Before we wrap up this evening, we want to congratulate Magnus Virtus who is walking away with an OfferZen swag pack simply for referring a friend. Magnus, we will be in contact to send you your swag. Then also a big thank you to our sponsor, Investec for making this webinar happen. If you’d like to learn a bit more about the Investec programmable banking beta mentioned during the Q&A, you’ll be redirected to the landing page once this webinar ends, or simply go to our website, OfferZen.com. Our next fireside chat is taking place next week, the 14th of July at 18h30, same time, same place. And we’ll be chatting to Razaq Ahmed, who is the co-founder and CEO of Cowrywise, a Y Combinator company based in Nigeria. Keep an eye out for the information about that event coming to an inbox near you. Thanks again for joining and we look forward to seeing you next time. Bye!