Interview with Will White, COO Loot
What keeps awake at night?
Depends what week is. If I am waking at the same problem every night I will be very worried. We are a young start up business as long as it changes I don’t losing sleep a bit. We can always look back a month or two and see the enormous evolution then I am happy. Its all part of the fun.
Interview By Parinda Kularatne
With Selified I get the privilege of meeting some real exiting individuals in the industry. When I listen to their day to story I always think, with so much going on How do they sleep at night? So I started to ask this question to get to know these amazing leaders and I thought to share this with you.
Parinda is one of our founders and he is in charge of making the product work. In his previous work life he developed one of the best mobile banking products which is being used over 20m customers around the world. He is a father of two and he spends his free time as a voluntary cricket coach teaching kids cricket and exploring the world.
Will is the brains behind Loot.io a bank account for the snapchat generation. I met Will at his super trendy Loot office in Waterloo. Here is the transcript of my chat
Parinda: What is Loot and where is it heading?
Will: Loot is a bank account – or more precisely a stored value account – aimed at foreign students. The main problem we solve is the pain of overseas students coming to the UK. They go through real trouble to get a regulated bank account. Our aim is to give all the functionality of a basic current account within an app that they like, that works seamlessly and gives them all the information they need. Moving forward we will be offering new services, for example foreign exchange, rewards, and the ability to save money. One of the features we have is ‘goals’. This is for putting money aside for a holiday or something specific. We were very surprised that over 50% have taken up of this service. After foreign students, we will look at the wider student market to help them better manage their money.
We are an agent of an e-money licence quite deliberately so as not to hamper the future direction of the business. We haven’t closed off the option of getting a banking licence, but right now at this early stage it would add a lot of unnecessary pressure - we have enough challenges. We will see who pays the money for the current services and then assess where we want to go next. Speed to revenue is very important for us. We have seen some of the businesses who have done that done really well, two examples being Stripe and Klarna. Klarna started as a very basic payment system and now has become a bank. Stripe may take that route as well. We keep an eye on the future but the key focus is what is solvable today.
Parinda: What is your role and responsibility?
Will: I am the operations director. Day-to-day I am responsible for all customer facing support and everything that sits behind that, i.e. payment systems, how we move customers’ money and all the third party relationships. Also, with responsibility for the compliance and risk side of the business, it comes with exciting challenges.
Parinda: What are the main challenges in running a Fintech like Loot?
Will: That varies from week to week. Some weeks we will have operational issues with payment systems and others the development team will be dealing with a compliance issue. There are obvious challenges when you give ability to people to make payments – it attracts criminal activity.
Parinda: What are the changes in the regulatory framework that will impact your business?
Will: We are well prepared for AML 4. As far as I can see AML 5 is trying to close down the loop holes in the crypto-currency framework. For us we can’t see anything to worry about in the draft papers. When it comes to data, a breach of any kind would be devastating for a business like ours. I am not worried about GDPR – as a ‘data first’ business we have always been sensible about it. But if you have to retrofit these principles into your business then it will be hard. The fine is £20m or 4% of your revenues, so it’s a problem we take very seriously but it’s not one that we are unduly worried about.
With PSD2, there is a curious tension for a business like ours because of the commercial opportunity of the open APIs, which I think it will take longer to fully materialise. I am not sure how quickly consumers will adapt to this newly created market place. We certainly try to solve real user problems today whilst keeping an eye on this new commercial opportunity. On the compliance side we aim to keep in touch because there is a lot of consultation going on and whilst we don’t have the power to influence the results, we will need to deal with the outcomes.
One of the great joys about running a small business is you don’t have to try to retrofit things. You really are forced to think about everything from first principles – i.e. what is the problem we are actually solving here? If a piece of regulation exists, what is it designed to do? Our view is regulation is designed to make sure that our customers, and society as a whole, doesn’t have a bad experience. So as long as we are thinking about this sensibly, we will genuinely seek the best approach whether it be through technology or manual processes.
Parinda: How do you plan to manage these?
Will: Our modern platform allows us to embed what we are doing technically at a fraction of cost of traditional banks. For example, we have built a fully transparent audit trail for pretty much everything we do. When you build these things in at the beginning, it doesn’t feel painful. Having previously worked in the traditional financial services world, we would have struggled to draw from such data sources.
Parinda: Everyone has a different definition of Regtech; what is yours?
Will: I see it very much as criminality prevention and monitoring - and that is how we use it. It’s taking away most of the human element and human error. We use specialist third parties in onboarding, we use specialists in transactional monitoring, we use specialist in PEPS and sanctions. Automation is good for us as it highlights what we need to worry about. We want to make sure we are getting right type of alerts and that we are not getting an explosion of false positives.
Parinda: Is Regtech hype or will it change the industry?
Will: Once you use Regtech automation tools you will be relatively confident that they give better results than human operators. At that point it would be hard to convince yourself to go back to manual processes. Access to compliance advice on tap would be amazing. Sharing information about low-level criminality would be great as this is an enormous operational burden. At the moment many Fintech businesses participate in the Fintech Financial Crime Exchange (FFE) of which we are a founding member. We get together once a month and have a Slack channel for information sharing. We have set the rules around how we like to share the information. We started with six and now there it’s up to about 25 including participation from the FCA and now NCA. We are trying to get the banks to join this. So it’s all very real.
Parinda: How will Regtech help your business and what technology do you use?
Will: We have document verification, PEPs and sanctions screening, transaction monitoring and some in-house builds. We also need to screen employees. We value the ability to do most of that in one place in a specialised way and then to work out what we need to build ourselves or do manually.
Parinda: What is your key message to the regulator?
Will: We found the UK regulators very friendly and supportive. It would be great to have a clearer view on time frames so we have time to plan these in. From a young business point of view, working on six to nine months time frame is challenging.
Parinda: What keeps you awake at night?
Will: That depends on what week it is. If I am waking up with the same problem every night I would be very worried. We are a young start-up business and as long the challenges are changing, I don’t lose much sleep. We can always look back a month or two and see the enormous evolution and progress we have made. That keeps me happy - it’s all part of the fun.