Even In Developing Countries, Don’t Make The Mistake Of Building For A Mass Market

There are two ways to fill the white space that’s been left by a lack of financial services in emerging markets, according to Monica Brand Engel, partner at Quona Capital.

The first is to replicate models that have been successful in the West. However, the problem with these solutions is that they’re often isolated and don’t always connect to an ecosystem. The other method is to improve on and leverage existing infrastructure, like Tala in Africa and India, which pulls mobile phone data to provide micro-loans.

Engel spoke alongside Tala’s founder, Shivani Siroya, and Matthew Saal, head of digital finance at the International Finance Corporation, in a conversation moderated by Anna Irrera of Reuters at the CB Insights’ Future of Fintech conference.

“It’s important to think beyond a bank branch when you’re looking at these markets,” said Siroya. “Meet the customer where they are and develop tools that are customized to them.”

That customer often sits in the middle of a complicated ecosystem. According to Engel, it’s important to include banks and other institutions in this ecosystem. “I know it’s popular to say that banks are dinosaurs,” she said, “but everything has a role in this New World Order.”

The startup opportunity lies in acknowledging these institutions – but also recognizing that they have their limitations, like struggling to provide more than their basic value proposition for users.

Siroya noted that startups have the ability to build relationships where these giants conventionally haven’t. “You can build brands in these markets … I keep going back to the importance of relationships. Even if there are large, traditional banks available, you haven’t seen them go deep into their respective markets and develop that brand with a majority of that population.”

For some incumbents, there is a strong willingness to partner. “There’s huge interest on the part of the incumbents,” said Saal. “Even when you have it right or are seeing traction, the agility at which you need to shift and pivot is really important. That’s not in a bank’s DNA — and often times, in these countries, they’re held back by regulators.”

Models also need to be light and flexible as it becomes more apparent what customers want. “One of our companies originally had the idea of a pay-as-you-go solar company, but soon we realized that people didn’t have the capital upfront to do that,” Saal said. “Instead, we decided to offer a microleasing model, and that worked much better.” In turn, this model helped them collect data about customers, understand their lending habits, and at the end of the payback period, supply them with a better and more customized loan.

Not all growth markets are the same, so it’s critical not to make any assumptions when going into one of these markets. “Understanding a customer’s daily life is incredibly important,” Siroya said. The big difference between developed and developing markets is that the population as a whole in the latter is underserved  — and it’s hard to come in and build for a “mass market.”

With this in mind, Siroya wishes someone had told her not to assume that her company would scale immediately. “Start in one particular city, one particular segment, with one particular age group, build products for them and prove that they can be successful, then open up that funnel and go into new segments.”

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Transcript

Anna: Good afternoon, everyone. So I cover FinTech for Reuters. I’m just gonna start by asking the panelists to briefly introduce themselves.

Monica: Good afternoon. Monica Brand Engel, founding co-partner of Quona Capital, venture firm dedicated to FinTech for inclusion.

Shivani: Hi, Shivani Siroya, the CEO and founder of Tala. We’re a mobile technology and data science company that has developed an Android app that allows us to instantly credit score someone using just the data on their smartphones. In addition to that, we actually do our own lending based on the credit scores. We currently work in Kenya, Tanzania, and the Philippines.

Matthew: Matthew Saal, working in digital financial services within the financial institutions group at the IFC which is the private sector investment around the World Bank Group.

Anna: So we’ve heard a bit of what’s going on in growth markets. But what are some of the most successful sort of leapfrogs that you think have happened or just FinTech initiatives that have happened in the growth markets you look at over the past few years?

Monica: So we’re a thesis-driven fund, and a lot of our investment strategy comes from our experience doing retail financial services in emerging markets. So our sponsor is a microfinance organization, our LPs are private institutional investors, and the opportunity they see is one that have been articulated in previous panels. Even this morning when we heard Sequoia and Nubank talk about the white space, it’s a big…it’s huge. And we see it being filled in two ways. One is, I would say, replicating models that have been successful in Western markets like we did in mPOS investment in South Africa that’s basically looking to expand the acceptance environment for digital payments to take advantage. And when you heard that last panelist talked about M-Pesa, it’s great to have a digital payment system, but if you have nowhere to use it, it creates a gap. So they’re trying to solve that gap by equipping small businesses with digital. So that would be more of sort of a, I would say, an improvement on an existing model.

The leapfrog happens with things like Tala, and we have an investment, again, on the SME finance in Mexico called Confio. And Confio is basically using similar or digital footprints of SMEs, of small and medium enterprises to lend to them. And there’s a trend in Latin America which is called [foreign language 00:02:17] or digitization of invoices. And what that means is the government is requiring small businesses to actually produce digital receipts. And the reason they’re doing that is to stop tax evasion, stop the under-the-table activity. But what happens immediately, so you have a digital record of cash inflows and outflows so it allows lenders to basically see immediately what the working capital needs of these businesses are. So rather than lend against the value of an asset or a piece of equipment or lend against the personal collateral an entrepreneur might have, you’re actually lending exactly what the business needs. And to me it’s, again, you know, so it’s a multiple trend and that I think in many markets, they’re digitizing informal sectors even faster than we are in Western markets and bringing people, businesses, and consumers who are invisible into the mainstream.

Anna: So do you have any other sort of expo-…obviously, you can tell us a bit more about what your business does and how that can be considered successful.

Shivani: Sure. I mean, I think, when I think of what really the core of our business is, is more about financial identity. And so while we are interested obviously in, you know, access to credit and other financial services, we actually think of it as, “How can we first develop a relationship with these customers, and to really understand their daily lives using the data on a smartphone?” Because at the end of the day, that is what they have access to. And so I think where we’re seeing the leapfrogging or where we see kind of the potential for these markets is actually thinking beyond a bank branch and actually thinking of it more as, “Let’s just meet the customer where they are and actually develop tools that are more customized to them.” And I think that’s what we all have the ability to finally do which is actually more interesting than, I think, we’ve been able to see in the previous years.

So I think that’s the first piece. And then I think the other thing that I’m really excited about in the industry is products or companies that are working on the system change. So, I mean, obviously, all of us are talking about blockchain, but I think it’s whether, “Can we recreate bureaus, can we recreate how we score, how can we understand, and then how can we help other companies in the space actually use data more effectively?”

Anna: So how much does the success of an application or of a product depend on its location? For example, we heard about M-Pesa, how successful has that been in moving on to other African countries?

Matthew: Well, we’ve seen mobile payments take hold in some markets and not so well in others, and usually, the difference is regulation. And in terms of innovations, to your previous question, you know, payments and probably identity are the foundational two pieces. There’s lots of things that are built upon those. But if you wanna go back to the basics and core infrastructure for what all of us are doing in digital, it really depends on good payments, infrastructure, and the mobile networks provide that, the extent to which they’ve been allowed to provide that with or without banks, the extent to which banks have been ready to partner has varied across country. And part of that is the market microstructure, the banking system in particular markets and the way the regulators approach things. But we’ve seen the success in Kenya, we’ve seen huge success in…we were an early investor in bKash in Bangladesh. So it’s not specific to any one market but it has varied widely across markets.

Anna: And what about, sort of, what are the most active players you see now? For example, here, we’ve heard a lot from startups, but are you seeing, for example, telcos stepping in or the banks playing a big role? Who do you think will sort of win these markets?

Monica: Okay, I’ll take a first stab. I mean, we, Quona, the name of our fund, means something in every language where we work. And we chose that name because we believe in connection. We’ll never hear it say, “Banks are dinosaurs,” even though that would be a popular thing to say here because we don’t think they’re gonna disappear. They will have a role in this new world order. I’ll give you a concrete example. Half of our portfolio companies, our balance sheet businesses, they either lend to SMEs or lend to consumers. And the reality is it is incredibly difficult to mobilize capital at the rate of growth of our portfolio companies. So banks are good partners, you know, if we can get them to lend in a sort of cost-effective way.

You know, there is a reason why deposit mobilization is regulated, whether or not that, you know, broadens beyond it, we do think there’s a role for some of these institutions to play to be fiduciaries. But we think, you know, again, the mobile network operators I think are complicated because they’re very good at acquiring consumers, but they’re not very interested in anything more than selling airtime. What we’ve seen is that all those mobile [inaudible 00:07:04], you saw the 277 million, let’s ask the speaker how many of them are active. Most of them are empty, and that’s the problem because the mobile network operators haven’t figured out how do you develop a compelling value proposition to get someone to use it for more than just paying for airtime.

So I think, you know, we think there’s gonna be a combination. Who’s gonna win, I think, is gonna depend on a country, depending on the regulatory environment. Some markets make it a lot easier for M&Os to win, like they did in Kenya. And other markets will be banks because they’re protected or because they have incumbency or loyalty. But we take an ecosystem approach and really try to help our tech startups work with the ecosystem.

Anna: And have…go ahead.

Matthew: We get to straddle. We’ve got a network of probably 800 financial institutions relationships globally in emerging markets, probably the largest network of such relationships anywhere. And we also invest in FinTechs. So we look at innovation across both sides of that divide, if it is a divide, but we actually see it converging. More and more banks are moving forward in their digital transformation, and that often means partnering with FinTechs.

The interesting thing about financial innovation is it’s move the information and contracting barriers that define Coase’s theorem in terms of what had to happen inside the unitary firm. And, you know, I could pull out my iPhone and say, “They’re made in 10 countries and 10 different producers,” and I’ll pull out my credit card and it’s coming from one bank. Well, increasingly, banks are able to subdivide the value chain and use different technology and different providers if the regulators will allow them. So we see a huge potential for innovation and partnering with FinTechs who are providing point solutions, new products, new services, or new ways of doing things to leverage the assets the bank have against the technology that the new providers are bringing.

Anna: So have you seen the banks and the more established players take…have more of an interest in some of these markets that they’ve traditionally kind of not served because they weren’t very profitable? Because they often speak about financial inclusion and the rest but do they actually see it as a business opportunity now or not yet?

Monica: I think they do. I’ll give an example. So we have a company in Brazil called Creditas. And Creditas basically provides asset financing to low and emerging consumers in Brazil. And what they’re taking advantage of back to the country specifics, there are a lot of, you know, the middle class is growing in Brazil. It’s a good story in terms of poverty alleviation. And what that means, there are a lot of people who might own an apartment, own a vehicle, so they had equity. And the idea of a home equity loan doesn’t exist, that category doesn’t exist. So Creditas came around, sees this enormous interest margins that banks are earning, and said, “We can help unlock credit by allowing people to refinance expensive consumer debt, unsecured consumer debt, and take out an asset base loan, whether it’s a home equity loan or a car loan, and actually, and even lending against actually, like we’ve seen in other emerging markets, using the asset, not just to finance that asset but actually other services like a home equity loan does.”

So they actually initially decided to work with banks. They digitized the end-to-end process from customer acquisition to payment, and they were working very positively. But then the crisis hit. Banco Itau, which is one of their biggest bank customers pulled back and they said, “It’s too risky for us. You know, we don’t wanna…” And again, part of it was regulatory driven in terms of the kinda capital adequacy ratios. So Creditas, our portfolio company, now has its own fideicomiso where it can raise money and lend against its own balance sheet, but it also will work with banks. So there is an example of banks when they have the appetite and all the enabling environment is right, they’ll do it. But they’re very fickle and will pull back when it’s, you know, something goes wrong.

Matthew: World Bank Group has made a commitment for universal financial access by 2020. That means bringing another billion people into financial services. That means lending to people who are newbies, who don’t necessarily have familiarity with what an APR is or the context of an amortization schedule. And we’re also reaching them through mobile channels, which means there’s no face to face interaction in some cases. So it’s extremely important that we look at this from the perspective of how the banks that have existing relationships and channels can reach them more efficiently and more effectively, and the technology allows them to reach those high-volume, low-value consumers with products that are efficient and effective.

We met with a bank in Zambia last year. They’ve got a small consumer loan process, but it’s a five-page application. You can’t do a $50 loan profitably and handle that by hand. So they’re looking at the technology and looking at which FinTechs to partner with in order to deliver that. But Shivani can probably speak to how some of that high-value and low-value works.

Shivani: Yeah. I mean, I do think that some of the infrastructure work that we are all talking about. So in Kenya, for instance, we do both positive and negative reporting to the Credit Reference Bureau. And so without us even partnering with a bank, there is now a pathway for a customer to go ahead and, you know, go out on their own and actually advocate and say, “Hey, I have a credit score, I have a credit history,” and they can walk right into a KCB or an Equity bank. So some might actually say, “Well, you’re giving your customer up,” but I actually think what it does is create a more sticky relationship. And so it makes it so what we all need to do is be more intentional, I think, about the relationship that we wanna develop with our customers and, you know, what are the products that we want to actually own and offer as opposed to what a bank or the ecosystem already provides. And so, in some ways, I think it allows a startup to focus on what they’re actually good at as opposed to trying to just replicate everything.

Anna: And have we normally seen the most successful startups and products be homegrown or is it maybe startups coming from developed markets or products originated in developed markets that are transplanted to the growth markets have success? Do you need to have a homegrown element or does it not matter?

Monica: I always think you need a homegrown element. So, you know, the example I gave before was mPOS, and you have the Squares and iZettles of the world. And we have two portfolio companies, one through our venture sister fund called Venture Labs. It’s called Clip in Mexico that just got investments by General Atlantic. But when we started, they were a small sort of mobile point of sale, and that model was started in Western markets but it really got refined and adapted because the interest rate margins and even the SME customer acquisition costs are very different. So I do think you have to, we call it, tropicalize it locally.

There are some models, though, that are really unique to the emerging markets. You know, we talked during the break, coins.ph, which is our, it’s our portfolio company in the Philippines, and basically, what it’s doing is it’s integrating all the core uses. The informal sector uses Digital4, so mobile top-up, bill pay, and remittances, usually peer to peer. And they basically and unfortunately, most informal sector do those at different distribution places. So they go one place to pay the bills, they have to wait on another line to get a cash remittance, and go to yet a third place to top up their phone. So, even basic financial functions is very inefficient.

And so what they’re doing is integrating those payments, and again, in a way that is very different. I don’t think you’ll see a model like Coins in the West, but basically integrating these informal distributions in an effort to move this customer to digital. So making it easier so that all of these transactions ultimately can happen digitally, but they’re meeting customers where they’re at, as Shivani said, and offering a cash-out. Like, you can imagine, would you keep a debit card in your wallet if there were no ATMs? Probably not. And that slowly, that trend, that’s what the transition they’re trying to engender.

Matthew: I think another interesting model that may, and it’s a third iteration, make it over to this side, is what we see now is the pay-as-you-go solar, which really started as people developing this, you know, home solar lamp with a place to plug in a cell phone, and then realizing that not enough people in East Africa, say, had the capital up front to buy it, so offered it on a floor credit micro-leasing model, the pay-as-you-go solar, with some technology that’s part of one of one of Monica’s portfolio companies to help with the monitoring. And that created a structure in which, not only do you have sort of a micro leasing portfolio that’s going up around this pay-as-you-go solar panels, but you’re collecting data about the customers. You know their behavior. And at the end of the payback period for that asset, you now have an asset that can be re-collateralized for another loan. So you basically have turned kind of an Internet-of-Things, micro-leasing collateral business. And I think that model is the level at which it’ll come back into this market where you could have a television that gets sold on installment with an automatic payment and a turn-off mechanism.

Monica: Actually, PayChoice, I saw that on the…I don’t know who was speaking about it. That is what PayChoice does. PayChoice lends to…for cell phones. And now, they’re exploring, “Can we use that credit experience to actually lend against other things?” So it is already coming back.

Matthew: But it is already happening with some of the big pay-as-you-go solar, are re-collateralizing the assets for just a standard consumer loan for school fees or whatever. So we’ve already seen the development from the pay-as-you-go solar company to, now, a micro-leasing company.

Monica: Oh, I meant in the U.S. though, PayChoice in the U.S.

Matthew: Yeah.

Monica: Yeah. [Inaudible 00:16:49].

Shivani: But I do actually think that that aspect of, you know, going from solar to TVs to things does require localization because you do need to know what the next advanced product would actually be. And so I think you’ve gotta find ways that you can have centralized kind of data analytics, data science, or credit. But then when it comes to product development, it’s gonna vary between, you know, Kenya and the Philippines are two totally different markets. I mean, as an example of just what we saw with the Coins experience versus M-Pesa in Kenya, you know, our customer experience in Kenya from downloading to actually getting money in your wallet, it takes us under five minutes. So it’s an instant product in Kenya.

In the Philippines, we expected the same kind of experience for our customers and that was what we were shooting for. But, you know, now, customers can get it within hours. And for them, that is actually instant because otherwise, they’re waiting on lines and that’s what they’re used to. So we actually had to learn that from our local team and doing the user research that even making that process slightly better is actually like above and beyond what’s in the market right now.

Anna: So how long does it kind of take you to move to a new market and how much work, sort of, how many people do you need on the ground?

Shivani: I think it depends again by country. So if we’re in Tanzania now, it’s a much more similar market to Kenya. You have similar mobile rails, and you have the same companies also working there, you have a similar dialect and language. So you’re gonna be able to, you know, service a lot more outside, out of Nairobi as opposed to going to, you know, let’s say, a new country entirely like Mexico or the Philippines, which is so different than Kenya. I think it’s a good challenge for a company to do that in the early days because you have to develop your processes and model so that they are globally applicable. But I think that’s really where user research, and localization, and understanding the customer’s daily life is incredibly important.

Anna: So what are some of the biggest mistakes or most common mistakes that you see startups making or that maybe you made at the beginning?

Monica: I’ll start. I think the number one, and Shivani just said it, is assuming the consumer behaves similarly. So I was listening to the Nubank presentation and they said millennials are similar across countries. I think that’s probably true. And there are a lot of similarities we see in the informal sector across markets, but there’s a lot more, there’s a lot of distinct, both in how the product is packaged, the delivery mechanism, regulatory compliance. And so I think you’re sort of underestimating the time, you know, because there is always a push to scale when you have venture investing. And I think realizing that doing it right will save you…a taxi driver said sometimes, you know, “You have to go slow to go fast.” And that’s an emerging market truism that, you know, you have to really get it right in order to really go up the J-curve.

Matthew: I’ll speak, and I’m sure it’s a mistake but a challenge. I mentioned before that we’re talking about banking, a whole lot of people who haven’t been banked before, and doing that responsibly and in a way that doesn’t result in over-indebtedness or misuse of credit or perhaps incorrectly damaging people’s credit records when it was a product that they didn’t fully understand or it was pushed to them over their phone. Not suggesting that anybody on this stage is doing anything like that because I think, you know, the responsible standards, and Shivani is part of, sort of ahead of the crowd, I think, in many ways on that, but that question of how do we protect the consumer even before the consumer protection infrastructure is in place becomes a very important one in these markets. And the challenge and those who don’t get ahead of that challenge will make mistakes.

Anna: So how many of these products have been able to get transposed in developed markets? Have there been any success stories there, or do you think that will be a big thing going forward?

Monica: So we just made an investment about four months ago in an insurtech company in South Africa. It’s called AllLife. And basically, they have a very disruptive model where they insure people who insurance companies typically filter out. So they insure people with HIV/AIDS and with diabetes. And the way they do that is by aligning incentives. They actually partner with clinics and the only condition in addition to paying a premium to getting the insurance is agreeing to get on a certain medical and, in case of diabetes, diet regime. And they collaborate adherence by biannual or quarterly blood test to make sure that you are taking what you’re supposed to. And once you do, what happens on the actuarial side is that you tap into all this medical research that can tell you that, yes, even someone with…everyone is gonna die, but if you…once you start taking the medicine, you have a much greater predictability of when that might happen. So you can offer them a 10 to 15-year life insurance and knowing that actually, they will lose some customers, but you’re actually betting on them staying alive, which is what the customer wants.

So there is a Royal of London, which is a U.K. insurer, loves the model, and in Western markets, we have very high penetration rates, which is different in the emerging markets where you have low, low insurance adoption. So there, they’re just trying to get some new segments. So they’ve actually imported AllLife into the U.K. and are actually launching a pilot to target people with diabetes in the U.K.

Anna: Are we likely, do you think, to see some FinTech giants emerge from emerging markets and then take over the rest of the world?

Matthew: If we can, China. Yes, already.

Monica: I think Alibaba.

Shivani: I think that there’s an opportunity to really build brands in these markets. So, again, I keep going back to the relationship piece but I do think it’s an important one because even though you have large traditional banks, even though, you know, like the Barclays of the world in places like Africa, you haven’t seen them really, I would say, go deep into markets and develop that brand with the majority of the population. And so I think the opportunity that FinTechs have and startups is you’re almost starting from the person up, right? And so you have this ability to develop a very deep personal connection that can then translate into a wide range of other products.

Anna: And why do you think some of these products seem to have faster adoption in growth markets rather than here? For example, I might be wrong but this is one of the most successful mobile money applications worldwide.

Monica: Two reasons. One, you saw the numbers about the unbanked. I mean, the quality of service and infrastructure is just completely absent. And there’s whole sectors that’s been overlooked. So I’ll give an example. We have a company in India called NeoGrowth, and they do merchant cash advance, which is kind of a seedy business in the U.S. And basically, what you’re doing is you’re taking merchants that might accept digital. And so what they have a problem is that it takes 30 days for the credit card company to settle that transaction. So in that 30 days, how do they restock their shelves? So merchant cash advance is lending against that credit card receivable. And in the U.S., it’s become, kind of exploited the business of taking advantage of SME lack of access to finance.

What our company in India did, they actually chose to be regulated. It’s a repeat entrepreneur. He understood very well. He was in the FinTech world doing software-as-a-service banking, understood his margins really well, and actually went with the merchant cash advance product. So the product’s not very different. It’s just that he went to the regulator, chose to be…invited of a regulation in, which meant interest rate caps which India has. But it also was a barrier to entry. So now, anyone who doesn’t want that scrutiny is not coming as competitors. He’s grown 14x in one year, in about 15 months. And that’s again because there is no one…it’s a real need, so anyone accepting, any merchant accepting a credit card has this problem, and they have to borrow from the money lender or an uncle. And he provides a seamless service so they’re lining up at his door.

Shivani: And I think it’s localization again. I mean, when we look at, you know, the way that M-Pesa became successful in the beginning, it was by targeting, you know, Thomas and microfinance institutions to help with the repayments and the remittances. And then they started these kind of brand campaigns around…you know, I think it was very geared at sending money home to your mother, right? And so they tied into that cultural ethos of, “This is something that we all do and we…like, we’re responsible for doing.” Or if you look at what I think is happening in India, they’re also tying it into, you know, this thing of…the government does subsidy programs but they haven’t been able to actually, you know, create a very accurate system for that. And so that was where the need came from.

And so I think that it provides that incentive that then ties into why your customer’s gonna come to you. But I also still think that when you think of access to credit kind of programs as well, at the end of the day, we know that there is demand for that. But we shouldn’t take advantage of that. We should really think about what’s best for the customer. So what’s the…is it a means to an end? What are we trying to do with the credit product, too?

Anna: So are there some lessons, I guess, you’ve learned that you might share with companies here from developed markets or from developing markets to developed markets, Matthew?

Matthew: I think the challenges are somewhat different. And one of the reasons we’ve seen, you know, adoption of the M-Pesa, because it wasn’t an alternative. And there were many people who didn’t have a bank branch nearby, didn’t have banking services. So there are segments. In the U.S., there’s a huge under-bank segment who might benefit from that in these markets. But if you want to generalize more, would be to not be afraid of going after those opportunities in the segments that don’t look quite as…well, the fact that they weren’t well served might be the opportunity rather than that they’ve been screened out for real reasons.

Anna: And, Shivani, what were some of the lessons you learned actually on the ground or some of the things you wish you knew before you started?

Shivani: I guess that…there’s a lot. And I think segmentation is a big one. So I think of it as, like In-…I could go to one of our countries but I think actually India is a really good example of this, which is, you know, there’s about 700 million people that really even the new income, even the new startups that are in the market aren’t probably targeting. But a company like us shouldn’t actually just go into India and assume, “Okay, this is…you know, we’re gonna scale immediately in this market.” And really, what we need to do, and the lessons I think that we learned are we probably need to go to one particular city, one particular segment even within that city, one particular age group and build products for that, prove that that can be successful, and then from there, really start to open up your funnel and go to new segments. But I think that would be the difference between developed and developing markets is that because the population as a whole is under-served, I think, they still have very customized needs. And so I think, from a product perspective, we shouldn’t come in and assume we can build for a mass market right away.

Anna: And I guess last question because we’re running out of time. We spoke about the incumbents or the established players there already. Have you seen them willing to partner? You work with the credit bureaus, right? So, have you seen…and maybe you guys can share experiences from other geographies, but is it, if you’re a startup coming from another country, is it likely that you’ll be able to get through the door and establish something with them?

Matthew: I think there’s huge interest on the part of the incumbents. You know, it’s topic number one. Everybody understands that digitization is reshaping the banking and financial services industry. I think the biggest challenges in terms of internal culture, and we spent some time in our advisory practice side working with financial institutions on organizing for innovation and understanding the, not just the technical needs, but also what they need to do internally to begin to take advantage of what’s available, whether that’s in data analytics across their existing customer base, and processes and products, or whether it’s in terms of how to hook up their systems to an external product or service provider or a new channel. So really changing established cultures is a real challenge, less an issue right now of interest and willingness but actual ability to execute.

Anna: Monica, do you have…?

Monica: Similarly, I would say, and it was part of my, our lesson learned is that these markets are really dynamic. So even when you think you have it right and you’re actually getting traction, you’ll have an external shock or you’ll have a major player make a move or changing strategy. And so the agility and speed at which you need to shift and pivot is really important, and that’s not in a bank’s DNA. So banks move very slowly, they make decisions really slowly. So our biggest challenge is on operationalizing. And I think there is desire or fear from the top that will get people engaged. But operationalizing it, not only from the beginning but ongoing, is our biggest challenge.

Matthew: And recognizing that one of the reasons the banks move slowly is that the regulators are sitting on their shoulders and saying, “What’s that?” And, you know, we’ve had a number…there are many countries which don’t have regulations in place to permit cloud-based services, for example. So it’s a challenge for the banks. There’s reason for it that goes beyond just their internal, but that needs to change as well.

Anna: Okay. All right, I think we’re finished on the right second so thank you very much.

Matthew: Thank you.