Tier One People's Dexter Cousins talks with Co-Founder David Washbrook to talk about a fine year and a Vegas road trip!
Tell us about Look Who’s Charging.
Look Who's Charging is all about improving the customer experience through enriching bank statement transactions. Everyone has experienced the issue. You look at your bank statement and half the time it may as well be written in foreign language. You see C&A WALKER PTY LIMITED, for example. A Google search brings up hundreds of businesses none of which you recognise.
So, you phone your bank. Twenty minutes on hold, verify yourself, bounce between two or three different departments, and at the end of all of that, more often than not the bank can't do anything other than a Google search themselves. In fact, two of the Big Four bank's contact centres don't even have access to Google.
It is a very frustrating problem for the consumer, leaving them feeling genuinely worried that they might be subject to fraud. It's also a very expensive problem for banks. Ten percent of all the calls to a banks contact centre relate to queries on unrecognised transactions. Sixty percent result in manual chargebacks, costing a bank around $80-$90 dollars for each one.
We improve the customer experience and save banks millions of dollars in costs through reduced calls and chargebacks.
How did you come up with the idea for the solution?
It was two-fold. My fellow Co-Founder, Stuart, was running a separate business at the time. He became increasingly frustrated with trying to reconcile his accounts due to the large number of confusing descriptions (most small accounting packages use bank statement data).
At the same time, I inadvertently committed a friendly fraud. I disputed a transaction with my bank as didn't recognise the merchant. I genuinely thought it was a fraud. I got my money back for the transaction which later turned out to be legitimate.
We did some further research and we quickly realised that unrecognised transactions were a big issue for consumers and also a very expensive problem for banks. Australian banks alone are spending somewhere in the region of $200m a year dealing with the problem.
Your solution sounds so simple. Why is it that nobody's done this before?
A lot of Fintech businesses can often be complex to explain. You are correct in that ours is very simple. However, solving the problem is far from simple. Lots of people have tried before. We know big banks who have tried; large software companies who have tried; other Fintechs who have tried.
They throw a team of people at it, work on the problem as a project, get something that is fifty, sixty percent of the way there, but unless you're maintaining the data, staying on top of it, it quickly becomes redundant. Our senior team has over 80 years’ experience working in IT and on big data problems, and this is by far the most complex problem any of us have ever come across.
The idea is not new but being able to execute on the idea, that's where we have achieved something that no one else has managed to. We return over 180 different fields on a merchant and our accuracy is >95%. Most other offerings simply return one field (being category) and the accuracy is far lower than us. Banks are pushing our data to one of the most important consumer touch points being the transaction feed of digital applications; they have to have trust and confidence in our product.
Our solution has three core components, all using proprietary market first technology:
Merchant database. We have compiled a database of the 1.3m card accepting merchants in Australia. Over 1m lines of code and we draw on over 150 different data sources to ensure we always have the most up to date information.
To solve the problem you need to understand both the legal entity information and trading entity information for a merchant. Some businesses out there know the legal entity information of a company, and some know the trading entity information, but from what we can tell we are the first business to build a complete legal and trading view of a merchant.
Search engine. We have developed a proprietary search engine to match the 20m+ transactions descriptions (per debit and credit card statements) back to this database of 1.3m card accepting merchants.
Robust architecture. Our robust architecture enables our data to be pushed to bank’s digital applications in real time. Our API can return data on up to 50 transactions in less than 30ms.
You've partnered with NAB. How difficult is it to partner with a Big 4 bank?
First conversation to go-live with NAB took seven months for us, which was fantastic, especially as they were our first customer. NAB had identified the problem of unrecognised transactions as a top consumer pain point and one that was costly for the bank. We offered a unique, market-first solution and NAB was able to move quickly to bring this to their customers.
In general the sales cycle with a big bank, or any bank for that matter, is relatively long. Most importantly you need a solution that solves a genuine customer pain point, saves the bank money or improves regulatory compliance. Tick two or three of these boxes and your chances of working with a bank significantly improve.
But you also have to have the correct governance, compliance and risk management protocols in place to pass their security and procurement checks. You can have the best product in the world but if you don’t have the right risk management procedures in place then you won’t go-live with a bank. The Hayne Commission and recent high-profile data breaches from companies such as Equifax, British Airways and Marriot-Starwood Hotels make it increasingly harder.
Finally, you must make your solution as easy as possible for a bank to integrate with. Our solution is at the easier end of the spectrum, but it's still a lot of work for a bank to integrate with a third-party. If your solution is going deep into banking systems, even if it's the greatest product in the world, it makes it a much harder task to partner with a bank.
Gaining recognition in the KPMG Fintech 100, has it had a noticeable impact on being able to attract talent and clients?
Absolutely. It has been a really good win for us, especially as we were selected without even applying. We've been fielding a lot of inbound inquiries from all around the world after the report was published. I think we were one of only seven Australian companies to make the list.
We're almost at thirty people now, twelve people onshore and another fifteen people offshore. We will continue to hire people in 2019. The decision has been made to draw on the best expertise from people around the world as there is a lot of complexity to our solution. Finding the skills onshore can sometimes be challenging; machine learning, AI, the search components of our architecture. We've developed a hybrid model with three very senior developers onshore managing the specialist skill sets from around the world and bringing everything together to make the solution work.
Culture becomes a critically important element in growing a business, and the culture is really determined by the quality of people that you hire. If you have a start-up with some traction, you're building something exciting and people can get involved with growing the business, it’s generally very appealing to great talent, especially with the buzz around tech at the moment.
You recently presented on stage at Money 20/20 in Las Vegas. How was that experience?
Money 20/20 brought together over 15,000 people from leading Banks and FinTech companies from around the World in Las Vegas during the final week of October. We were lucky enough to get a spot on stage and a stand at Money 20/20. Look Who’s Charging was selected, as one of only 24 companies, out of over 800 from around the globe, to pitch on centre stage. If you're a tech business you really have to think globally from day one. Money 20/20 provided the perfect springboard to explore off-shore expansion.
Immediately after our presentation there was a long line of companies queuing at our stand up saying 'we need this in the market. No one is focused on the problem.' The greatest interest came from Canada and the UK, they're a bit more advanced with digital banking than the U.S.
What’s your perception of the Australian FinTech market compared to the US?
We expected to go to Money 20/20 and find 10 other companies doing what we do. However, despite a high demand for transaction enrichment, we were unable to find any company who has or is trying to provide a solution quite like ours.
More generally in the banking and the payment space it seems that the U.S. is definitely lagging Australia. For example, we have contactless payments rolled out across the country. I personally haven't taken cash out in Australia since 2017 and I haven’t had any problems. I solely rely on my phone and my watch now.
The U.S. still primarily has legacy infrastructure where you have swipe your card, sign, and show ID to verify your signature. A number of merchants also still don’t accept card payments. This makes it much harder to enact behavioural change and get people to switch to a digital wallet.
The environment in Australia is the perfect testing ground for financial services companies to get their product to market. If you can perfect your product here, there's a massive opportunity to then launch in the U.S. and other markets like Europe.
However, I think that we have got to go to them because they're generally not coming to Australia to find out about us. The support is there for Australian FinTechs to expand, for example, Austrade’s Global Landing Pads and the recent UK FinTech Bridge. In addition, if you have a product in market, and that product is scalable, you shouldn’t have any issues raising money in the markets like the U.S.
What growth plans are there for 2019?
We are super excited about the coming 12 months. We’re making good progress in the Australian market having on-boarded two of the big four banks and a number of small banks. This will remain our number one priority in the short term.
There’s also a growing number of use cases for the technology – enriching transactions within digital banking applications is just the tip of the iceberg. For example, one of the top findings from The Hayne Commission was that banks are generally good at verifying income on loan applications but that they were generally poor with expense verification. Our technology can quickly and easily automate the verification of both income and expenses to a high-degree of accuracy.
Overseas expansion definitely remains our longer-term goal. We’ll likely look to expand into the Canadian and U.K. markets next as they are similar in nature and size to Australia. We're very excited by that prospect and opportunity.
Founder of Tier One People and host of the Fintech Chatter Podcast.
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