Myra Thomas
Good day. My name is Myra Thomas, and I’m editor of Bank Automation News. Recently I had the chance to speak with Charley Ma the general manager, FinTech, at Alloy, where he’s focused on deepening the power of the platform’s FinTech offerings and go to market strategy. He joined Alloy in January of this year from Ramp, where he was head of growth and helped launch the first corporate card built for savings. Prior to Ramp, he was the first business hire at Plaid, where he led the FinTech and developer sales vertical and built out the firm’s New York office prior to Visa’s $5.3 billion acquisition. Earlier in his career, Ma worked across several strategy and product groups at JPMorgan Chase, covering payments, API’s, blockchain and FinTech. Alloy, an identity decisioning platform helps banks and FinTech companies automate their decisions and workflows. Its platform connects the banks to the data needed to automate identity and risk decisions from onboarding and beyond, meaning better conversions, less fraud and less manual reviews. The single API platform connects financial services companies to more than 85 data sources to help them verify identities and monitor transactions, giving a holistic view of each customer from the day they onboard, throughout their life with the organization. I just want to welcome you, Charley, to the Buzz and thanks very much for being here. You say, the banks, that the perks is associated with capturing Gen Z customers. But there’s also more inherent risk associated with onboarding them, so give me an idea what are the perks and what are the increased risks about?Charley Ma
Yeah. Well, we know that this generation, that there’s there’s going to be an event over the next, you know, couple of decades as a big amount of wealth transfer going from the boomer generation to the millennial generation to the Gen Z generation. Right. And, and I think being able to capture that younger population and create a really powerful brand experience on day one, like making products that are extremely sticky, like banks know, right? I think the first bank account that I ever had was a bank, that I opened, when I was in high school at my first job. And I stuck with that bank for many, many, many years before I finally had to switch because I moved to New York City, and I just couldn’t bank with them anymore. Right. But I think with the advent of digital banking, online banking, that capturing that user early on and building that relationship early on, can be extremely valuable.Myra Thomas
Sure, absolutely. So talk to me a little bit about, you know, what banks need to do in order to do better identity verification, particularly for this Gen Z group? Because you say they’re more difficult to try to figure this out for. What KYC steps in automation should they take?Charley Ma
Yeah, I think that I think the biggest differences is it’s sort of thinking about what is the product experience that sort of this generation is looking for? And how do you actually build a KYC, identity fraud sort of workflow around that product experience? Right, I think everyone sort of knows now that, you know, the stereotypical Gen Z customer doesn’t want to go into a branch, talk to a person Nope, have a bank account, right? That’s the stork method, I think, the vast majority of advise us to open bank accounts, but that isn’t what Gen Z wants to do, right? They’re much more used to opening up a phone, downloading an app and going through an onboarding process and being able to immediately transact with their banking application with their FinTech application in real time. But I think I have this uniting there’s this joke on the inner that on the internet, no no’s if you’re afraid, if you’re a dog, if you’re a real person, right. As a result, there’s a ton more fraud vectors that start to open up when you start to introduce a truly digital mobile first onboarding. And so you can’t be reliant upon like traditional methods of identity verification, right? You can’t just be relying upon, Oh, great. If you are, if you you know, we look up against traditional databases, and we see that this name does exist on the internet, we’re going to onboard you through you have to look at a combination of other different signals for this generation in order to be able to accurately say whether or not they are who they say they are. And the other thing is, I think historically, when it comes to KYC, you’re reliant upon kind of historical data, right? Whether it’s, they have, you know, a history of, you know, they have a mortgage and that that mortgage was was put onto, you know, some sort of data source, or if they’ve been moving around and you’ve seen, you know, histories of employment for that user. Gen Z doesn’t have that right. Oftentimes, they do Maybe maybe have had one job, maybe two or they’ve had many gig jobs, that employment history. The identity history of that user is much more dispersed. And so as a result, I think typically you have to cobble together a wider range of sources in order to truly validate, you know, are they who they say they are, which makes that much more complex.

Myra Thomas
So how can automation help sort of, you know, change that process, particularly freeze Gen Z, if, you know, you’re not relying on traditional credit reports, and, you know, things that give you, you know, that credit history, so how can automation, you know, make it possible to, you know, onboard these Gen Z customers effectively?

Charley Ma
Yeah, I think one thing, being able to being able to automate and build out, you know, much more dynamic integrations to a wider range of data forces, right is really, really critical. And to because of your essentially increasing the amount of data scope that you need to view in order to, to bring onboard the type of customers and having that go through a manual review process is doesn’t scale anymore, right, you’re going to need to bring in technology, whether it’s NLP, whether it’s OCR, whether it’s, you know, Id verification scanning, in order to automate a lot more of that flow in order to create a really, really seamless experience, right, you want to ensure that, okay, for the good users that they’re going through an extremely happy path, automate experience, and ideally one that doesn’t require manual intervention or human touch. But for those that, and then I’ll flip side, you also want to automate, you know, for users that do live, obviously bad, being able to pick that out in a really, really automated fashion before they commit on the platform. And for those of you who are in the middle of being able to leverage technology to be able to pull out the key pieces of data that you want to actually view for that user to validate whether or not you want to want them to go through the process. I think it’d be really, really critical in our offering, the experiences that they’re expecting.

Myra Thomas
Yeah, I think it’ll be interesting to see too, because I remember President Biden was thinking of developing a way for the government to or helping organizations figure out ways to develop a different way to report credit. And that may facilitate some of this for banks, I guess, but it’ll be you know, wait, we’ll have to wait and see what that actually means. But so, you know, he noted too, that companies like steppin square, have been successful, because their platforms have used, you know, all sorts of social media in order to get engaged and see whether it’s Tick tock, twitch or Snapchat. And then you’ve also advocated for, you know, word of mouth marketing, you know, for influencers, you know, and I don’t necessarily see this as a strategy for blue chip banks, though, do you? I think what you’re talking about simply is, you know, challenger banks, neobanks, or whatever else, or newer digital payment providers, you know, what do you see, you know, banks changing their strategy when it comes to Gen Z?

Charley Ma
Yeah, that’s a good question. I would actually argue that it’s not a different kind of shift in strategy, right. Like, I think, like we’ve seen, every single bank has had celebrity endorsements, celebrity sponsors, and they do it through, you know, channels, such as media, print, advertising, right? television, movies, etc, right. And I view this as essentially taking that same exact playbook and applying it to the areas as to where Gen Z lives, right? Like, they’re not really watching TV in real time. They’re using the they’re viewing Tick Tock reading twitch doing live streams or viewing Twitter rather viewing live streams on twitch. And it’s okay, how do you actually bill? The right authentic, authentic brand for that consumer? How do you identify like the main influencers are, quote unquote, New Age celebrities, right, amongst those those platforms? And how do you actually reach those users? And so I would actually argue that, and I haven’t seen a great, you know, blue chip Tick Tock out from a bank yet. And I’ll be curious as to when that happens. But I I view as probably as a pretty natural extension to what they’re doing today. Right? They have those marketing budgets, those exist. I think, understanding how those platforms works, and you can just take a TV ad and put into a tech target, that doesn’t work. It’s just not authentic to that platform. I think that’s going to be kind of the key puzzle to lock.

Myra Thomas
So, you know, how can banks better facilitate this process though? You know, I mean, what does automation mean, in 2021, when it comes to your customers?

Charley Ma
Yeah, I I do think it goes down. I mean, I think we’ve obviously seen a lot of headwinds with the pandemic and then moving to truly kind of omni channel digital digital first experiences, right. But I generally think that like automation Offering a first class like digital product goes hand in hand, right? I think Financial Services is unique in the sense that it’s one of the few digital products where when you press a button in your on your app, the button doesn’t say what it’s supposed to do, right? Like, well, when I go onto Google, and I press Google, right, Google X, Y, Z, and I press the search button, Google’s submits logic to go and actually search my query, right? When I press, you know, in my bank account, I want to send $1,000 to the bank account, that doesn’t automatically get triggered, right, because there’s a ton of different decisions, there’s a ton of different data points, there’s all these different things that could be pull as to whether or not that match attrition actually wants to knock that payment in in a digital first spam manner. And in order to do that, in real time, you’re going to have to automate everything right, you’re going to automate how you pull the data, what data you’re pulling, what decisions should be made up as a result of that data. Otherwise, the alternative is not having any automation, doing a command, review, having a person at a call center, review that transaction. And even if that just takes a few minutes, you’re going to lose out the customers to someone that has a much more automated experience. Right? I think that’s what we’ve started to see with this kind of rise of FinTech platforms with the likes of you know, mentioned square and stuff, like they do have real time experiences powered by technology, they don’t have 1000s of 1000s of people in a call center reviewing transactions, they’re using technology to automate all those reviews. And that I think, is extremely key to be able to scale your user base and scale, a real time experience.

Myra Thomas
Yeah, I’m starting to wonder though, you know, if, you know, some of the larger banks, and you know, midsize banks understand, I mean, I’m sure they understand the threat, you know, from Alternative Payment providers, and all sorts of other, you know, FinTech companies that facilitate transactions, financial transactions, but at the same time, it doesn’t seem as if they really get it. Do you? Do you get my drift? You know, I mean, what, what do you think, you know, do you think banking is responding enough to the the outside threat?

Charley Ma
Yeah, I think they are, this is probably my bit of my my own bias, experience. But the the, the the exact, all these banks definitely have it as a kind of a top line strategy, right? Like, they’re aware of the threat that some of these FinTech companies present. And I think a lot of bank execs are actively concerned about, you know, are not a concern, but aware of, okay, you know, what this is mean for the next generation of users potentially, on our platform, right? Where historically, I think you’ve been able to be reliant upon Okay, great, like if my parent banks that ABC bank, right, and my family banks at ABC bank, historically, most likely, I was also gonna open a bank account, ABC bank, right, but I think for the first time in a long time, that’s no longer true, right. And so I think the hard part, though, is one, getting that strategy kind of dispersed across your entire financial education, right, and then to, it does require a lot of refactor or revamping like legacy technology infrastructure, right? Like, if I want to offer, I think these FinTech companies do have the advantage where a lot of them are building from scratch. They don’t they don’t have hundreds of hundreds of years of just legacy code architecture that they have to completely revamp different processes. You have to revamp teams, they have to rebuild, and refactor how different systems are integrated to each other. These vendor companies like don’t have to do that, right. They get to build from scratch using best in class technology on day one. And I think that is an advantage for them to move quickly. But the advantage that these banks do have is that they do have the brand they do have trust amongst consumers, generally speaking. And I think that that’s the biggest challenge is how do you actually implement something quickly at scale and build scale, but also doing so in an innovative or regulated regulated environment is still quite difficult.

Myra Thomas
Right. Talk to me a little bit about the automation behind the loi always API, what it facilitates for financial institutions.

Charley Ma
Yeah, so the way I sort of scrapped but what Alloy does is on one side, we provide kind of an ecosystem or marketplace of any sort of data that you could potentially care about as relates to onboarding a customer, or even ongoing transaction monitoring for the purposes of AML requirements. Right? We I think as as you mentioned, we integrated to 85 different data sources. And all provide sort of different unique interesting signals around identity, whether it’s around phone data, email, data, identity data, even device that Id data, you can build a really comprehensive picture of the user by plugging and playing and by sort of a plug and play integrations into all the data sources and provide and then on top of that, we provide additional Whereas you can kind of think about it as a no code, low code workflow tool, where you know, your operations team, your data teams, your fraud, identity teams can easily build sort of logic and decision workflows on top of that data to actually automate that process, right? If you want to be able to pull in phone data from one source and compare that against, you know, a phone data from another source and also loop in potentially social media data from a third fraud source, you know, we can help build that kind of workflow within our platform. And it’s all automated and done in real time via API’s?

Myra Thomas
Well, let me flip the flip this script here for a bit, and pretend you’re, you know, working at a financial institution, knowing what you now know, from your life at a FinTech? I would imagine that the difficulties for bank banking for banks is that they’re dealing with so many different vendors, right, and vetting those vendors, as well as coordinating the various services, processes and solutions that they provide, you know, and that mix that, you know, trying to get this ecosystem to work together is complicated. Yeah. And so if you’re sitting, you know, somewhere, you know, in the C suite, your ci, so you CIO, whatever, you know, chief data officer, a, how do you facilitate the many different relationships that you have with vendors to more effectively move your products to cost to banking customers?

Charley Ma
Yeah, yeah. No, that’s it’s a great question. It’s a hard problem, right. I, it’s funny, I think that a lot of the advantages that FinTech applications has is that you just have a pure ability to be able to move and test different vendors quickly, right? There’s tons of new emergent threats and surface areas as it relates to fraud and identity and AI in order to be able to I think build a world class onward experience, they’re constantly having to refresh. What data sources are out there, being able to test and iterate very quickly as to which data source will provide the most signal is really, really important. But most banks, I think, to be honest, aren’t aren’t set up for that type of rapid iteration, right? It’s okay, great, even if I want to test a new data source that is extremely high single that we’ve seen case studies for that, oh, it’s gonna, you know, lower fraud rates by 40 50%. Grade, the next answer is okay, before I can test it, I will put you through better due diligence, I’m gonna have to scope out engineering resources, I think, get that on to a, you know, a two year timeline before I can integrate you out. And by that time, I integrate you in the Next, you know, two or three years, that data source could be completely outdated, right, and there’s a new, more newer data source that has more signal on the market, that I have to kind of re re incorporate back into our roadmap, right. And that sort of rapid iteration and cycle isn’t very conducive to creating I think, really great AI experiences. That’s something that that that would that we provide alloy, where we make it really, really easy to be able to test and build and even back test different data sources, right if there is a new data source that you know, our clients have found to be a high signal, we’re often going back to a lot of our clients or banking clients and saying, Hey, you know, we found this data source to be really really high signal I think for your user base. We believe it can cut down into big amounts of fraud we can help you back tests that provide information as to how much signal does it provide for a user base and you can test easily without having to dedicate an entire engineering team on day one to see whether or not the status was going to work and it’s worth actually investing the time and resources to do a full deploy across your your your user base but I do think it’s it’s a mix of both leveraging sort of best in class technology and API’s as well as also probably a bit of a process change internally to be able to more rapidly onboard and iterate with with new different types of data.

Myra Thomas
I would imagine though, when you’re dealing with your financial institution clients, sometimes the actual challenge is not necessarily the pulling of the automation more so than just dealing with the culture of the people that work there. Have you noticed that?

Charley Ma
oh 100% I think there’s there’s often there is a lot of product product like process change right and like then a time you move from you know, something that historically has been very valuable to something that’s that’s automated like it you you have to kind of do it in steps I think prefer to get full buy in across a bank or an eye fi you know, if I go to you and say hey, you know this process that you’ve been doing manually for the past 2030 years with a team of 1000 people or just have one person to be fully automated Tony just as accurate. You’re probably gonna get a lot of blank stares and not gonna it’s probably gonna take a lot longer to get implemented. Right. So I think it often takes a lot of step functions to Be able to show and prove that it’s just as performant, if not more performance than the current manual flows and being able to even run it side by side for a while to validate that it’s going to be really important to get that fully deployed and get the team bought in.

Myra Thomas
Sure. So, you know, looking at the clients that you’re dealing with the banking clients, what sort of automation innovations should banks be most focused on? Or in other words, you know, What challenges do they face that they most need to address with automation that they may not be doing effectively enough now?

Charley Ma
Yeah, that’s a good question. I still focus on just the the automation that’s required to actually create a best in class onboarding experience, right? Like, I think that the bar has shifted now. Where you’re no longer competing against other banks in regards to who has the best banking app, and who has the best account opening experience, right? You’re being compared against, you know, not even the fintechs of the world, but just the other apps that exist on my phone, right? If I open up my banking app, and it’s slower than me opening up any other app on my phone that’s powered by Google, powered by Apple, etc. I’m immediately not a fan of that banking application. Right? I think it’s it’s fun. I think if you go on the app store, and you look up the ratings for typical bank application, these banks are spending hundreds of millions of dollars on their banking apps. And they’re all rated to kind of three star plus, right. I think it’s rare to find a banking mobile app that has four plus five plus stars all around the experience and a law that I think is because there’s still just a ton of manual processes as it relates to onboarding someone online. Right. I think historically, it wasn’t even until the last two years, I think that if I went to any of the top five banks, I had to go in person to open up a bank account, right? I couldn’t open a bank account online, I couldn’t open a bank account on my phone that seemed completely crazy to that, right. There’s a lot of processes kind of manual process. I think that people have sort of duct taped on the back end, where it looks automated on the phone. But turns out, it’s being powered by, you know, 1000s of people offshore somewhere that are manually Mechanical Turk in reviewing these applications, and I think that is a large like low hanging fruit to automate and use it sort of best in class API’s to automate just pulling in the relevant data being able to make the very straightforward decisions on top of that data.

Myra Thomas
Well, that seems like a good place to stop. I want to thank you very much, Charlie, for joining us. That wraps up this episode of the Buzz. Thanks for listening and please let us know how we’re doing at Bank Automation News.com and of course on Twitter and LinkedIn. Thanks again. Hope to have you listening soon.