1034. News: Was Brex a bargain buy for Capital One?

27:24But my point is that one of the things I think that fintechs working in this space at the moment need to do and really need to focus on is talking to people and presenting themselves in such a way that ensures the people who are using their services fully understand them. Fully understand what it is you're doing, what the benefits are, what the potential risks are, because there are going to be risks in this kind of investment. That's just a fact. So I think the most important thing for me is choice is good. Absolutely, it's good to have options out there. but I think there is a sort of responsibility on the people providing these services as well as the regulators to make sure that people understand what it is they're doing and as you know and as been said you need a balanced portfolio you need to understand what you're investing could be lost you need to understand that before you make the decision to do it that doesn't mean we should be all doom and gloom and say you know although don't do it it's not safe because there are definite upsides to doing it but it's just presenting it in the right way and that's always that's always going to be my perspective on this kind of thing whenever we say any kind of you know new investment product or service come to market.

28:22Yeah. I hope I haven't offended either of you gentlemen because that was not meant to answer either of you. No, no. I think it's such an important point because I mean, I couldn't agree more on both the upside and the downside. So I think, you know, one of the biggest barriers from a market perspective with private markets is lack of education, lack of knowledge, lack of familiarity. And I think, you know, from both understanding the risks, absolutely. You know, these are much more complicated products. I think we all as an industry have a job to do to explain the benefits, the risks, the characteristics, all that type of stuff.

28:56But I also think, I would love to hear what it's like in the GCC, but in the UK, this is so new. And new often means scary. New often means just tomorrow, not today. And I think we see so many opportunities on the upside if you can unlock some of these products. But the market is not going to get unlocked unless we educate, unless we really lift the lid on what it means, unless we really, to be honest, help bring it to life. Because public markets, obviously, there's like generations of knowledge. And even then, the average retail investor still is often not equipped to make good investment decisions.

29:39These products are brand new. So we have kind of an extra challenging job on our hands. but to even kind of catalyze the space in the first place, let alone also then trying to help educate around the risk side as well. Thank you. Ziyad, one last very quick question to you. You mentioned, and as you were talking, that one of the big things Venray does is it's providing access to Sharia-compliant investments. And there'll be some people listening to this who don't quite know what that means or why that's important. Could you just give us a very quick summary of what makes an investment Sharia compliant and why does that matter?

30:15Absolutely. Thank you very much. And actually one just last step about what Sarah and Matt were tapping into. This understanding the sophistication of the segment is very important because it's not one size fits all or one type of opportunity fits all or one type of allocation. And the level of sophistication is a spectrum. So, and this is where technology should come. not only doing the education for everyone as if everyone needs the same education as well what kind of education journey they can have and as much as they can be empowered to make their next investment decision for us at vendry we've we've done an impact even if it was now outside our platform even if people come to us and speak to us about something outside our platform at least they are following a process rather than just they got a deal on whatsapp and they want to subscribe to it.

31:09So going back to Benjamin, your point about the Sharia. Sharia is obviously, it will be very difficult for me just to summarize it. It's a complex. It's people who follow the Islamic values. There are standards of how you do business where at its core, interest rate is not something favorable in a way where the whole purpose is to motivate people who hold cash to make their money being invested to create value in the economy and in the society by not simply depositing their money in bank accounts and taking an advantage over the arbitrage of deposits versus lending and taking interest fees and not investing their money in creating value or businesses or creating employment.

31:59That's the very basic intro to Sharia compliance. Secondly is what type of activity. So you cannot go into a real estate retail complex that has a casino in it and then generate income from that casino. And then the underlying activity is not Sharia compliant. And actually, it might be surprising, but a lot of ethical investing or overlap with a lot of the Sharia compliance standards. Like if you want to follow, like you don't do arms, you don't do stuff that could be harming for the society and so on. So it's not very far away if someone commits to ethical investing actually. So the importance is, are two things, the underlying activity of the business and two, how it is structured and how it is finance.

32:56Those are the two key things that define if an opportunity is Sharia compliant or not. So, for example, on a private credit side, we've been facing a challenge in bringing a private credit product that is really Sharia compliant. Because some managers do something called wrapping, where it is like a plain vanilla private credit, but it's not really Sharia compliant. So, this is an area where you really need to make extra effort and innovate and find the right partner. Thank you. That was an excellent summary. Well, thank you very much. And many, many congratulations again, Ziad, to you and your team.

33:32That's just fantastic news. So we will watch from the sidelines and wish you and your colleagues great success. Okay, well, we'll just take a quick pause here and we will be back very shortly. Hey, folks, David Breer here, CEO of 11FS. Here's something you might not know about me. I get a lot of people trying to impersonate me online. Fake profiles, scam emails, the lot. And a big part of that comes from data brokers. Hundreds of them quietly collecting and selling your personal information. Your phone number, email, home address, job title. All out there and all fueling identity theft, scam calls and spam.

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34:54And yes, it's risk-free with a 30-day money-back guarantee. You'll find the link in the description. So now a quick break from the headlines to tell you about our latest Insights podcast. We've partnered with our friends at Plio to look at how spend management has changed over the past decade and with tools like artificial intelligence, what the next 10 years could look like. It's out now. Just head to the podcast below this one in your feed. Okay, let's go back to the news. So our next story is that JPMorgan has acquired WealthOS to bolster its pensions offering. So JPMorgan Chase has agreed to acquire the UK pensions technology firm WealthOS as it looks to deepen its retirement and personal investing offering.

35:39WealthOS was founded in 2019 and provides wealth and pensions software with teams based in the UK and in Sri Lanka. The deal was announced internally by J.P. Morgan Personal Investing, which was the business formerly known as Nutmeg, which J.P. Morgan acquired in 2021 for around£700 million. And while the financial terms of this deal haven't been disclosed, the bank says the acquisition gives it access to cutting-edge technology and deep sector expertise as it expands into wealth management. um so sarah let's start with the sort of obvious question um what would a big american universal bank um want with a british technology firm well i think um at jp morgan by the way every time i come on i'm talking about jp morgan recently so i don't know if i've been put into that slot or or if it's just they're doing an awful lot of activity and i'm sure it's probably the latter So I think it's quite clear that JP Morgan is making, has got the UK in its sights.

36:39If you look at Chase the Retail Bank, you look at Nutmeg, this is kind of building on that strategy. If it wants to build in the UK, if it wants to expand in the UK, then, you know, requiring a company that's based here makes a lot of sense. It's quite likely that the teams at Nutmeg and the teams at WealthOS have come across each other previously. WealthOS has been around for sort of six or seven years. It's had investment from Barclays. So it's certainly not a completely new kid on the block. It's got established roots. So I think that'll make sense. Go back to our previous story about culture.

37:08If they're going to try and merge two companies, then two companies that are based in the UK make sense. I think there's also a point to be made about the fact that the UK has long led when it comes to pensions full stop. I mean, the earliest pension I could find in British history was from 1590 for disabled seamen. So we've got a bit of pedigree there. Anybody who knows me would know that I could have gone down that rabbit hole for hours. But anyway, my point is British companies, the British financial services industry knows a lot about pensions. It's been doing it for a long time. And therefore, when people are coming along and developing cutting-edge solutions or provide provisions or products for pensions in the United Kingdom, they know what they're doing because they've been here long enough to see all the problems.

37:51So yeah, I think it's a combination of, you know, culturally it makes sense to buy where you want to expand and also kind of the British pedigree in kind of the pensions market. Now, the headline in Sky News for this story was that banking behemoth, JP Morgan, nutmegs rivals with purchase of WealthOS. I couldn't believe they got away with that. You might have to explain to some listeners what that means. So the listeners are not British. The term nutmeg is a sort of slightly rude way of saying someone sort of head-botted someone. It's quite an aggressive term. Anyway, Matt, rather than forcing you to explain what nutmegs means in that context, Do you think that Sky News is sort of right in suggesting that actually J.P.

38:31Morgan's pulled a bit of a fast one here because it's, you know, here's the American bank picking out the British software company and sort of by implication, Barclay is an investor and a number of other British wealth companies, British banks, etc. have sort of missed or passed up the opportunity. Do you think there's anything in that? I take a really different view, and I'm obviously coming from a very biased perspective, building a whilst manager that's trying to disrupt the nutmegs of the world, or the JP Morgan personal investing, the staffy title of the world. But if you look at that acquisition, which I don't know what it was, three years ago, perhaps, that they bought nutmeg three, four years ago.

39:15Yeah, four, I think, possibly even five. I mean, it was a huge business at that point. They'd done a very, very good job, but that thing is pretty old. It was one of the early challenges within FinTech. So, you know, I'm sure infrastructure-wise, I'm sure technology-wise, that was not bleeding edge by any means. And, you know, if you look at the product set that they offered, obviously it's improved over time and they've done what they've done very well. But challenges, I put ourselves in that space, have definitely moved at a pace with far fewer resources across a broader set of products and have innovated much faster.

39:54So, you know, like I'm definitely guessing here a little bit, but part of what I would expect would have been part of the investment rationale or the acquisition rationale would be, well, I mean, we bought this thing, it's pretty big, but it does a call really well. There's now all these new entrants running and actually potentially here to steal our lunch. we need a better technology stack to be able to go and enable some of that. So I really wouldn't be surprised if that was part of it, that they were just wanting to upgrade and perhaps didn't have the technology they were expecting with Nutmeg.

40:25The other side of it, and it's always hard to guess, right? Particularly when an acquisition, you know, the amount isn't announced and things like that. But, you know, like I was a VC for a few years and invested in infrastructure players and they are hard businesses because they are failing until they're not. You know, like you can build the most amazing technology and it can take you two years to sign your first client and it can take you another two years before you sign your next one. It can take you 10 years before all of a sudden you are a huge business because of those enterprise sales cycles.

40:59So I'm sure WealthOS has some fantastic technology and I'm sure that actually it was just waiting to be picked up by someone like JT Morgan and then, you know, potentially didn't have the contracts to go and fly on its own. So you never know. I mean, the devil is always in the detail on that. But it does seem like a very good marriage, to be honest, to tie those two things together. And it's certainly something we'll be looking at because I think, you know, J.P. Moore has definitely said that they want to get much broader into that wealth management space, do a much richer service beyond their core classic robo-type offering.

41:35And it seems a good platform to be able to go and enable some of that stuff. Ziyad, thank you, Matt. Ziyad, what do you think? Is pensions just a logical extension from investing? I mean, it seems that way. Do you think Matt's right? There's probably a technology play in here as well. What's your view? So if you want to look at it, Notepad versus Wells OS, Notepad was a front business to customers, while Wells OS, like an average retail, wouldn't know about it. That's why the tendency of Matt is to analyze that they wanted a technology. that probably plug in well to their JP Morgan person investing and they want to leverage this technology.

42:22It might be a good deal for JP Morgan. They got it at a good price where honestly, again, we don't know the value of the transaction. We don't know those numbers. So it might be not as a strategic, but more of a good deal, you know, because they are not acquiring customers. so you are acquiring the operating system. In general, pension is a good introduction to reach people. Like if you want to build a relationship with people, pension could be a good introduction. For example, in our region, in GCC, I know I'm in London, I live in London, but I say in our region, it's a bit weird, but we don't have a pension system, proper pension systems like here.

43:04So, and while pension here could be a very good starter to build a relationship with the retail customer because the retail customer is most probably employed, they have a pension, they are enrolled in a pension, they contributed their pension, you guys have the ISAs, and that could be a good starter to build a wider network. So getting access to probably data, insights, that today JP Morgan doesn't have it for whatever reason. There could be a value out of it. We don't know. And I think the core point that this is not a front-end product or a startup or a fintech. It's pretty interesting, isn't it?

43:54Saying JP Morgan sort of moving into other layers, into the stack, moving into the infrastructure layer. There's an interesting question of whether is this just about JP Morgan using this internally or will they continue to support this business offering the capabilities out to lots of other companies, which is, you know, not necessarily a huge departure for JP Morgan, but it's definitely a sort of shift to providing more capabilities as a service than it perhaps currently does. I'm not really sure I'm throwing that question towards anyone. Matt, maybe final thoughts on this? I'd be really surprised if that was it.

44:31Honestly, I'd be really, really surprised if they started to get into the infrastructure, as in into the infrastructure as a service layer. No, I keep calling them nutmeg. I still can't adapt to JPMorgan personal investing. JPMorgan personal investing already does pensions as well. So, you know, I think that's one of the interesting bits, which is at Sidekick, we're looking at launching a pension this year. And compared to the other areas, compared to an ISA, compared to a GIA, it is complex. It is hard. it is messy, it is manual. I've said it before, I think like they've got some slick tech, if they're making it nice and easy, I'm sure there's a bunch of costs that they can take out of that business.

45:12And, you know, Nutmeg was loss-making, I think it remains to be loss-making, so anything they can do to turn that business around, I think it has to be a good thing. Very interesting. Okay, let's move to our last story of the week, our last big story of the week, which is that ClearScore, is entering mortgages via the acquisition of Acre Platforms. So ClearScore has acquired mortgage technology firm Acre Platforms, marking its entry into the mortgage market. ClearScore says the deal lets it root mortgage demand from its 16 million UK users into Acre's broader ecosystem. The acquisition adds property, mortgage, and affordability data to ClearScore's platform, expanding beyond its existing unsecured credit and auto finance.

45:57ClearScore plans to roll out the mortgage platform internationally, starting with mostly English-speaking markets, including South Africa, Australia, New Zealand, and Canada.

46:10So, Sarah, maybe I can come to you first. For listeners who are maybe not aware of ClearScore, what does ClearScore do, and what do you think EcoPlatforms maybe adds to that? So, ClearScore is probably most widely known in the UK as being a little like an Experian or something like that where you can go and check your credit score. What it also does off the back of that, like many similar platforms, is offer credit products to customers. So you can go on there and you can find kind of the most, you know, appropriate credit card or car loan and therefore now apparently mortgages. So there's a logic to that, that if, you know, ClearScore is expanding its product offering into other forms of credit for individuals and consumers, then it would look at mortgages as well.

46:57Acre is an interesting company to me because it's an alumnus of the venture studio where I used to work, Founders Factory. So I'm really actually quite pleased to see this. This is quite nice for me to see as a story. So I think there's logic to it from ClearScore's perspective. Acre is sort of, it's quite a broad platform itself. So if ClearScore is kind of consumer-facing, credit scores, credit products, Acre is very much on the back end doing all sorts of interesting things for mortgages. Why say interesting? They're probably interesting to people in the mortgage space. The consumers are probably less interested.

47:32But what they do is they're a digital and intermediary solution for brokers. They do have a digital interface for clients. So the end client trying to get the mortgage can then kind of see where they are in the process. They can interact with kind of the broker. They also have a solution for kind of the mortgage managers. so they can keep an eye on, for example, keeping track of whether customers are becoming vulnerable, missing payments in accordance with various FCA regulations. So Aker does quite a lot. I think it's quite a comprehensive solution. I think it fits with ClearScore's platforms.

48:03My question is, ClearScore plans to roll up a mortgage platform internationally starting with South Africa, Australia, New Zealand and Canada. Now, mortgages between Scotland and England are completely different. So I have questions about how, I'm not saying they can't do it, and I actually don't know. All of those countries I just mentioned are ex-Commonwealth countries. It's possible they have similar mortgage systems here in the UK. But mortgages are almost as bad as pensions for being complicated and having a lot of backwards processes involved. So I'd be really interested to see how they plan to roll out mortgage offering overseas.

48:39Yeah, I was going to say, Matt, you were just talking about how complicated pensions are. I mean, mortgages is another area of enormous complexity, you know, long-term products with lots of still sort of paper processes around the place and so on. It feels like it's a similar sort of business to WealthOS in some respects and presumably facing similar challenges. Yeah, I mean, it seems like a great tie, to be perfectly honest. I mean, as you say, it is such a fragmented system. It is still a very offline system. You know, there's been plenty of players who tried to disrupt it and have found how hard it is as well.

49:23So, you know, I think if there is a natural technology partner that can just help them capitalize on that space, it just feels like a really good opportunity. I mean, mortgages, I feel like a bit of a holy grail as well for close school. If you're thinking about commissions that they can take, commission you could take on a credit card, might be in the tens of pounds, I'm sure. Commissions you could take on a personal loan may be in the low hundreds, but commission I'm sure you can take on a mortgage is significantly higher. So if they can do that, productize it, work with a partner to digitize it and scale it alternately, I think that's going to be, I think that could be absolutely huge.

50:03I think the bit I don't know about Acre is the other side. So do they have all the relationships with all the mortgage brokers in each of those different locations because if they had, I mean, that is how you go international on day one if they've already got that network. They're having to build the network from scratch. That's a whole other beast. But I'm sure that is, yeah, I'll dig into Acre in a lot more detail because it looks a really, really interesting deal. Great perspective. Ziad, have you thought about sort of mortgages at Venray? because obviously, you know, lots of people around the world, you know, in the Gulf region, but, you know, all around the world put a lot of their money into property, particularly for their sort of primary home.

50:46Have you sort of started thinking about sort of mortgages and how you might sort of weave mortgages in with some of the other things you do or property investments more widely? To be frank, no. Very straightforward. I will tell you, first of all, it's a very complex field. It's very vertical. I think what we see here that ClearScore is getting into acres. Probably they want to grow vertically into that space. And about the cross-border, I'm sure there are a lot of challenges. As Sarah mentioned, cross-border, anything cross-border is really a challenge. And I'm not sure if this plan to roll out through all the countries listed by one eventually.

51:30So, but buying a home is an important topic for Henry's. Let's put it this way. And Henry's care about if they haven't bought real estate, especially in our region where real asset matters a lot. Historically and culturally, there is a saying in Arabic, like real estate is the good son of your investment. So, I just tried to translate it now. So people grow up saying they want to buy their first land or their first house. So we come across those questions from the Henrys, like when is the right timing to buy a home or when they need it and for how long they need to lock in their money and capital.

52:18And it depends on how the market are moving and if the Henrys are working in the GCC, but they are not originally from there. There are a lot of dynamics. And before, just now Saudi Arabia announced allowing foreign nationals to acquire real estate properties in Saudi Arabia. And that's a big transition because before you can live in Saudi Arabia for 10, 15 years, but there is no law that allow you to acquire your home. So expats from Levant area and North Africa used to end up buying homes back in their original countries like Egypt, Lebanon, Syria, and so on. So it is an important topic when it comes very common among Henrys and about the timing, about the size.

53:09Honestly speaking, we've advised many people about just how to define the timing. Not whether to buy or not to buy, but when to find the right timing and the right size of the opportunity as well or the home. because some people try to aim so high and that would suck all their cash and they sit and keep on working to pay the mortgage and they cannot grow a wealth out of it. And yeah, it's a very interesting topic, definitely. But for us at Vendry, not at this stage, let us solve the issue of liquidity, maybe with Matt. We do it in the GCC, Matt does it here. And let's solve this. And I think the sky then is the limit.

53:49So interesting. Thank you, thank you, thank you. All right, well, let's wish everyone at Acre Platforms and ClearScore the best of luck, exciting deal and best wishes to everyone involved and hope for many good things in the future. So on that note, we'll take another quick pause here and we will be back very shortly.

54:12Okay, now for a quick look at one story we don't have time to cover in full, which is that Revolut has dropped its US bank buyout plan and is instead eyeing a standalone Office of the Comptroller of the Currency, or OCC, charter. So Revolut is rethinking its American strategy, dropping plans to buy an American bank, and instead preparing to pursue a standalone U.S. banking license or charter. According to the Financial Times, Revolut has been in discussions with American regulators about applying for a national charter via the Office of the Comptroller of the Currency, or OCC, which would allow it to operate across all 50 United States.

54:50The move marks a reversal from last year when Revolut explored buying an American bank as a shortcut, a route it reportedly cooled on due to regulatory complexity and expectations around physical branches. So this is an interesting story. Poor old Revolut does seem to come up a lot with license challenges. But it makes sense. it makes sense to get its own license rather than sort of trying to back into an existing license, which may indeed have expectations around branches and so on. Not that having the odd branch isn't a bad thing, because psychologically, customers seem to be more comfortable depositing money in a place that has a physical presence.

55:33But nevertheless, this is an interesting decision, and best of luck to revelate that that's a smooth process, because one of the challenges for digital banks expanding into the United States, whether they're American, homegrown, or from overseas like Revolut, is the sheer difficulty of getting a charter or a license and the cost and complexity of that process, which in some ways has slowed down the arrival of fully-fledged digital banks into the United States. Okay, and finally, one more weird story, which has taken the internet by storm this week, which is that a deer has caused chaos after crashing through a bank window as the police are called to the scene.

56:18So police in Suffolk County, New York, were called to a Webster Bank branch after an alarm went off for a suspected burglary, only to find that a deer had smashed through a window and was tearing up the office trying to escape. Officers eventually managed to lasso the deer and guide it safely back outside. And yes, the police confirmed that the deer was not charged and lives to break into another bank another day. So, firstly, Sarah, you've clearly been watching videos on YouTube this week. Have you seen this particular video? And I've all related videos on YouTube. I need a break from the real world, guys.

56:56I have actually seen this. That was served to me on LinkedIn. My first thought was, oh, that poor deer, because it does look in distinct distress. Though it does sound like the deer was safely rescued and returned. Wild. My second thought was, if a deer can break in, who else can break into this branch? And are they looking closely at their security?

57:21Matt, if you're Webster's social media manager, what do you think? Is this an opportunity? I mean, maybe as Sarah points out, it's an opportunity to attract criminals. But is there a fun way the bank can make some publicity out of this, do we think? almost suddenly I mean the fact that we're talking about it on the other side of the Atlantic you know there's no bull in a china shop that's here in a bank branch so I'm sure you can make some sort of saying out of that and make it stick so yeah I'd be doing that if I was a really person Brilliant The other question our producers have lined up is about fictional bank heist movies and I'm not sure there's that many films with a fictional sort of animal based robbery but the one they've come up with is Feathers McGraw from the Wallace and Gromit films I don't know if those have had much circulation beyond the UK but there's a penguin who famously puts a sort of rubber hat on his head and looks a bit like a chicken and disguises himself Can I just say that the last time I was on the last story was about a bank heist as well so I don't know if there's a theme here if bank heists happen more in the winter I always remember the American bank robber who was asked, you know, why do you keep robbing banks?

58:41And he said, well, it's because it's where the money is. Just leave it there. I think there should be an opportunity for more companies that does security windows to market that the bank was taking cheap option. So this is where the opportunity is. Definitely. Deer-proof windows. All right. The three of you have been the most fabulous guests. Thank you so much to the three of you. Where can people find out a little bit more about you and your companies? Firstly, Sarah, where can people find out a little bit more about you and what you're up to? You can find me on LinkedIn. That's Sarah Kuczynski.

59:21Matthew, where can people find out more about you and about Sidekick? They can find me on LinkedIn, so Matthew Ford. But importantly, Sidekick, go to sidekickmoney.com or to the App Store or Play Store and just search for Sidekick Money. And Ziad, where can people find out more about you and about Venray? Yeah, it's LinkedIn, Ziad Mopsout, Instagram, Ziad Mopsout. I share more stuff there behind the scenes and less professional, more real. And obviously, the website and our mobile app, if you want to explore what we are doing, this is a place. and as for me, Benjamin Ensor, you can find me on LinkedIn and you won't be able to find any behind the scenes footage of me on Instagram because that would be very dull.

1:00:09Right, well, that wraps up today's episode. Thank you all so much for listening to today's show. If you enjoyed what you heard, please do recommend us to your friends. Do follow us on your favorite podcast platform and do share a review if you wish. If you want to join the conversation, seek us out on social media. Just search for 11FS or Fintech Insider, or you can email us at podcasts at 11fs.com. Thank you all again and goodbye.

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