979. News: Monzo slapped with bumper fine, Robinhood stands strong on tokenisation, and will TSB vanish from the high street for good?

22:31Laura Watkins:Yeah, I think it's not a surprise, but it might leave a few people stranded. I mean, as a very basic example I was attempting to change my name after marriage with my bank and the reason I haven't done it is because I can't find a branch that I can go to you know around work to actually physically present myself in the right documentation and so on because that's not something I can do digitally do you need a bank branch for that so yeah it's just the removal of some of those like practical services you don't even know you need until you need them. Well they need to people need to think about it, right?

23:01It's exactly that. And it's, you know, like I was saying about checks, there was a problem with a check and exactly, you then have to look for a branch. And it's the banks being much more innovative in the solutions that they're providing and name changes and, you know, power of attorneys, all those different things, they need to have a digital offering as, you know, something to build on their roadmaps. I think.

23:21Laura Watkins:Definitely, we should get you involved, get you to tell them that. I'll just start pioneering it, it's fine. Tom, in your opinion, do you think we're seeing a kind of wave of consolidation in the banking sector? Obviously, if these two merge, they're going to become the third largest, as we said, but also kind of, you know, two become one, as it were. So you're losing a bank in that respect. Yeah. Is that a trend? I'm not sure if it's a trend, but I do think it's interesting that there's going to be a kind of a change across the industry. The big four UK banks have been so dominant for decades.

23:55Those four brand names have always been so prominent. And so it'll definitely kind of show some sort of upset if now you've got kind of Santander coming in to be the third largest brand. I also think what's really interesting about that is it really demonstrates Santander's commitment to the market and kind of really wanting to kind of go harder and grow and etc. So I think between that, I think it's kind of evidencing that there is a bit of change on the horizon for the kind of retail banking sector. I mean, it's probably a watch this space kind of environment. Definitely.

24:26Laura Watkins:And I think it is interesting to your point that they're really doubling down on the UK market, obviously being a Spanish brand, where in their home market, they are kind of fending off hostile takeover bids from their rival BBVA and kind of, you know, pushing them away with a stick sort of thing. but now they're doubling down on the UK. Jess, in your opinion, what does that mean for the brand and what would the UK regulators be looking at when they come to approve or not approve, as the case may be, of this merger? So, I mean, the UK regulator is under so much pressure for multiple different things and ensuring there's fair competition across the market is obviously something they're coming under pressure for.

25:07I mean the UK market was still dominated by the handful of players the big names and this kind of merger will limit that name list even further if it turns into a trend I mean Tom says it won't do but if it does I mean I agree with Tom actually I don't think it will but if it you know for example triggers any further consolidation or they do see that the consolidation and loss of bank branches does actually impact customers negatively. And then from that consumer duty lens, you have a real issue and reducing the kind of underserved communities, etc. That's when I think you're really going to see them push back even further on this kind of competition piece in future.

25:50Laura Watkins:The Santander UK CEO claims that this will create more competition in the market, not less. Do you have a view, Jess, on how or why that might be if we've taken one bank out of circulation, how he's reaching that conclusion. I mean, I disagree with it. I do not think this is going to end up with more competition. It's really looking at that consolidation. That was my initial thought when I read it. But, you know, here's his quote. So I wanted to interrogate that. Sophie, what was your take on this one in terms of that competition piece? yeah similar um I think I knowing Santander over over the years and knowing different colleagues there I think that they're hungry and they have a strategy and they they do want to you know I can feel they want to have that heavy presence and and and consolidate and and take more over so does it create more competition uh amongst the top four like you know is maybe that the kind of theory behind the statement it's kind of going look actually we're here we're a player we're a sound player we're really really here and we're going to stamp out our mark yeah we're coming for Barclays lunch that kind of thing rather than Monzo maybe exactly and maybe maybe there's just a new stance from them I always find this stuff super interesting because I think um I love it even more so when people don't see it coming um or you know when you hear about it you're like oh oh yeah okay that kind of makes sense so um yeah I think it's an interesting one and I think yeah the top four like we've spoken about they've been dominant for forevermore right um and we're seeing we're seeing the challenger banks just take different different stances i think the monzo piece again is very interesting i know we'll perhaps talk about it a bit later but yeah i think perhaps the statement is more about the top four and and i'm providing a bit more competition in there and really starting to stamp through some of that and demonstrate some change whether that creates any trend whether it then creates those um you know it keeps it just moving um in my opinion which is good uh tom do you concur yeah i think so i think it's kind of a case of you know maybe the kind of competition pieces around the big four become the big five potentially is that going to be kind of you know the angle you're going to get to this but actually at the end of the day and you've got one fewer brands on the high street that can't be a good thing interesting yeah so in terms of like phasing out that uh that kind of brand name you know Jess in your opinion does that have like a sort of reputational change like say you're a TSB customer suddenly become a Santander customer?

28:26Laura Watkins:You know, does that have a knock on effect? Do people care? Or could that actually like, you know, force people to switch? I don't think it has as much of an impact now as it used to. Obviously, there are some customers in the market that do have that kind of loyalty to the brand for a very long period of time. But a lot of the younger generation are more than happy to cross across different brands. And they're looking for speed, they're looking for good customer experience, they're looking for access to a variety of services in one platform, not necessarily the brand or the name. But again, each customer has very, very different requirements for their banking and digital services.

29:07I don't think it's necessarily the name anymore.

29:09Laura Watkins:Well, yeah, I think that will be interesting to keep an eye on because, yeah, maybe it's not just the name, but it is those services. It is kind of taking away some of those branches. I don't know enough about the individual brands, but if one offers something that the other doesn't, do they, you know, do they merge them or are they actually taking services away? We will have to keep an eye on that one and see. As we said at the top, we might be waiting for Q1 next year to confirm whether this happens. So we'll obviously have to keep an eye on the rumor mill to see if it does. But yeah, lots to unpack when it does.

29:40Laura Watkins:And equally, you know, just the practicalities of merging two enormous banks will be an interesting challenge when it happens. On that note, we're just going to take a quick pause here back very shortly.

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30:41Laura Watkins:Welcome back. Before we dive back into the news, we want to share our latest insights episode with you. As we know, financial services are evolving rapidly. Where innovation and customer experience once led the agenda, banks are now focused on stability and securing business critical operations amid market uncertainty. So what does this shift mean for advice and consulting? Because we don't just do podcasts here at 11FS, we also do consulting and we won consultancy of the year at the British Bank Awards, no less. So David Barton Grimley put the question of navigating change and supporting clients to Ross Gallagher, who heads up all things consulting here at 11FS, as well as industry expert Kate Drew, director of research at CCG Catalyst Consulting Group.

31:22Laura Watkins:To find out more, the episode is out now. Just head to the podcast below this one. Okay, back to the news. And our next story is that Robinhood are confident that tokenized equities will withstand regulatory scrutiny. The story in payments. Robinhood has begun offering tokenized US stocks and ETFs to European users via its new platform built on the Arbitrum blockchain. Trades are 24 for 5, not 24 for 7, commission-free and settled via blockchain tokens. Revolut is offering access to token-like assets representing private companies like OpenAI and SpaceX. These are not real shares, just synthetic representations.

32:04Laura Watkins:OpenAI has publicly clarified this to avoid confusion. The Bank of Lithuania, Robinhood's EU regulator, has requested more details on how these tokens are structured and marketed. Robinhood CEO Vlad Tenev said the company is confident its products can withstand the highest form of scrutiny. So we were talking before the show. This is a fairly complicated topic. Tom, could you sort of break it down for us a little bit what what does sort of offering a tokenized um u.s stock or etf actually mean so trying to take that kind of very very high level and simplistically essentially what you're trying to do is rather than acquiring a uh an asset a share a a bond an etf through a standard exchange um which will have a fair price which you can see on the market and is traded in a in a regulated way you're taking that into a separate market that will essentially mirror it in a digital fashion whereby you're buying a token that will hopefully match the asset but won't be backed by the asset that can be traded in much the same way and so the idea being that the kind of underlying valuation of it could still be the same but because you're trading it in a digital fashion you're holding a digital token on a blockchain you can do that cheaper faster more conveniently You can also do it in a fractionalized fashion.

33:32So if a share price is, you know,£1 ,000, you can buy a small slug of that rather than having to fork out for the full£1 ,000 share. And being able to do that kind of helps to kind of take away some of the friction you see out of trading and be able to kind of broaden out how access to those types of assets can be proliferated.

33:53Laura Watkins:Amazing. Thank you for that. That really helps kind of make it real for everyone. So that's what Robinhood are trying to do. But then equally, they've added in this kind of synthetic representation of a share. Sophie, kind of what's your take on that as kind of a tokenized version of a private company stock, which actually isn't public market knowledge, as we were talking about off air. and OpenAI have kind of come out and declared that this is not kind of a real share and they are very keen to make that clear to everyone. What's kind of the impact of that in terms of making shares of companies that aren't necessarily publicly traded yet?

34:37Yeah, it's such an interesting one and I know we were discussing it a little bit more together because again, it's just so complex. I think one of those things where it becomes when you make things like this public knowledge when that's not what they're designed to be. And again, does that impair on or infringe on things like competition or insider trading and those sorts of concepts? I guess everybody's going in with their eyes wide open. And I think that, as I was saying earlier, we've explored stablecoins and asset tokenization before with some of our partners. And it's something I'm super, super interested in.

35:11And I think there is something in this very similar to when crypto started And then I sort of was, again, I'm incredibly interested in the concepts behind it, the blockchain, the auditability, the efficiencies, the securities, providing it's all governed correctly, treated in the manner that it should be treated and how the technology can enable these types of things across the globe in multiple environments that may not have had access to things like this. so I know that's not answering your question in the regards of what does it really mean when you're going to be sharing sort of private knowledge publicly and start making those sorts of things available I think there's two sides to it and that's not me sitting on the fence being unopinionated because that's not me it's it's more that I think there are two sides to it I think it could be positive it could encourage and add some insight and energy into how we could make this work.

36:13And on the flip side, I think it could be damaging. So I think it's just around how we learn from what we've done already with technology in this space, how we start to put some processes around that, how we can embed some governance and some support without getting in our own way and overcomplicating things and how you can then land it in the market.

36:34Laura Watkins:Thank you. And And Jess, kind of on that governance piece, as we said, the Robin Hood CEO is very confident that this will withstand the highest form of scrutiny. What are the Bank of Lithuania on the European side, the SEC, kind of thinking when they are scrutinizing these things? What sort of thing are they kind of looking for? Yeah, so a lot of them are basically applying the same kind of, it's the same activity. It's got the same risks in many ways. I mean, Sophie just touched on things like market manipulation. And therefore, it's being increasingly clear that they are aligning the same core principles here to traditional securities.

37:14So even though they are kind of a tokenized digital representation, they are going to still be subject to the same regulatory frameworks. But there are still a lot of nuances and regulatory boundaries are still not very clear across multiple different areas, which makes it tricky for both the firms trying to launch these products, but also customers trying to engage with them. I did read today that a couple of days ago, the crypto mom, they call her in the States, the US securities regulator, Commissioner Hester Pierce, she basically said that they remain securities and must comply fully with all of the federal securities laws.

37:51So registration, enforcement obligations, disclosures, everything will be the same because ultimately the risk profile here is very similar. So you've got the market manipulation risk, custody failures, you've got disclosure issues. Of course, from my perspective, you've got all the requirements around AML, KYC. All of these are absolutely critical. But on top of that, you've got some really nuanced risks specific to these product sets, which a lot of people still haven't kind of grappled with, which is a lot of customers are not understanding that this is not a security. This is a digital representation.

38:32And it's just making sure that customers that are engaging with this, I mean, for example, you know, Robinhood's traditional customer base is the retail investor, not institutional investors. I don't know, but do they have the full understanding of what this is in order to engage with it fully? So there's many different things that we kind of have to unpack and unwrap to make sure that customers are engaging this in a sensible way and regulators can build the appropriate framework around it to make sure that we are minimizing those risks and mitigating them. And one thing I'd add to that, Jessen, I think to really kind of double down on bits is around the security point of this.

39:13You know, when you buy a share, you know that it's on a register somewhere and you've got that kind of credibility to it. If you're buying a digital representation of something, there's a good chance that that could in theory be stolen. That could be copied, marked, et cetera. And so being able to have the safety and security of knowing that you've got that asset, you can kind of retain it in a wallet and sometimes having kind of like a really credible exchange to have that in is helpful, but it still is a slightly more unknown, less secure an avenue than if you were going to go and buy that original asset in the first place.

39:45brief little plug HSBC in Hong Kong developed a similar platform for fractionalized gold and the level of quantum cryptography that needed to be required to be able to kind of make sure that those tokenized assets were secure is mind-blowing the type of level of security that has to go around that in order to give the customers that kind of confidence and that's exactly what you need and I think it's really great that the regulators say and these will be treated like any other asset but you still need to have all of the wrap around it around security

40:15Laura Watkins:Yeah, definitely. And sort of to Jess's point, like the trickle-down effect on customers actually understanding what they're getting into as well. Like, you know, is it Robinhood's responsibility to educate the user? Is it the user's responsibility to educate themselves is kind of a perennial question. But, you know, it is definitely one worth asking when, you know, they're kind of changing the way the system works. If you're creating sort of synthesized representations of shares, that's entirely new territory, right? Yeah, totally. And I think if you're going to have a crystal ball moment and kind of fast forward time by 10 years, actually, you know, Robinhood are pioneering something here.

40:51And, you know, as similar to other exchanges have all been doing in a similar sort of fashion to kind of push this forward. But actually what you'll end up seeing is that all the exchanges that run these types of securities anyway will just merge into this type of technology. So all the benefits you'll see around 24-7 trading and kind of cheaper commission cost, etc., will just naturally gravitate into what is the kind of today's BAU in a digital fashion, in my opinion. Do you think as well on that? Because I think this is something I find really fascinating, that there's this kind of big bang approach to things.

41:21And it's actually more, the more we can test and learn, test and learn, test and learn, is so much more powerful. because actually getting your head around things like this and we as we were saying before the show this is such a huge concept to get your head around especially if you're even in in the industry you know we've all touched on the pieces that we've spoken about where you'll start trying to consider how things are converted when where the responsibilities where's the liabilities all of those different things and and we're talking about an end-to-end here that's that's just so out there at the moment that actually the gentle steps to get there it is you're absolutely right I think if you fast forward we'll be there and it will make sense to us and we have to take those steps to get there and you just want to like we said earlier set this up with scale and sustainability and governance in mind so you start with that clarity what we're trying to do why are we trying to do it what does that mean then the controls and the governance and compliance I know it's not nearly as exciting as that big bang release though but I do think that there's a those stepping stones to get us where we need to get to and then bringing along your audience is

42:27Laura Watkins:so so important definitely like i think yeah i think that is completely it it's sort of you know you've got to bring people with you otherwise you'll already get in trouble if people don't understand what it is that they're doing and rules are broken and so on and so forth which is actually going to bring us nicely onto our next story uh which is that monzo has been hit with a 21 million fine for anti-money laundering failings. Story in Fonextra, the UK's Financial Conduct Authority has imposed a£21.09 million penalty on Monzo for inadequate anti-money laundering and financial crime controls between October 2018 and August 2020.

43:06Laura Watkins:Monzo's user base grew nearly tenfold in this period, but its internal systems didn't scale to match this growth. The FCA found serious deficiencies in Monzo's onboarding, customer risk assessments, and transaction monitoring systems, including signing up over 34 ,000 high-risk customers, some with implausible addresses such as 10 Downing Street, Buckingham Palace, and some put Monzo's own headquarters. This action follows a similar£29 million fine against Starling Bank for weak AML controls in October last year, highlighting a broader regulatory crackdown. So Jess, I'm going to come to you first, largely because you were on that show when we talked about Starling.

43:48Laura Watkins:And of course, this is very much in your wheelhouse. How did the FCA get to this conclusion? And how does this happen? How do Monzo onboard 34 ,000 high-risk accounts with ridiculous addresses and things like that attached? I mean, it's a pretty damning read. But it's actually easier than you think to make these kinds of mistakes. And if we look back at the Starling Bank fine, there are just so many similarities. I mean, with the Starling Bank fine, of course, that was focused more on weaknesses and sanctions screening tools and data sets. Ultimately, this one is more focused on the customer due diligence side with the classic 10 Downing Street, for example, and the addresses.

44:33But ultimately, if you don't have a holistic control framework that's operating with the right questions being asked, the right tool sets and the right data collecting and verifying the right piece of information, ultimately you don't know who your customers are. And I think that's one of the key things that came out here is that as part of their growth journey, they really thought that they just had UK resident retail customers doing lovely things on their platform. And that's part of that kind of great fintech story. but ultimately there were customers on there that were trying to do things that were not quite so nice and that's where you have you know the fraudulent use of addresses and just not collecting that information ad onboarding meant that their ongoing monitoring was also very difficult to implement because they weren't collecting the right information weren't verifying the right information at the start of the process and therefore they couldn't monitor effectively I mean, there were so many interesting things in there, like the transaction monitoring piece, like the CIFAS database for fraud checks as well.

45:42And to Sophie's point, there are a lot of pieces around governance and culture. We've picked on governance a lot today. But ultimately, it just meant that their holistic financial crime framework wasn't collecting the right information or answering the right questions. And ultimately, that meant that when they had their voluntary requirement or not so voluntary requirement put on them, they could not adhere to it. And a very high number of customers snuck through as high risk when they could not monitor that and they could not verify that they're actually meeting those requirements, which ultimately meant that they got a slightly higher fine, although it was reduced for certain reasons because of their good remediation program.

46:24but it was just a multiple failures across the framework but I mean as we sort of said at the

46:30Laura Watkins:beginning not that it's excusable at all but it is important to note that this is from the period October 2018 to August 2020 meaning that it's not necessarily representative of Monzo as it is right now but you know how it was back in the day when as you said it was sort of scaling on mass and trying to onboard as many customers as possible. And these, you know, things were not adhered to. Sophie, you know, what does that mean for the sort of the consequences of that on the brand? Because, you know, I'm stressing that this is Monzo back in the day, but do people reading that headline and not reading anything else take that on board?

47:09Laura Watkins:Or do they, you know, is that a reputational damage of how they think Monzo conducts themselves right now? Yeah, I think it could be because people don't necessarily read the detail, do they? They'll see Monzo's been fined by the FCA for failings in financial crime. And I think, yeah, it could definitely be damaging to the brand. To counter that, I think there's so many fines and there's so many failings of scaling businesses and, you know, and banks in general and financial services. I think one of the hardest things for businesses to do is they scale. And exactly like we just said this was from October 2018 to 2020 and like we know that's when Monzo really kind of took off and were really focused on growth and scaling you know their risk-based approach to um their monitoring their their controls what were they doing how were they doing that as a business and a young business at that um I think is incredibly tough to um to navigate for businesses again I do feel like a broken record and I'm I am sorry but it does come back to that you know when you start these businesses up and when you can have the right advisors and VCs or governance, people are supporting you to say, look, you know what you know.

48:22You don't know what you don't know. And this is where you bring in the right support to consultants and other people to go. You need to think about these things. And as you scale and grow, you're going to need to take a different approach to how you are monitoring your transaction, monitoring your KYC, KYB, or all of your CDD. and you have to be alive to that all the time and thinking about it. So I think it could be damaging for their brand. I hope it's not. I am a big fan of Monzo. I think what they've done is really, really remarkable. And I like how they service their customers and how they think of their customers.

48:54So I imagine for them this has been quite damaging for their own culture and quite painful because I think they're very proud of what they've done. And yeah, I think this is a good recognition that you can't behave like that. and there is consequence if you don't stay ahead of the game here. And it's not even ahead of the game, is it? It's complying with what we're all needing to do when we're a licensed institution. And so it's important that there's reprimand, yeah. It is the game. Yeah, exactly that, yeah. So I think it could be damaging. I like the term consequences you use there, Sophie, because I think some of these fines are also quite important from an industry perspective because it keeps everybody's kind of eye on the same situation.

49:34earlier we spoke about kind of like the shift towards sustainable growth and not having that mindset of growth at all costs and then you backfill all the bits and pieces anyway and that's not to insinuate that that's what Monzo did back in those days but it was very much kind of the heady days of the Monzo kind of really like scaling very fast and so to have that kind of culture and mindset shift through our entire fintech industry is probably very very good and to actually kind of start to have that philosophy of you want to have growth but you want to have growth that kind of goes at a kind of sustainable way that means that you're kind of doing the right thing not only for your own business but for your customers and for and for how you're building all those blocks and it's very hard as you say like the right thing at the right time not after the fact yeah it's very hard to do especially in in the industry i think you know i come from a scaling business and we're we're absolutely shifting from like we said that that hunger for growth at all costs right through to now turning into a profitable enterprise.

50:29And it has to be, and we are so firm with this as a business and me as a CEO and a leader of Shieldpay. It's not revenue at all costs. We will only do the right thing and we use our regulation and all of the rules and regs, all of our governance as enablement and we won't do it. But it's very hard for the industry when you're constantly under pressure to deliver and execute and so on. And, you know, with investors, with board members and VCs all pushing you to get to where you need to get to, it can be very challenging. But you have to have that ingrained in your culture and your belief. You have to because and consequence should be served if you don't.

51:06Laura Watkins:And to your earlier point that there are lots of other fines and to terms around keeping the the kind of industry on its toes. You know, we talked about Starling's£29 million fine. the FCA gave out 176 million in fines across 2024 but we should say this is not just a neobank problem right just like in 2021 NatWest was hit with a whopping 264.8 million fine for ignoring red flags fairly obvious ones such as bin bags stuffed with cash and things like that between the period of 2012 and 2016. So like, you know, everybody needs to adhere to these rules. This is not about singling out neobanks or, you know, against anyone else.

51:56Laura Watkins:And to be fair, like the scale of the fine obviously gets bigger, the bigger you are, right? Yeah, I mean, for people that work in financial crime, day in, day out, we've known for a long time that this has been a big focus of the regulator. And it keeps us unbelievably busy all the time. But we already know this going forward because set out in the next five years strategy, financial crime is one of the four core pillars of that strategy. We know that creating an environment where people can engage with products and services in a safe way and mitigating financial crime is an absolute focus of the regulator.

52:31So we're not going to see them back off from these kinds of fines. I mean, we've also seen a big spike in the use of Section 166 skilled person reviews as well, which are again, very intensive, but they're a lot of money and they come in and have a look at your entire framework. And we are seeing a lot of those being used and you can see a very big spike on those. They either come in and look at your entire framework or they come in and the FCA is doing specific focuses on specific control areas at the moment. So we know that the regulatory push at the moment is looking at sanctions. and it's looking at trade-based sanctions.

53:10It's also looking at market manipulation. Those are its key focuses at the moment. And we can really see that each of these different core financial crime areas are being truly targeted by the FCA. And it's all part of this smart regulator push. So we've got the new RepCrim financial crime reports and they are analysing all of the data across multiple sectors, looking for key issues and trends across specific sectors and targeting those sectors with that issue. And that's where we're seeing specific sectors over specific issues. And we will continue to see that at least over the next five years because it very, very much is a continued focus.

53:48Laura Watkins:So we will continue to see headlines like this coming to the fore, do you think? We will indeed. We will indeed, yeah. And one of the things that, yeah, a lot of the things that firms always forget is, yes, this is costly. It's damaging on their reputation. It's damaging potentially from a customer perspective as well. But the one main problem that people always overlook is the morale impact it has on the business whilst you're dealing with a skilled person, whilst you're dealing with a large multiple year remediation program. It's the constant pressure and the low morale. That's the real thing that businesses struggle with across these challenges.

54:24Laura Watkins:That's such an interesting point. That doesn't really get much airtime. So, yeah, thank you so much for kind of adding that spin to it right at the end. However, I know we could probably talk for ages on this one, but I am going to move us on. Okay, now for a quick look at one more newsworthy story this week that we don't have time to cover in full, but we think you will find just as interesting. This story in FinTech Finance News, a new report finds that Gen X prioritizes security over convenience in payment choices. According to the report, when it comes to choosing how they pay, Gen X, that's people aged 45 to 60, put security at the top of their list.

55:03Laura Watkins:Nearly half of them reach for their debit cards, with credit cards coming in second at 33%, and good old-fashioned cash is still hanging on at 22%. Many of them don't use digital wallets like Apple Pay or Google Pay, which came in at around 5 % to 6 % of use. And according to this study, the group's main concerns are fraud risk, closely followed by hidden fees, with only 31 % valuing loyalty programs, closely followed by cashback offers. so I have to say I don't think this is particularly surprising um you know thinking of my mom's generation who's perhaps slightly older than Gen X actually just out her a little bit there but um you know around the sort of 60 mark I don't find that that surprising I think you know we see this a lot of sort of reluctance to um embrace new technologies such as an Apple Pay or Google Pay almost because it's too easy and they don't trust what's going on under the hood uh preferring you know, to stick with what they know, you know, adapting even to contactless debit cards or upgrading from an Oyster card to contactless on the tube, you know, seemed a step too far a few years ago.

56:07Laura Watkins:So I think this isn't really surprising, but I do think change will come. It will just come a little bit slower to maybe millennials or Gen Z. I'm not really surprised that the main concerns are sort of security, fraud risk, that sort of thing. What's interesting, I think, is like, Surely that is everyone's concern. If you break that down by all the other age brackets, that's probably everyone's concern. However, perhaps the younger generations are more likely to trust the newer technology to fight that fraud risk, more so than a sort of debit card and credit card. And we're increasingly seeing that Gen Z in particular are turning their back on credit cards.

56:48Laura Watkins:Perhaps they're a little bit more embracing of buy now, pay later. and, you know, whether or not that should be categorized as a type of credit is a discussion for another podcast. But yeah, I think these findings are not that surprising. The report does go on to say that Gen X values substance over style and that payments providers should think about that when designing kind of new flashy experiences. But I think probably finding the balance between the style and the substance is probably where you're going to please all crowds. Okay, I'm going to move us to our and finally story now. So as it was London Pride this week, we thought we'd take a closer look at this story, which is that the Payments Association calls for more LGBTQIA plus diversity in payments.

57:36Laura Watkins:So the Payments Association is calling for more meaningful inclusion in the UK payments industry, warning that many companies engage in sort of surface level support, kind of the classic sort of rainbow branding during Pride and so on, without any real lasting change. And the call to action follows their association's 2025 D &I survey, which revealed considerable gaps in how the sector collects and uses diversity data when shaping its policies. And they have said that inclusive product design is needed, platforms should respect users' pronouns, chosen names, and diverse identities with better internal policies and active leadership to promote inclusion.

58:13Laura Watkins:I mean, you know, that sounds like a fairly obvious thing, but it's obviously lacking in the industry for them to have kind of made this stance. What's your initial take on this? Who would like to start? For me, this is kind of a data story, which I think is really interesting, that kind of something as interesting as pride and kind of the sexual orientation kind of lens of diversity, I think is super, super important. But it's about making sure that if you're capturing that data, you're going to understand your customers better you'll understand the kind of how people are using and interacting with your products and if they're not interacting with your product in the way that you would expect it's then around the kind of piece around adapting and kind of being able to do things with however you the payment profile is to be able to better account for that um i think financial inclusion is such an important part of the financial services industry um and i think there's so much opportunity within the world of fintech to put new technology into that that if you can kind of capture the right data and understand the customer journey for some of your underserved uh customer groups then there's probably a lot of interesting commercial angles that you can kind of come up for this and so i always sometimes feel if you put a kind of a revenue carrot over a problem someone will go ahead and solve it definitely i think it's the report said something like only 11 of companies are actually you know um trying to find out this information on their customers meaning to your point that they're leaving a huge amount of data untapped on the table and you you use the the example there around the pronouns if you're a customer with for whom that's a really important part of your identity they won't forget that that you've kind of taken the trouble to build your product maybe it's the ux of your app or something like that that will kind of get that right um you've got a little customer and probably a brand advocate and they're invaluable definitely um and equally the other way around too like if you disrespect people's pronouns and force them into sort of you know the wrong boxes so to speak when they sign up and that sort of thing like that is going to have a massive negative uh impact on their interaction with your brand and then of course they will remember that and act accordingly sophie what was your take um i think i think tom's absolutely nailed it i think one of the um challenges we face so is how data is used and again the protection of data and i think there's a real adversity to completing some data fields due to perhaps perception that it's going to be used in a negative way.

1:00:47So I think you're right. But I think it's not mandating it, right? It's making it available. It's making it available and capturing data and making sure that your product is fit for purpose for all of your consumers and ensuring that that is used in the right way. I I think my only concern with exactly what you said, Tom, is how that data is then used and then how it's going forwards. But yeah, I think it's fantastic. And I think we need, we absolutely need to make our world everywhere inclusive. It doesn't matter. And I say that hand on heart. And it doesn't matter any of your orientation. other than you should feel supported and you should feel included and you should feel part of your environment, our environment, where we are.

1:01:33So, yeah, I think data is the most important thing. I think the commercial elements will really drive businesses to do this. It's wonderful to hear more and more about it, especially with the, I don't know that we'll get through the whole podcast without talking about Trump, but maybe we should. But, you know, with everything in the US, you know, around this, I think it's wonderful to hear that we're getting it front and centre and it's getting more attention again on a positive way, in my opinion. Definitely. Jess? So, I mean, from a financial crime perspective, we really need to think more about diversity and inclusion when building financial crime products.

1:02:09So if you take, for example, your onboarding journey with identity verification and you have someone that's transitioning genders, you really have to think about, do you have a process in place to facilitate kind of manual onboarding or an additional or something that will solve the problem of dealing with different faces with traditional ID and V vendors? So that's some of the things that we're working with at the moment. And we have to think across a lot of different types of diversity and inclusion when we're building these frameworks, because ultimately our frameworks should be preventing financial crime, not preventing genuine access to services to people that absolutely should be part of these services with no problems whatsoever.

1:02:53Absolutely. But yeah, I think it's obviously a timely call out from the Payments Association.

1:02:59Laura Watkins:I think it's pretty cool that they were heavily involved in London Pride, as was Monzo. They were part of the parade, which I think is very cool. you know I don't know if they're the first Vintech to do it but they're you know talking about the top four banks it's not really the space that they play in so I think you know that's a it's very cool to kind of see the industry starting to get behind these initiatives obviously what they you know the actions will be more impactful on their customers than anything kind of performative but it is you know indicative that this is something that is on the agendas of some of these companies.

1:03:39Yeah, definitely. And I think part of that is that kind of pink washing agenda that might kind of come out of a lot of these things. You know, it can be one thing to put a load of pride flags over your logo or to even be part of the kind of, you know, the celebration that is pride on the day. But if your products and services don't reflect those types of customers, it does feel a bit disingenuous, doesn't it? So it's around getting that balance completely right. And some brands do it fantastically well.

1:04:06Laura Watkins:Absolutely. And yeah, much to take forward from Pride into the rest of the year to make those kind of diverse, financially inclusive products, I think. But on that note, that wraps up today's FinTech Insider News. Thank you so much to today's guests. Where can people find out a little bit more about yourself and your companies? Let's start with you, Tom. You can find me on LinkedIn. I'm a Thomas on LinkedIn, so that's Thomas Easterby. Very formal. My mum will be proud. And you can find more about HSBC Innovation Banking at hsbcinnovationbanking.com. Fantastic. Thank you. Jess? Yeah, it's Jessica Capp.

1:04:46Again, the full Jessica, very formal, on LinkedIn or thistleinitiatives.co.uk. Brilliant. Thank you. Sophie? Yeah, I'm also Sophie. I guess there shouldn't be a Sophie Condi, but yeah, Sophie Condi, also on LinkedIn. And you can find us and you can find She'll Pay on LinkedIn and she'llpay.co.uk.

1:05:05Laura Watkins:Thank you so much. As for me, you can find me, Laura Watkins, full name, on LinkedIn. Otherwise, on 11fs.com or search for Fintech Insider. Thank you so much for listening to today's Fintech Insider. If you like what you've heard, please do make sure to follow us on your favorite podcast platform of choice. And if you really love the podcast, why not share it around? Share it with a colleague, share it with a friend, share it on your LinkedIn. As always, if you want to join the conversation, please find us on social media. Just search for 11fs or Fintech Insider. Odds on, we'll be there. or email podcast at 11fs.com.

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