Fintech Insider Podcast by 11:FS
00:32:59 · Conrad Ford
Because one would assume that if we pre approve an overdraft for them, that's a pretty compelling reason to think about moving to Allica. So so that's where we're going. We've got a number of bets, new bets in that space. But in the end, the thing that we don't know is basically there's gonna be many other participants in this market. I would expect the comparison sites to be playing here. Right? This is their natural territory. So the comparison sites, they're they're presumably gonna be building agents or working with agent firms. And then you've got accounting software has the same level of insight that we do. Actually And in some cases more, they can see invoices in the future, for example. So they they have a slightly better insight in some cases. So my point is basically, we can't just try and solve this for our customers and and solve it as a monoline. We also have to lean into the fact that there's gonna be other solutions out there. And we are, that means of course that we need to be thinking MCP. So in other words, we need to be building a bank, bank in such a way that if people, if our customers want to interact with us via agents, via their agents. So so I mean, I think that's a really interesting topic by the way, because everyone, the the technical stuff around MCP is really not that hard, right? If you've built an API first bank, right, the MCP's fairly basic actually. The hard bit is being API first. Of course, if you were founded more than ten years ago, it's freaking hard to be API first because you you didn't have a crystal ball. Right? But if you're a modern bank like us, API first. So so the technical side is actually the I think there's a softer side, right? So we we need to think through all the things around payment authorizations. So is it gonna be the same as buying on the internet? In other words, up to a £100, the agent can do what it wants. But over a £100, the human being is gonna need to horse wise it. So he needs to think through all of those things. And it's not clear whether or not the regulator is gonna tell us, well, that's how it is. So we're gonna have to come up with our own rules or the industry is gonna collaborate on rules. We don't know. So you've that bit. But even more, even harder to think through is basically there's a whole list of questions that come out with agents, right?
00:35:06 · Conrad Ford
So let's say that I confide to my chat GPT that I'm feeling lonely, right? My chat GPT thinks I can help, and just goes and buys you a dog. Right? Orders you a dog online, right? Yeah? Very rational thing to do if you chat GPT. Terrible idea in practice, right? We're gonna need a whole new class of defensive agents, right? They're kinda like, hang on, gonna need... Can't just buy a dog. You can't do that, yeah? They're kinda like puppies not for for life, right? So so we're gonna need a whole new class of agents and a whole new class of thinking. It's a very exciting time, but people kind of underestimate the extent to which this is fresh piece and a lot of things are, and and and I'm really enjoying it. Right? You you live for times like these in your career when new things happen.
00:35:49 · Ross Gallagher
[00:35:49] S1: And and and I love those. I love those examples because it does actually start to bring to life a little bit how you can start to differentiate some of these offerings in a sort of agent native context. Picking up Conrad as well on your point about the innovator's dilemma, And, you know, we are already starting to see some tension around, who controls access to customers' money. We referenced obviously JP Morgan, earlier on sort of restricting access to those AI agents. And obviously, they're citing things like security and liability concerns, and all of that stuff has to be worked out. And of course, we want all of that stuff to be prioritized. But I think for me, it raises, I suppose if you're if you're going to apply a slightly more cynical lens, it raises questions around sort of protectionism. If you're not quite ready to sort of adopt that sort of AI native approach, then sort of lock things down, you know, how long can we preserve preserve the status quo? I mean, think there's an obvious comparison there as well with Amazon restricting access to the likes of Muse on the basis of sort of similar concerns. But I think then when you start to dig a little bit deeper, is it because they're trying to protect their advertising revenue because agents don't care about advertising and all of those sorts of things? What's your what's your perspective on that?
00:37:14 · Conrad Ford
[00:37:14] S2: Yeah. I mean, there's obviously a lot of noise right now because agents have been detected within bank accounts, so certainly in The US. I think to some extent, this is what happens in these very early stages, right? And by the way, we've seen this movie before, right? Because early days of what became open banking, right? There was screen scraping. And there were many people and businesses that found that screen scraping of their bank account to be so valuable that they were they just kind of ignored the Ts and Cs saying you're not allowed to do this, and they did it anyway. And then over time, the kind of use cases became so well understood by the incumbent banks that they kind of began to see that this was actually something that they should probably lean into. So a real a real example in my world of SME banking is that it's table stakes now to have an integration with accounting software, what they call bank feeds, which is just a variant of open banking, where basically you no longer have to type manually type in your bank transactions into your accounting software because there's an automated feed. So I think there's been a lot of noise about this and lots of people angsty about what this means for competition on Twitter or exit, I think it's now in this. The reality is right, this is this is normal stuff. An FYI, you don't want your bank just saying, hey, you know, go fill your boots, right? There's a lot, as I said before, there's a lot of thinking that needs to be done. But I do think the winning banks are gonna be those that kind of lean into this, Right? So kind of, you know, constantly trying to trying to block this and stop this rather than actually try and come up with constructive ways to make this work. I I think we'll be the winning winning players. And and and I'd certainly like to think that we'll be in that category. So I think that's the way to think about it. But a lot of the noise and angst at the moment, I think is massive. It's like you can't just allow agents into an account without any rules or guidance or principles. It's just not a thing. Right? Whatever we might think.
00:39:03 · Ross Gallagher
[00:39:03] S1: And Merusha, I think one of the the interesting shifts here is, you know, particularly when we sort of rewind a little bit to where, the sort of digital arms race was was was really flying. And I think, you know, the the the the one of the worst things that sort of a bank exec could could fathom was this idea of sort of not owning the customer relationship disintermediation, but I mean, what we're talking about now takes that to a whole another level. Right?
00:39:34 · Merusha Naidu
[00:39:34] S3: Yeah. Absolutely. And I think there's a real shift from, you know... Now the question is who is the customer? Right? What is the customer identity versus who is actually making the payment? Right? So now you actually have two components where you have to satisfy both. And so that balance is really important. Right? Because the bank still cares about the customer identity. They still care about the profile of the customer to say, is this a high revenue customer? Do I need to keep them happy? If I need to keep them happy, I have to help them to simplify everything that they do within the banking service. And, actually, it's not a... It's no longer about how much time do you spend on the banking app. It's about how many transactions. And whether that... Whether those transactions are being enabled by an AI agent is actually going to help the bank to create a better, you know, a better relationship with that customer and actually make that customer identity a more successful one. Right? And so I think what the banks want to do is... And and we hear this every day. Banks are saying they want to enable AI agents. They want to create an easier way for customers to make payments, which is more autonomous. The challenge that they have is the guardrails. Like Conrad was saying, the most important thing is how do you give the agent the flexibility to make the payment while also giving the customer identity the control to say, you're not allowed to buy a dog. Right? But you can buy me a box of chocolates if it is below 50 pounds and if it is at these MCCs and... You know? So giving those... Giving the agent the guardrails, a, satisfies the customer need of, you know, control, but also flexibility that the agent can make those payments. And the bank is still happy that they own the overall profile. They are satisfying the customer's need to be able to make autonomous or to... The customers need to allow agents to make the autonomous payment still be in control. And now what happens is I trust my bank more. They give me what I need. I still have control, and I trust them more, so I stay. And you know what? I'll use that bank for other services as well. So that's where banks need to get to.