How do you traverse the ever-changing terrain of the FinTech industry? In this episode, True ML VP of Product Michael Krafft meets with Alloy Head of Product Parilee Wang. They begin by discussing Parilee’s journey with product and FinTech, while uncovering her perspective as to how great products are built and how she implements this at Alloy today. Following that, they dive into the uncertainties surrounding FinTech in 2023. They cover fraud in the product space, the current macroeconomic climate, and the rise of new data signals and sources.
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On moving at the speed of fraud
“When you think about the two really big problem statements that we’re focused on, one of those is, how do I move at the speed of fraud? Look at just how radically the fraud landscape has shifted, especially with a lot of pandemic funding. Fraud is getting siphoned off and reinvested into better fraud. Our clients and LOA are constantly asking the question, how do we move as fast as those fraudsters are? And how do we help our clients move as fast as the fraudsters are moving? So we talk a lot about future-proofing and we have launched the codeless SDK.
“How do we make sure that when you want to make a change, as an elderly client, it is codeless? How is that a configuration, not something in your backlog? Testing something to react to something will not ever move as quickly as the fraudsters. If you can do that in an easy AB test, your ability to react and move quickly is astronomically higher.
“As a product leader, it is so hard to fathom the universe of ideas that the fraudsters will dream of. The latest for me is getting text messages, purported text messages from my company CEO and the co-founder that are clearly fraudulent. But, somebody’s probably falling for those. So we have an internal Slack channel called “bad things”. If anybody gets any kind of phishing, they post it there. Seeing what people are trying to do to people who work in fraud prevention boggles my mind. Just how wild the fraud landscape is right now, how quickly it’s changing, and how fundamentally predatory it is. Anything we can do to help combat that is our top priority.”
On the current macroeconomic climate
“When I look at broad trends and the macroeconomy, one that I think a lot about is that pendulum that VCs have to manage and think about between no top-line growth at all costs. Are you growing in a scalable way that makes sense in the long run and drives you to a profitable business? But are you still growing fast enough to justify venture-type returns?
“When I think about trends, like where that pendulum is. We’ve certainly seen a correction there, or a swinging of the pendulum in the last six, nine months. How do you grow sustainably? How do you have the cash flow and efficiency that sets you up for long-term scalable, independent success?
“I feel very fortunate to be positioned in a business where they need to be compliant, they need to stop fraud, they need to make good credit decisions. Those aren’t going away, those are a constant. You’re selling to banks of all sizes, as well as FinTechs of all sizes. They are counter-cyclical with each other. Interest rates go up, account opening and onboarding at banks increases, even as maybe some FinTechs face a harsher interest rate environment.”
On the rise of new data signals and data sources
“A trend that really lights me up in FinTech right now is the rise of new data signals and new data sources. When you can run things seamlessly in the background, to mitigate compliance risks, to mitigate fraud risk, to manage credit risk well, and have that be invisible to the user. That’s how you hit like a Venmo bar. You want every experience to feel easy and seamless. We work with digital products all day, every day, and are used to really great digital experiences.
“If we want to be able to offer those same experiences in financial products, you can’t just do that by saying nevermind, risk doesn’t matter. You’re going to wind up in hot water fairly quickly. But you also can’t do it by just throwing up a ton of friction. Customer’s bars are a lot higher than that today. So, the way that you do that is with really great data running in the background.
“We partner with all of the different data providers, but there’s incredibly exciting innovation happening in how you can look at the broad amount of data out there. You can extract some signal from all of that noise in very complementary ways. Then, use that and bring different signals together to make calls in the background to unlock those amazing seamless front-end customer experiences.”