I'm here at Money 2020 Europe in Amsterdam, and I am so pleased to be joined by Paul Stoddard, the CEO of Fourthline, and we will be talking about one of my favorite topics and something that is so central to innovation in finance, digital identity.
Paul, thank you for joining me.
It's an absolute pleasure, thank you.
I'd like to.
Start at the top where, um, we have, you know, as we've seen over the years, so much emphasis on KYCAML compliance in a system that is not yet brilliant at catching the criminals where we need to giving huge vulnerabilities across the financial services, um, supply chain.
Talk to me a little bit about that problem around regulatory complexities, uh, standardization across the globe, how countries are working together to try to fix these problems.
I mean historically, the problem has been solved in a very manual way.
Um, the financial services industry has naturally focused on leveraging technology where it sees the biggest return on investment.
Maybe it's a mistake that they've left it so long to, to look at this particular space, but um the problem is now increasing uh as a result of the fraudster and and nefarious characters using technology for their advantage.
And so you've got this interesting dynamic of it's still one of the areas in banking and financial services and insurance that is very manual, very cumbersome.
But essential and required by regulators, so the compliance factor comes in.
In Europe, we have the advantage of AMLR coming in over the next 12 months or so, which will create a sort of more standardized environment for identity and KYC and AML in Europe, which means that financial services regulated providers in Europe have an opportunity to revisit how they solve the problem and make investments in capabilities that Maybe catch up to allow them to think about this as not just a compliance action, but as an opportunity to help them grow revenue by letting the right people through the front door, whilst at the same time, ensuring that they're catching uh the fraudster by being able to use technology, um in a more sophisticated way to identify and help mitigate risk and and ultimately cost.
I mean, it's, it's in the news this morning, but um Wise is being investigated um for potential um potentially having let down on its compliance.
And, and that's really got in the way of its IPO news, which is such a shame and um.
It's also fascinating to see this, as you say, as something that's slightly been left behind whilst geopolitical tensions rise globally.
And um there's no point in having sanction rules if you don't have the mechanisms to deal with them.
And you also touched on a point there that I think is fascinating about, you know, it's all very well having the rules in place, but if the industry.
Does not have uh their moment of, of actively getting together, collaborating over the standards that push that to being a useful tool.
Um, where do we end up?
I, I think we've seen regulators themselves start to collaborate, uh, certainly prior to COVID, um, both the FCA, European Commission, European Central Bank, uh, amongst others, you know, Singapore and Asia, um, and the Fed.
There has been efforts to collaborate globally, um, that hasn't gone as well as it could have done in my view.
Um, certainly there were efforts put in.
Um, the reason it's important is that a lot of providers in the sector today operate across more than just one market.
Right.
Uh, and so.
Equally, uh, from a criminal fraud perspective, they don't typically choose one market and only focus on that market.
They also operate on a global basis.
So it's back to my point earlier on about how the problem has become a growing and global problem that had previously been served by very manual and less effective methods.
Um, and the important developments in the last 5 years.
Have been and 4th line is at the front of that, they're bringing new technology to the forefront, working in partnership with our customers and, in some cases other national uh, databases and providers in the industry to help, you know, um, Restrict the opportunity for those that would see ill of industry providers.
And I think that's the relationship we have with our customers.
In the end, it's about trust.
They're recruiting customers and they're asking prospective customers to trust them, to trust them with their personal information that they need as part of the ability to open an account.
In turn, Those customers need to be able to trust us to deal with those most valuable data assets from individuals and consumers and businesses, and treat them in the right way, make sure that they're secure, make sure that they operate in a compliant way.
And so it's a chain and you're only as strong as the weakest link ultimately.
Uh and that's why, you know, industry and international regulatory collaboration is helpful and important and I hope will increase.
Um, but collaboration across the value chain is equally important and not just to be seen as a compliance issue, not ticking a box.
Absolutely, because if you do that, what suffers first is the experience of the customer at the front end, and ultimately the, the reliability and the resilience of the whole process starts to fall down.
Um, it's an interesting Venn diagram, uh, AI, human users and, uh, and trust, um, you know, it's.
And trusting that there is an identity behind all of it.
And talk to me a little bit about how your company uses AI to to drive identity and security.
I think most companies in financial services, uh, are thinking about it in two ways.
There is the product that we offer to customers, our proposition in its broadest sense.
And then there is how we use AI internally to be a more efficient, more effective organization.
And they're two very different for us.
They're very different in terms of what we bring to customers.
We use all of our own proprietary technology.
We've built our own data sets.
We procure data sets, we use data from our customers and partners in a compliant way to inform and train our models, and we use our internal machine learning and artificial intelligence capability.
Targeted directly at improving the automation and quality of our service to our customers, um, in our view, it's really important that we treat that PI data in the utmost valuable and secure way and, I've yet to find many financial institutions and consumers that are happy for that sort of data to be made available to the LLMs and the uh global Gen AI brands that we all know.
I'm sure that time will come in the future, but that's important to think about the two in a different way.
What we provide to customers, given the data, the proprietary data that we're dealing with, it's important that that is treated in a different way and that it stays in a secure domain and is, Leveraged by the data sets and the machine learning models that we've created, um, and we can deliver a high quality and resilient service to our customers.
Internally, like everybody else, we're figuring out how Gen AI will help our business.
Whether it's engineering, you know, another plug for claw code.
Our engineering teams love it, you know, it really helps them be more productive, more efficient.
We have our own internal agent, Sophie, that is available to everybody in the company, uh, every function in the company, um, that helps each function improve, become more efficient.
Solve problems on a day to day basis, um, and we have a team who are systematically working around every function in the business, looking at the top 10 use cases from an ROI perspective and how we can become more efficient and effective.
Um, the latest one is an RFP agent that will help our sales and commercial teams respond to RFPs in a very timely and efficient.
And it's, it's a constant, yeah, constant transformation, consideration, like how does this, and then how does that filter through to maybe changing business models anyway?
Absolutely, and it's a learning continual learning process, and that's what I love about it is every week there's something new that crops up and, OK, not every time is it, is it valuable and worth spending time on, but.
Literally every week there's new ideas coming out and the headlines here have all been agentic uh uh stablecoins, digital assets, and I would have, I personally, I think digital identity is just central to all of these questions.
And what have you been hearing here at Money 2020 what's been most, same as you.
I mean I love actually I've been to many of these both in the US here and uh even in Asia.
And I love the buzz, you're hearing what people are talking about and what's hot, what's not, what's still hot, what's disappeared, um.
I'm hearing pretty much the same.
I I question the long-term viability of some of the conversations.
I mean, I still, I still find um, er the use of, of shopping agents for example is something that I.
At some point, see the value to certain people, whether it will be a global phenomenon.
I don't, I don't know.
I still like bricks and mortar, absolutely, and when I have two daughters who are 21 and 18 now and.
They love the bricks and mortar.
I mean, of course they love the shopping apps as well, but the touch and the feel, you know, maybe when we're walking around with VR headsets that are putting scents under our noses and maybe we touch with gloves.
Look, I love the technology and I always have 2027 but the future.
Oh, thank you so much, Paul, that was absolutely brilliant and uh we wish you the best success with Money 2020.
Thank you very much.
I look forward to hearing.
Absolute pleasure.
Thanks.
Thank you.
