From transactions to Tech4Good: authors Theodora Lau, Bradley Leimer on the inclusion opportunity for fintech
Theodora Lau and Bradley Leimer are the co-authors of Beyond Good: How Technology is Leading a Purpose-driven Business Revolution (see my book review here). The material makes for a valuable read for startups, financial services players, and business leaders.
The authors are co-founders of Unconventional Ventures — a consultancy in financial services innovation. Theodora lives in Washington DC, while Bradley — the former Head of Innovation and Fintech Strategy at Santander US — lives in California.
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Theodora Lau and Bradley Leimer join us in this chat on emerging trends in fintech space, innovation opportunities, and ecosystem collaboration.
Edited excerpts of the interview below:
YourStory [YS]: In the time since your book was published, what are some notable new fintech developments or players you have come across?
Theodora Lau and Bradley Leimer [TL & BL]: We have witnessed more community-focused fintech startups launched recently, providing services to demographics such as LGBTQ and communities of colour who have long been underserved.
Such development is encouraging and serves to showcase the power of using technology for good. There continues to be a great deal of venture-backed investment in payment, credit, and infrastructure startups.
Examples are Klarna, large neobanks like Nubank in Brazil, and significant IPOs like Marqeta in the US. The valuations continue to be mind-boggling!
[YS]: How was your book received? What were some of the unusual responses and reactions you got?
[TL & BL]: We have been overwhelmed by the positivity from our ecosystem, our community, and our tribe. Seeing pictures of our book from around the world was absolutely wonderful.
And, we can’t even describe the excitement when our book made No.1 ‘Hot new release in strategy and competition’ in Amazon the first week it was released!
As both of us are long time writers but first-time book authors, this has been a very rewarding experience.
[YS]: What is it like being a consultancy in fintech? What are the unique opportunities and challenges you face?
[TL & BL]: Our work provides us with the unique opportunity to meet different founders from all walks of life. It is a privilege to be able to work with different companies at different stages of development and be part of their growth story.
The energy and the passion are intoxicating! It’s also critical to have sherpas to help connect startups with corporates and help these companies reimagine their business models and who they can serve.
We are huge proponents of the shift toward a more inclusive financial services ecosystem, and we feel very privileged to be part of making that happen through the work with our clients.
[YS]: What are the typical barriers fintech innovators face as they scale up their company? How can these challenges be addressed?
[TL & BL]: The ability to tap into the larger ecosystem for partnership and funding is one of the common challenges we have seen with fintech startups, and much of it is still isolated to “who you know.”
We need to do a better job cross-pollinating ideas and enabling opportunities across different demographics.
[YS]: How should innovators strike that delicate balance between ‘Stick to your vision’ and ‘Adapt to a changed world’?
[TL & BL]: That’s a great question. To be honest, there is no one size fits all. But it is crucial to keep an open mind. As we have witnessed in the past 16 months, change is a constant, and the ability to adapt is always crucial.
What founders must focus on is that there is a new world now — partnerships enable new forms of businesses every week it seems — so each business needs to remain as flexible as possible and be open to taking that unexpected path.
[YS]: What are some effective ways to ‘unlearn’ old business models and principles in the face of disruptive change? Many incumbents have failed or are struggling in this regard.
[TL & BL]: Pay attention to what your customers need and want. Talk to them to see how they are coping with changing economic conditions.
Ask yourself these important questions: What problem are you trying to solve? Who are you solving it for? What are we seeing that our competitors are not? Trust us, there are always untapped opportunities in every business model.
[YS]: How useful are disciplines like design thinking and lean startup in assessing fintech growth curves? And what are their shortcomings?
[TL & BL]: Putting the end-user in the centre of everything is crucial to creating a sustainable foundation for businesses built on understanding the drivers of customer needs (and why).
It is an iterative process and requires a change in mentality and appreciation for ‘experimentation.’ This doesn’t always come naturally, especially in an established industry like financial services. Incumbents have learned a lot from startups over the past decade, but they are still not nearly nimble enough.
[YS]: What kinds of collaboration are possible between banks and fintech startups, and accelerators?
[TL & BL]: There are many ways incumbents and fintech startups can collaborate — from creating new value propositions for customers to making back-office operations run more efficiently.
There are indeed formidable challenges such as speed and agility.
Successful partnerships require open-mindedness and a deep appreciation of our interdependency. This is not a zero-sum game.
[YS]: What are the key success factors for government and industry to work together and grow the fintech sector in their countries?
[TL & BL]: First and foremost, open communication is a key enabler to empower different parties to collaborate.
To foster growth, the industry needs to be able to bring in capital. Unlocking regulatory barriers and providing tax incentives can help cultivate an attractive environment for local and foreign investments to advance the fintech ecosystem.
[YS]: Looking outside the US, what do you see as emerging hotspots of fintech? And what’s holding them back from a global scale?
[TL & BL]: We’d argue that numerous hotspots are leading fintech innovation, and in many ways, ahead of the US.
This is particularly true in China, where the super apps from Ant Group and Tencent have not only upended how we think about financial services but have also promoted financial inclusion in China to dramatically reduce the number of people that remain unbanked.
We are seeing similar trends emerging in Southeast Asia, where banking services are increasingly provided by big technology companies via smartphones and without human bankers, and consumers are adopting them en masse.
Regulatory changes around banking charters, data, and payments will further open up new opportunities for challengers to erode incumbents market share and revenue streams — from payments to credit to investments.
Scale is already happening today as these growing startups are tapping into new markets, a deeper set of consumers, and leveraging technology in more creative ways.
[YS]: How can social entrepreneurs and non-profit organisations make use of your fintech frameworks? Are there some examples you can cite in this regard?
[TL & BL]: Purpose and profit do — and can — co-exist. We can draw inspiration from the numerous examples we have provided in our book.
Aspiration — a fintech startup and a Certified B Corporation — is focused on building a more inclusive and sustainable economy. Sunrise Banks is a Certified B Corporation and a financial institution focused on serving the immigrant population.
When you see corporations like Ant Group planting millions of trees and so many incumbents paying more attention to ESG (environmental, social, and governance) principles, then you know something has shifted.
[YS]: What is your next book going to be about?
[TL & BL]: We would love to dig deeper into the intersection of technology and humanity and some of the newer developments that we were not able to include in our first book.
There are many more stories to tell, and so many more ways the financial services business model will evolve as banking itself disappears into other businesses. It’s the most exciting time to be working in this space and equally humbling to be a part of telling the story of how it becomes more inclusive going forward.
[YS]: What is your parting message to the aspiring fintech innovators in our audience?
[TL & BL]: Economic inequality is a human-made problem that can be solved.
It is past time for us to go Beyond Good, and build back better so that we can create a more equitable society for all.