 Hello everyone and welcome to my talk on product management in the world of fintech. I am Nausher Cholawaram. I'm a group product manager at PayPal. So today I want to talk about what is especially fintech, what makes fintech special. We'll dig into a couple of items on things that are especially important to fintech such as trust and regulation, ecosystems as well as value chains. We'll finally talk about what makes a great fintech product and how you can make one and then I'll leave off with a few key takeaways. So what is fintech? Fintech, the word is a portmanteau of the words financial and technology and the textbook definition of fintech is the use of technology to deliver or accelerate the delivery of financial services to consumers and businesses. Now you may ask in this day and age how is that different from what every other company does who is offering financial services and the sort of the fine point there is that you have old players who are offering things in a new way and you have new players who are offering which were specifically sort of old things. Now for example banks and credit unions and other financial services companies are offering their services through apps and through various technology channels and you have new players which are mobile first who are for example mobile native who are especially on the technology side who are offering now what are previously services that were only offered by banks and financial services companies. So there are a few things I believe are very core to a fintech product and the very core the number one thing is when you are offering to deal with other people's money ideally foundationally you're offering a trusted intermediation service this is something which is critical and your users expect trust to be at the core of a financial product whether it be that the money is being sent to you for savings for spending for investment the primary function of a fintech product is to provide trust in addition to whatever value add that it brings. The second core important thing about fintech products and financial services is the outsized economic impact that they have not only in the US where the Federal Reserve is responsible for example for licensing all banks and financial institutions but worldwide it's always a central bank or a state regulator or a central federal regulator who's responsible for licensing the promulgation of financial services. This is primarily because monetary policy is a tool for most governments and they use banks as well as financial services companies to set interest rates to set monetary policy and other economic tools. A third important thing with fintech products is the importance of financial health to the product and how the user experiences itself is tied to financial health. A product that helps improve your user's financial health is going to have a huge impact on how your users view and use your products for example if it was a product that helped your users save money at the end of every pay period and help this money grow this would have an outsized impact in the lifetime of your users and a lot of the reason why there's a lot more regulation is also because of the impact to financial health of most consumers and finally I think the most important thing about fintech is the time-tested ecosystem that exists. There's a long history with regards to money and the exchange of value and there've been complex networks and partnerships that already exist that help move money help underwrite most activity and also provide data as well as as it pertains to fintech products. In the real world a lot of business is done on a handshake and in some ways fintech companies aspire to do so in the online world or in the virtual world as well or in the digital world. With regards to trust you're largely handling other people's money now that quote reminds me of a movie by Danny DeVito with the same name where his character has a quote which goes the only thing I love more than money is other people's money and it's those kind of characters and that thinking that you would want to keep right outside your platform or your product if you have a financial services or fintech product. As we discussed earlier trusted intermediation is foundational and a lot of the regulation that exists within the financial services industry largely exists to ensure that trust and fairness is maintained and people can trust the financial services to hold their money to help them grow it and help them spend it. Another important factor as I said was the criticality of regulations and compliance when offering your financial services or fintech product. For example a product that meets all your customers needs is extremely innovative it may still fail if it fails to meet the requisite rules and regulations required by the state and country that you operate in. So as a fintech PM it's important to be aware of the regulations that may apply to your specific domain. Well it's not necessary that you know all the regulations and in effect become sort of a regulatory lawyer but it's more important to just have the expertise to know how and to largely insist the intuition which sometimes is developed with a lot of experience to know when a certain aspect is going to be is going to require compliance or any regulatory approval. As a fintech PM your work will span the front end the back end and the back office. Now let me explain what I mean by this. Everyone is likely aware of consumer PMs, growth PMs and the different specialities that a product manager could have. In the fintech world the three core competencies that you would need would be the ability to be an application PM or a consumer PM, a focus on platform PMs and the ability to understand and have an appreciation for risk and compliance. As an application PM you are looking at crafting a user experience that gives your users a lot of value and something that they can use and it's intuitive in fintech and as it applies in other domains. The application may be served through various channels. It could be a mobile app, it could be a desktop browser application or it could be an application on smartwatch or even on a smart speaker and in the near future on a smart class. Now all these different applications will not have a monolithic stack of their own but rather will make use of services that run on the cloud or in the back end. Being a platform PM gives you the view of managing these services, creating a roadmap and creating a roadmap that works with consumer applications of any kind. An important factor that differentiates fintech PMs from perhaps other PM domains is the importance of risk and compliance. So what regulations and compliance may apply? This slide is meant to provide a flavor. It's by no means comprehensive or exhaustive and a lot of this would differ based on which fintech product and domain that you operate in. So at the very outset would be the banking and sort of payments regulations. So if you're a bank or licensed as a bank, you need to apply by banking regulations. As a money service business or an e-money business, you'd want to follow licensing requirements for those kind of businesses. Largely, you'd also be required to follow AML or anti-money laundering policies as well as KYC and KYB, which is know your business and know your consumer requirements. On the consumer side, in order to protect consumers, there are a lot of laws. For example, the financial disclosures for any product on the financial services side. You'd be required to abide by data privacy laws such as GDPR in Europe, LGPD in Brazil, and CCPA in California. And you may also be required to provide data that's stored by your application or your product through open banking APIs, et cetera, under the purview of PSD2, which is the payment service attractive in Europe. Besides regulations, there are also industry rules. If you were to store and accept a credit or debit card, you'd have to follow the payment card industry's data security standard. If you're accepting a card from one of the payment networks such as Visa, MasterCard, Discover, UnionPay, or Amix, you'd want to abide by the rules of those networks. And if you were to use a banking system, for example, the National Automated Clearinghouse in the US, the Single Europeans Payments Area Banking System in Europe or BEX in Australia, you'd want to abide by the rules required to submit payments in a banking system. And finally, while this is not necessarily a regulation or a rule, but is sort of common sense and sort of means of doing business would be applications of trust and safety that you would want to apply. For example, you would want to definitely detect fraud and gaming if that's happening with your product. How do you handle disputes when someone's not happy with what's happened? And how do you deal with charge backs? This could be largely with sort of payment instruments where a bank requests that the money be refunded because of a bad merchant experience. And finally, you'd want to ensure that your users are complying with the terms of service that you offer for your financial product. We can now look at some of the value that the ecosystem brings and the value chains that exist within the fintech domain. Financial transactions, by their very nature, always have at least two parties. So an institution and the consumer, where the consumer may be saving the money with the institution or sending or using the institution to grow the money, are more parties. But in addition to those explicit parties, there are other entities that may be involved, and these are entities that are providing processing of that transaction, providing data to support that transaction. They may handle risk of fraud and provide underrating and much more. There's a pretty large and well-established ecosystem of companies that provide financial services. By utilizing the power of partnerships, you can focus on having a product that provides innovation and unlocks new value instead of focusing on things that have already been done and reinventing the wheel when it comes to financial services. In the next couple of slides, we will walk through a processing flow for a card payment and a bank payment. These are at a high level, and the purpose is actually to illustrate the different partners and actors that are involved in a simple payment that happens almost every day at a huge volume. And the reason is just to illustrate by no means a comprehensive explanation or primer on all financial transactions. So we can start with a payment card process. So this would be either a credit card or a debit card. There are over a billion cards in the US, and globally last year, there was over 500 billion transactions, so half a trillion transactions where a card was used globally as well. The payment starts with a customer going to a merchant. This could be either physically at the store where they use a POS device or a point of sale device, and they could swipe their card, or it could be online where they go to a website and enter the card information or using an app. A customer will usually present themselves with a card, and this card is actually issued by the issuing bank. And if you look at any card when you flip it around or on the front, you will see the name of the bank that issued that card. And it's usually the one where you got approved and you get applied. Either for a debit card you have a bank account with, or for a credit card you applied and signed up for a credit card account. When the user swipes or enters their card information at a merchant, the merchant in turn will make use of a processor to help them process that card information. Most merchants may not be able to store securely the card information so they do outsource this to a processor. And the processor will work with an acquiring bank. This is a bank at which the money will be sent for the merchant's benefit. And from the acquiring bank, a transaction goes to a card network. So this would be Visa, MasterCard, AmEx, Discover, or Union Pay. The card network as its members has both the acquiring bank as well as the issuing bank. So the card network will then be able to reach out to the bank that issued the customer the card in the first place. They can ask the bank to authorize this payment so the bank can confirm that this card was actually issued to this customer, run a few other checks, and they can authorize that this payment can go through. At a later point of time when the money gets settled, the money will be moved from the issuing bank to the merchant's bank account at the acquiring bank. Now we can look at a bank processing flow. This last year there were 27 billion payment transactions using a bank, which works out with about 80 bank transactions for every US citizen. Now in case of a bank either a customer will present a check at a merchant, which is highly unlikely in this day and age, but still possible with certain stores, or they can more likely provide their bank routing number and bank account number at a merchant website. The merchant will forward this to a processor again. The processor will work with a bank which originates this transaction. The origination here refers to the fact that this transaction, this debit transaction from a consumer's account is being started or originating from a specific bank account. It's not necessarily indicating the direction of funds flow, but rather direction of this request being made. The request is then forward to a clearing house. Depending on each country, they have their own automated clearing house systems, and this will be forwarded to the receiving bank, which will then go ahead and look at the consumer's bank, make sure it has the right amount of balance, and then go ahead and debit the consumer's bank and notify that the merchant bank can now be credited with the money that was required. Most bank flows currently operate in an offline batch system, so there's different cutoff windows. They do not operate at least in the US for now in real-time fashion, but in countries around the world and also in the US in the near future, you would start seeing bank payments that are real-time. Now that we've looked at the importance of trust, intermediation, regulation, and the ecosystem, we can now start focusing on how can we use that information to create a fintech product that works and is successful. Launching a successful fintech product requires, in a way, getting all your ducks in a row, but sort of the three important things that you want to make sure that the boxes that you check are, one, you need to have your product improve the long-term financial health of your customer, a product that does not do so or does do this only on a short term may not be sustainable. You do want to make sure that your customers keep coming back and the product adoption grows largely because of how you are improving the finances and the financial health of your customers. The second important thing is balancing innovation with regulation, while you could have a very innovative product that works for your customers and that wonders if it's not compliant with regulation, it won't see the light of day. At the same time, a product that abides by all regulations but does not offer anything innovative is not likely to be adopted very well. And finally, your product needs to be able to achieve product market fit. It is a product that has a need in the marketplace. So while there are different frameworks that you can use to achieve product market fit, for example, there's the lean product process or the 40% rule. The one that I'm most fond of is the jobs to be done framework by Professor Clay Christensen at HBS. And we can talk about that framework in the next few slides. Another thing that I believe is extremely important as you design a product is to know where your customers are in their financial life cycle, as well as which product space or which financial domain your product will operate in. Your customers may be really early in the financial life cycle where they need help with either managing payroll and they're basically earning money and getting payouts for the jobs that they do. Your customers may be saving money and they need a checking savings account or a balance account. In some cases, your customers may need to borrow in addition to their savings for large purchases such as a home, in which case there's a mortgage or a car loan, or even for short term purchases such as products which they may opt to buy with a buy now pay later loan. Your customers may also be looking to spend, which includes sending money to a merchant or to a friend or a family through P2P payments or maybe even making a remittance overseas to friends or family that live overseas. Your customers may be looking to invest their money and grow it, whether this be investing in stocks, investing in bonds and other securities or real estate and even cryptocurrency or in this day and age, you can only invest in art as well as sneakers. I'd like to talk about the jobs to be done framework. At a very high level, you're looking at three steps. The very first step is to state what's the job that the customer needs done for them. When I'm at the store, for example, there's a situation when they are at the store, they want to do something. For example, they want to purchase an item and get out of the store as quickly as possible. Then what's the expected outcome? Well, they want to purchase, but they want to do so. It's frictionless, it's fast, and it's easy. The second step would be to find out what kind of job they want to accomplish. Is this a functional job which is doing a specific activity? Is it an emotional job where it serves some sort of emotional need or it could be making a decision? In this case, if somebody was to make a purchase at a store, they're looking at making a functional activity. Basically, it's a purchase for their daily life. Then finally, we could start drilling into what kind of substitutes exist right now and what do these substitutes lack? For example, going to the store, a substitute right now is using a point of still device and swiping with a card or paying with cash. Now, paying with cash in a COVID environment that we are in may not be preferable because they have to handle cash. Even with a card, users may feel that the whole process of pulling out a card from your wallet, inserting it into a POS device that's been used by multiple people may not be the most hygienic or the most appealing. In which case, perhaps an alternative would be the use of a QR code to scan and pay for their purchases would speed things up and is at the same time completely contactless. With that, we're at the end of the talk. I'd like to leave you with a few important key takeaways. As we spoke earlier, at the very foundation is trust. Your product needs to provide trust to your users in order to be functional in order to be sustainable. Second, you want to have a product that balances innovation with regulation so that it abides by all the required regulations in order to be sustainable and at the same time provides innovation that users are lacking right now in the market. It sometimes may help to start with innovation at the edges rather than the core of the product offering that you have. And finally, you want to make sure it's a product that gets the job done for the user. So if the user has a specific job that they're seeking to accomplish, having a product that accomplishes that specific job is going to get you a lot more traction in the marketplace. Well, thank you for being an amazing audience. If you'd like to connect with me or have any questions or comments, please feel free to reach out to me through these social media handles. It's been my pleasure today to walk you through product management in the world of Vintec. Thank you.