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Jo Ann Barefoot explores how to create fair and inclusive consumer financial services through innovative ideas for industry and regulators

Barefoot Innovation Podcast

The Future of Regulation: The FCA's Reg-Tech Leader, Nick Cook

Jo Ann Barefoot

Nick Cook 2.png

What if regulation, as we know it, might disappear? Regulation will never stop, of course, but what if some of it will take on a new form, shaped by technology?  What if we’re entering into a new era of what we could call “digitally-native” regulation, that’s as agile and intuitive about regulation as digitally-native consumers are about consumer technology?

Of all the shows we’ve ever done, I think this is the most mold-breaking and thought-provoking. My guest comes from the agency that is leading the world in modernizing financial regulation for the digital age, and he leads the team that’s doing it.

Nick Cook is the head of Regtech and Advanced Analytics for the United Kingdom’s Financial Conduct Authority. The FCA’s innovation leadership is world-renowned, especially for their Project Innovate and its “regulatory sandbox,” which allows careful testing of new financial technology that could benefit consumers. Less well-known, though, is a newer initiative, launched about 16 months ago, to explore regtech.

As we’ve discussed in other shows, the term “regtech” is used in two ways. It refers both to regtech for regulators -- technology to enhance their own activities, and to regtech for the industry, to improve or streamline regulatory compliance. The FCA is working on both halves of this equation, and true to form, they’ve invented an innovative way to explore it. They aren’t using a sandbox for regtech (although the Bank of England has a sandbox-like “Fintech Accelerator”). Instead, Nick’s team has been convening what they call “tech sprints.” They invite a diverse set of participants -- banks, fintechs, tech companies, lawyers, consultancies, academics and others -- to come together for problem-solving exercises designed like hackathons. Sometimes for a day or two, and sometimes longer, they work on how new technology could be applied to a regulatory challenge like “digitizing” the rule book or streamlining regulatory reporting.

Nick and I recorded this discussion at the Regtech Enable conference in Washington in December, where he had just shared an update on their work from the stage. At the time, they were in the midst of a two-week sprint that had two objectives.

The first is to try to make regulatory reporting requirements “machine-readable,” and therefore much easier to navigate, including for innovative companies that often struggle just to know what rules apply to them.

The second -- even more profound -- is to explore whether some regulations can also be made “machine-executable” -- could regulatory guidance, in some cases, be issued in the form of computer code, and therefore be self-implementing?

This is an idea that’s been under discussion for about a year, including at a regtech roundtable I hosted last spring as a Senior Fellow in the Harvard Kennedy School Center for Business and Government. The same conversations have included a second concept the FCA is also pursuing, namely that new, high-tech regulation should be introduced gradually and should be optional for the industry. Gradual rollout would enable policymakers to start small and learn, while voluntary adoption opens up a practical road to changing our complex system with minimal disruption.  

The FCA’s tech sprint on machine executable reporting ended a few days after we recorded this podcast. They will be sharing its results in the coming months, so be sure to watch for it!

Let’s step back and think about what’s underway here. Finance is being transformed from analog to digital design. And, right behind it, so is regulation. Digitization will do for both -- for finance and financial regulation -- what it does for everything else. That is, it will make them faster, better, and cheaper, and will create a new foundation on which people will innovate further, in ways we cannot yet envision.

A striking thing about my talk with Nick is how different he sounds from traditional regulators. It’s hard to put your finger on exactly why, but I think it’s mainly the comfort he displays with uncertainty. The same trait was evident in my earlier podcast with Christopher Woolard, who heads the FCA’s innovation strategy. Somehow this agency manages to be simultaneously bold and humble. They know they don’t have this all figured out. They even know they can’t figure it out by themselves. But they also know they can move forward, and that the way to do so is by engaging a community of diverse experts to work together. As Nick says, that can be scary, but the risks come way down, for regulators and everyone else, when solutions are developed collaboratively by people who believe in its potential to make regulation better.

I hope this episode finds its way to many regulators, including those in the US where our agencies are actively exploring innovation agendas. Nick says regtech should be easier for regulators than fintech change is. For one thing, the companies leading it are generally not regulated entities, which makes them easier to work with. In addition, no consumers are affected by regtech experimentation. It’s about how the regulators can do their own jobs better, and/or can enable financial companies to do the same. As he puts it, regulators can, therefore, put “a toe in the water,” in regtech, and then move forward.

My friend Andrew Burt of Imuta and Yale Law School helped design the FCA’s December sprint and has put out a white paper on it. And here is the FCA’s great video on how tech sprints work.

So, I’m not naive. I’ve been a bank regulator, a U.S. Senate staffer, and I’ve worked in regulatory compliance for decades. Technology won’t magically make regulation easy. These solutions won’t fit some types of regulation, and where they do fit, they will inevitably create new problems. We all know all that.

Still...Digitally-native regulation. Think about it.

More on Nick Cook

Nick leads the FCA’s RegTech activities, including the FCA’s TechSprint events - the first events of their kind convened by a financial regulator. He is responsible for creating the FCA’s Analytics Centre of Excellence to drive the organization’s use of data science, machine learning and artificial intelligence.  Nick is the FCA’s representative on the European Securities and Markets Authority’s (ESMA) Financial Innovation Standing Committee and an advisor to the RegTech for Regulators Accelerator Programme. Nick joined the Financial Services Authority (the FCA’s predecessor) in 2009, initially in its Enforcement and Market Oversight Division. Prior to joining the regulator, Nick qualified as a chartered accountant at KPMG Forensic.

Other links

More for our listeners

Just before Christmas, I finished my 7 week, three-continent “World Tour.” I think 2017 was the pivotal year for moving both fintech regulation and regtech toward becoming priority issues at regulatory agencies throughout the world. 2018 will take it all to the next level.

We’re starting the year with amazing shows in the queue. We’ll have a fascinating London conversation with the charismatic CEO of Starling Bank, Anne Boden; another with Innovate Finance CEO Charlotte Crosswell; and another with a group of amazing innovators working in Europe and Africa, including Ecobank. In the U.S. we’ll have one with Cross River Bank CEO Gilles Gade; with Michael Wiegand, who heads the Gates Foundation’s work on financial services for the poor; with Financial Services Roundtable CEO Tim Pawlenty; and with Nerd Wallet CEO Tim Chen...and many more!

I hope to see you at upcoming events including:

  • OCC Bank Information Technology Conference, January 9-12, Washington, DC

  • Innovate Finance Global Summit, March 19-20, London, UK

  • Bank Director, The Reality of Regtech, April 18, New York

  • Texas Bankers Association Annual Conference, May 3, Houston, Texas

  • Comply 2018, May 16, New York

As always, please remember to review Barefoot Innovation on iTunes, and sign up to get emails that bring you the newest podcast, newsletter, and blog posts, at jsbarefoot.com. Again, follow me on twitter and facebook.  And please send in your “buck a show” to keep Barefoot Innovation going. And keep innovating!

Support our Podcast

Jo Ann



Innovating in Payments: Wells Fargo Head of Partnerships and Industry Relations - Braden More

Jo Ann Barefoot

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I could tell I was walking into an innovation lab even before I saw the space, because I could hear the ping pong game underway as I stepped off the elevator. It was great fun to be in San Francisco, on a sunny day in early fall, to talk with Braden More, Wells Fargo’s head of partnerships and industry relations -- and to see their fascinating innovation facility, which includes what they call their R&D Garage.

As Braden explains in our talk, Wells Fargo has reorganized to establish an integrated digital strategy for payments, under the leadership of their famous innovation head, Steve Ellis -- whom Braden described as the Steve Jobs of banking. They know that today’s customers expect a great digital experience, which means they won’t put up with processes that break down as they hit the old silo walls between traditional bank product groups, nor processes that merely automate old paper based, linear designs. Banking has to become fully digitized -- with all the gains in speed, cost, accuracy, and innovation that comes with digitizing anything.

Not surprisingly, a lot of this episode focuses on the challenge of how you change a large organization. Big banks are anything but nimble. It’s not their fault, it’s just their nature -- their size, their complexity, and their reliance on legacy IT systems that have accumulated, in most cases, over years and decades of mergers and acquisitions, and never been fully integrated with each other. On top of that, every move that big banks make faces regulatory requirements and close regulatory scrutiny, and regulators, for good reason, tend to frown on fast change -- especially the kind championed by small fintech innovators who love concepts like “minimum viable product” and (God forbid), “fail fast.”

However, all the big banks know they do have to change, and also that they have to speed up -- dramatically. That’s because the technology change is speeding up. Its curve is exponential, which means that both the opportunities and risks are outstripping organizational models and cultures that were hard-wired many years ago -- even decades or centuries ago -- for linear change.

A big bank innovation model is now emerging. It usually has a few elements. There’s an innovation team, which is usually small, is charged with rapid learning. Some of it is typically walled off, so that the big organization won’t accidentally smother it. There’s a lab-type effort, with a mandate to reach beyond short term, practical applications and do some dreaming. These sometimes have an actual playful edge to them -- hence the popularity of ping pong tables and bean bag chairs. Meanwhile, other parts of big banks today are busy with projects trying to smash down some silo walls and push people into the same rooms, to work knee-to-knee on shared challenges. And there’s usually an accelerator or incubator that brings in startups and tries to learn from them, sometimes making venture investments.

Wells Fargo has all this underway, and Braden explains their philosophy on how to get the best of both worlds -- both isolating ninja-style disruptors while also making innovation central to everyone’s job. If you’re a fintech, he describes their accelerator and some of its successes, including Eye-verify, which verifies customers’ identity by scanning the whites of their eyes with a phone camera, and which has been acquired by China’s huge payments innovator, Ant Financial -- Alibaba. He also tells the story of Wells Fargo incorporating Zelle’s instant payment service into the bank, and its importance to customers who need quick cash. Our conversation ranges widely, from the future of fast payments and crypto-currency to the evolution of skills needed at banks.

Braden also previews coming attractions for 2018. One key:  he says active online and mobile users connect with the bank every 42 hours on average -- vastly more often than traditional branch customers. Converting this rich relationship into more value for both customer and bank is a key to the future.

Big banks have unique challenges in embracing innovation, but they also unique resources for solving them.

A highlight of my visit was seeing the toy room. Pepper is there -- the charming talking robot. So are 3-D printers, biometric safes, and drones -- Braden gives an example of how bank can use a drone. He even talked, intriguingly, of occasionally seeing the folks in The Garage busy making things with soldering irons. You hardly ever used to see that, in a bank office.

More Information

More on Braden More

Braden More is the head of payment strategy at Wells Fargo. He and his team work across Wells Fargo to coordinate payment strategy, incubate new initiatives, and represent Wells Fargo in the payments industry. Braden also serves as the portfolio manager for the Wells Fargo Startup Accelerator, a program that mentors and invests in innovative companies.

Before assuming his current role, Braden was the head of strategy and planning for Wells Fargo Treasury Management. Previously he was with Wells Fargo’s Internet Services Group, and before that held positions in public accounting, management consulting, venture capital, and competitive strategy with Deloitte, Wit Capital, and Intel.

Braden graduated magna cum laude from Bowdoin College with a degree in government and legal studies. Subsequently, he earned an M.B.A. with distinction from NYU’s Stern School of Business, and a CPA license from the state of New York.

Braden lives in San Francisco, where he is active as an advocate for experiential science education. He has served on the board of directors for the Exploratorium Lab and Marin Academy. His Twitter handle is @BradenMore.

More for our listeners

I’m about to finish what I’ve called my World Tour -- travels all over the world this fall making speeches, meeting fascinating people and, happily, collecting podcasts. I’ve learned so much, so fast, about fintech and regtech, it’s hard to absorb it all. I’ll be sharing lots of thinking in the new year.

The upcoming podcasts are amazing. We’ll have one with Nick Cook, who leads the FCA’s innovation work on regtech, recorded at Regtech Enable in Washington. We’ll have Nerd Wallet CEO Tim Chen, and Cross River Bank CEO Gilles Gade. We’ll have one in London with the charismatic CEO of Starling Bank, Anne Boden and one with Innovate Finance CEO Charlotte Crosswell. We’ll also have a lively discussion with a group of amazing innovators working in Europe and Africa. We’ll have one with Michael Wiegand, who heads the Gates Foundation’s work on financial services for the poor. And back in the U.S., we’ll have a show with Financial Services Roundtable CEO Tim Pawlenty...to name a few!

The 2018 schedule is filling up fast. I’ll share those events next time.

As always, please remember to review Barefoot Innovation on iTunes, and sign up to get emails that bring you the newest podcast, newsletter, and blog posts, at jsbarefoot.com. Again, follow me on twitter and facebook.  And please send in your “buck a show” to keep Barefoot Innovation going. And keep innovating!

Support our Podcast

I want to thank you for all your wonderful support this year, and I wish you a peaceful and joyous holiday season to you and yours!

Jo Ann



Regulation Innovation: The FCA's Christopher Woolard

Jo Ann Barefoot

Woolard 2.png

I’ve been looking forward to today’s show since my very first visit to the UK’s Financial Conduct Authority, over two years ago. It was clear even then that they were doing something completely new for a regulatory agency. They were innovating. Not just creating new regulations, but actually rethinking how to create them. Reinventing the regulatory process itself.

Specifically, they were responding to the novelty and especially the rapid pace of technology change in finance by creating an innovation initiative and soon thereafter, the world’s most famous regulatory sandbox.

Today’s guest is Christopher Woolard, the FCA’s head of Strategy and Competition. In this episode, he tells the story of how they first realized they had to change, how they did it, and, importantly, what they’ve been learning so far. We sat down together last month during the Money 20/20 conference in Las Vegas, where we also did a fireside chat on the regulatory stage and where, for the first time, Chris shared their new report on lessons drawn from their first several cohorts of sandbox companies.

Most of our listeners know what these sandboxes are -- they’re also sometimes called reglabs, greenhouses, or a new generation of pilot projects. They’re being adopted by a leading cadre of regulators, including a few in the United States, who have realized that the speed of innovation today is outstripping traditional regulatory processes, which means policymakers are going to have to invent something new to keep up. Part of what they’re inventing are these small, safe “testbeds” where they can get hands-on with new ideas, understand them, shape them if appropriate, and generate insights to feed back into mainstream regulatory activities. The original version, really, was in the United States in the CFPB’s Project Catalyst, which inspired the FCA to build something similar. But it was the UK’s much bigger and bolder effort that then caught the world’s attention and has now inspired several dozen imitators around the world, according to Aspen Institute research. Here is an article I wrote with more on how the program is designed.

The FCA itself grew out of the financial crisis, as the UK decided to separate prudential banking oversight from a new entity focused on “conduct.” In some ways the restructure mirrors the U.S. decision to create the CFPB after the crisis, except that the FCA’s remit is not limited to consumer protection. The UK Prudential Regulation Authority is now housed in the Bank of England in the old City, while the FCA inhabits contemporary offices out in Canary Wharf, in an area burgeoning with startups and financial companies converting old warehouses to cool new space.

In our talk, Chris describes what the FCA is doing in both the sandbox and the agency’s wider set of innovation initiatives -- and again, what they’re learning so far. He cites the FCA’s advantage over many regulators in having a mandate that includes fostering competition. He debunks some misconceptions about the UK sandbox, including that it waives or dilutes consumer protections. He touches on their work in regtech (a topic we’ll soon return to with the FCA’s regtech head, Nick Cook, in an upcoming show). He talks about the sandbox’s global imitators and also how the UK cooperates directly with other countries to ease the path for their respective innovators. And he shares his concern that if even one of these global sandbox experiments “catches a cold,” we could see a contagious loss of confidence that could undermine regulatory innovation, worldwide.

I admire the FCA’s deft mixing of a very high-profile, exciting initiative with, simultaneously, a strong note of humility. They always emphasize that they don’t have all the answers, that they’re just learning as they go. But this, you see, is actually the key. The thing they figured out -- and believe me, it doesn’t come easily to regulators (or to anyone, for that matter) -- is that it’s not going to be possible, anymore, to figure things out before acting, in the way policymakers used to do. Instead, regulatory institutions are going to have to learn to navigate permanent and daunting, technology-driven uncertainty. They won’t have the option to hold still and wait for clarity to materialize...because it won’t. They need to find ways to move ahead iteratively and collaboratively. Testing -- sandboxes and reglabs -- will be essential to that. It’s a huge change, in both process and culture, for both regulators and industry. The sooner everyone starts making this shift, the better.

The FCA’s humble tone is right and wise, but my view is that this regulator has shown not only vision, but also courage. They decided to take the risk to strike out in uncharted territory, to begin to blaze a new kind of policy pathway, and they’re inspiring many others to follow them.

More on Christopher Woolard:

Christopher Woolard is Executive Director of Strategy and Competition, and an Executive Board Member of the Financial Conduct Authority. He’s responsible for policy, strategy, competition, market intelligence, consumer issues, the Chief Economist's department, communications and the Innovate initiative. He is chair of the FCA's Policy Steering Committee and a non-executive board member of the Payment Systems Regulator.

Christopher joined the FCA in January 2013. Previously he was Group Director and Content Board member at Ofcom. He has spent most of his career in regulation or policy development including working at the BBC and in government as a senior civil servant. He is a Sloan Fellow of London Business School.
 

Here are resources and links to items mentioned in the episode:

More for our listeners

I’m in the midst of a busy set of travels that will produce some fascinating podcasts. Between November 1 and December 20, I’m traveling to seven countries -- three in Asia, three in Europe, and one in Africa -- to speak on fintech and regtech for both industry and regulators. As I mentioned, we’ll have a podcast with the Nick Cook, who leads the FCA’s innovation work on regtech, recorded at Regtech Enable in Washington. We have one coming up with Wells Fargo’s Braden More on payments innovation. We’ll have Nerd Wallet CEO Tim Chen, and Cross River Bank CEO Gilles Gade. We’ll have one in London with the charismatic CEO of Starling Bank, Anne Boden and with the trade association Innovate Finance, and also a lively discussion with a group of amazing innovators working in Europe and Africa. We’ll have one with Michael Wiegand, who heads the Gates Foundation’s work on financial services for the poor. And back in the U.S., we’ll have a show with Financial Services Roundtable CEO Tim Pawlenty...to name a few!

Plus, I’ll be recording a special series straight from the floor of the American Bankers Association conference on financial crimes, in December.

I hope to see many of you there and at other upcoming events, including these:

Please remember to review Barefoot Innovation on iTunes, and sign up to get emails that bring you the newest podcast, newsletter, and blog posts, at jsbarefoot.com. Be sure to follow me on twitter and facebook.  And please send in your “buck a show” to keep Barefoot Innovation going. See you soon!

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Real Lives: Rachel Schneider and the Financial Diaries

Jo Ann Barefoot

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If you spend a lot of time in Washington, as I do, you see a lot of issues framed around statistics about people, especially medians, and averages. For instance, policies aimed at helping lower-income people typically stratify Americans into categories, in bands above and below median income, or median incomes in their census tracts. I’ve worked with programs like this for decades -- HUD housing and mortgage programs, the Community Reinvestment Act, and many others.

And then one day, someone comes along and goes inside those data categories, and finds out what’s really happening in the lives of the people covered by them. And it turns out to be surprising.

That is exactly what today’s guest did. She is Rachel Schneider, Senior Vice President of the Center For Financial Services Innovation and co-author of the new book, The Financial Diaries: How American Families Cope in a World of Uncertainty.  Some years ago, Rachel joined a CFSI study trip to South Africa where she learned about financial diaries methodology -- intimate research that tracks the daily financial lives of individual consumer households. With funding from several organizations including the Omidyar Network, she and NYU Professor Jonathan Morduch undertook a diaries project in the United States. They identified a cross-section of America -- 235 families in a wide variety of circumstances, in communities ranging from Mississippi to Ohio to California to New York City, and had a team spend over a year with each one, mapping every bit of money that flowed into and out of each household.

Not surprisingly, they found some alarming trends, which other research has revealed as well. A full fifty-seven percent of households today are considered financially unhealthy -- including a third of those with incomes over $100,000 a year.

But by looking closely, they found much more. In particular, they spotlighted a huge issue that had been traditionally masked by the statistical averages -- namely that for many people, the most pressing problem is not actually lack of money, but rather volatility. It turns out that millions of Americans live within their means, in that they spend less than they earn, but struggle nevertheless because they have volatile and unpredictable earnings and expenses. Since they also lack savings, they can’t cushion or smooth out their expense spikes and income troughs without relying on high-cost services like payday loans and checking account overdrafts. It’s worth pondering the irony that these consumers can afford financial services, as evidenced by the fact that they do -- they actually pay more in interest and fees than other people do. But they are not well-matched to our current models of products, pricing, money management, and risk assessment.

CFSI’s research has also revealed something else: families that appear identical in the statistical averages may actually be in completely different situations. Some are rising while others are sinking. And some are overwhelmed and confused by financial management, while others are the best money managers in the population, because they have to be -- have to know exactly how much money they will earn, and when it will be in their account, and exactly how much they must pay, and precisely when, and which bills have timing leeway and grace periods and which don’t, and then must strategically plan and execute the daily, weekly, and monthly financial plan.

As we’ve discussed in other shows, innovators are working on all these problems -- more affordable smoothing solutions, easier saving, better saving psychology, effortless financial management, ladders toward good credit scores, new data that more accurately evaluate credit risk, and more. We’ve talked about those in past shows and will cover many more going forward. Most of these innovators begin by trying to understand customers’ real-life ways of using money, including by bringing in behavioral science -- recognizing that finance is not just a cerebral process but also an emotional, and social, one. The financial industry will do even better as it aligns the products offered with the ways people think and feel about them.

For this deeper understanding, nothing is more illuminating than Rachel’s book. In today’s show, she helps us get to know some of the people the Diaries tracked, see a little bit into their lives, and learn the strategies they use to make ends meet. In the process, she gives us a lot to think about, beyond the statistics.

So...buy the book! It’s in the show notes at jsbarefoot.com. And meanwhile, enjoy my conversation with Financial Diaries author Rachel Schneider.

More about Rachel and her work

Rachel Schneider is a Senior Vice President at CFSI, and co-author of The Financial Diaries: How American Families Cope in a World of Uncertainty. The Financial Diaries connects the findings of the ground-breaking U.S. Financial Diaries research project, which collected highly detailed data about how 235 households save, spend, borrow and plan over the course of a year, with the broad trends upending the economic lives of American families. It uncovers the emergence of a hidden inequality, in addition to disparities in income and wealth – an inequality in access to steady finances. It provides a framework for how to develop products and policies that can help.

Rachel is highly sought-after as a consultant and speaker, Her research has been featured in the nation’s top publications, including the New York Times, Wall Street Journal and many others, and she speaks frequently at a broad spectrum of events.

Though she began her career as an investment banker at Merrill Lynch & Co., Rachel credits her commitment to the potential for innovative finance to solve major social problems from her days as a VISTA Volunteer (now AmeriCorps). She holds a J.D./M.B.A. from the University of Chicago, and a B.A. from UC Berkeley. She lives in New York City with her husband and their two children. She occasionally “competes” in triathlons, which are getting easier to “win” as the number of competitors in her age group shrinks. She says the same cannot be said for improvement in her piano skills.

Here are other resources, including items mentioned in the episode:

More for our listeners

The next two months will bring a podcast bonanza to Barefoot Innovation, with amazing shows coming up. I just recorded a fascinating one with Christopher Woolard of the UK Financial Conduct Authority on the FCA’s innovation initiative, including lessons learned so far from their famous regulatory sandbox. We’ll also have one with the Nick Cook, who leads the FCA’s innovation work on regtech. We have one coming up with Wells Fargo’s Braden More on payments innovation. We’ll have Nerd Wallet CEO Tim Chen, and Cross River Bank CEO Gilles Gade. We’ll record one in London with the trade association Innovate Finance, and on this side of the pond, we’ll have a show with Financial Services Roundtable CEO Tim Pawlenty...to name a few!

And, I’ll be recording a special series straight from the floor of the American Bankers Association conference on financial crimes, in December.

I hope to see many of you there and at other upcoming events. My speech schedule is packed solid from now to the end of the year, which is an indicator of the fast-growing interest in fintech regulation and in regtech. I recently spoke at five events in four cities in four days, and here is some of what’s coming up.

Please remember to review Barefoot Innovation on iTunes, and sign up to get emails that bring you the newest podcast, newsletter, and blog posts, at jsbarefoot.com. Be sure to follow me on twitter and facebook.  And please send in your “buck a show” to keep Barefoot Innovation going.

Support our Podcast

Meanwhile, don’t stop innovating!



Big Banks and Big Ideas: Citi FinTech's Andres Wolberg-Stok

Jo Ann Barefoot

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My guest today is Andres Wolberg Stok, Global Head of Policy at Citi Fin Tech. We got to know each other this year on a panel at FinXTech in New York, and something I immediately noticed is that he has a special way of talking about innovation -- a very fresh way with words. It might be because he’s lived all over the world, or because he was once a journalist -- see his biography below for a sampling of his journalism adventures, which sound like plots of action/adventure movies.

All large banks have innovation initiatives -- labs, accelerators, incubators and the like. They’re all looking at issues like blockchains, big data, artificial intelligence and human-centered design -- such as, creating a user experience that customers will actually love. Banks have plenty of innovative people, of course -- in our talk, Andres quotes CEO Michael Corbat saying that Citi is actually a technology company with a banking license. However, very few banks of any size have really innovative cultures. This is partly because most are mature organizations, and also because banking has been heavily regulated for so long, which tends to foster conservative, risk-averse cultures and decisionmaking. In today’s world of rapid technological change, banks need innovation (and many innovators need banks as well). It’s important that the big banks are investing in learning how to do this well.

Citi Fin Tech was formed in late 2015 to pursue what Andres calls “fintegration.” The impetus was a critical insight: they realized that their customers’ standards had fundamentally changed. Instead of comparing Citi to other banks, there was a new yardstick -- comparison to technology firms. That set a new, high bar.

Andres explains how they’re tackling this challenge. He describes the new kinds of skills they hire. He explains their focus on agile methodology and co-creation of products and learning to experiment. He talks about building multidisciplinary teams that work concurrently on initiatives, instead of sequentially in the old waterfall-style process that could divert an innovation from what had originally made it exciting. He talks about obsessing on the consumer experience and doing thousands of focus groups to understand what customers really think.

He also talks about how the bank should “feel in the palm of the customer’s hand.” He calls mobile an “exoskeleton” for the human mind, connecting us to all the world’s information, all the time. He talks about the issues ahead in AI, privacy, and data aggregation, including the challenges for regulators. He says the key, for regulators, is to understand the upside benefits of technology, not just the risks.

Andres explains how Citi Fin Tech works with innovators, including startups -- note that he invites people to come and work with them using their API’s and data. That site is at https://developer.citi.com.

I think my favorite insight is that banks need a new model that’s open, not closed. He says the customer relationship used to be one-to-one between a bank and its customers -- and of course, the regulations are still mostly built for that. Now, though, there are multiple parties -- consumers use apps and “modular” financial relationships. If the bank wants to continue to be at the core of that customer relationship, they will have to build an open model -- and regulators will have to change with it.

As you listen, think about how regulators and also community banks could get access to this kind of hands-on experience with financial innovation. The sooner they do, the faster the system and its customers will benefit from, as Andres puts it, “breaking a few windows and letting in fresh air and sunshine.”

More on Andres

Andres Wolberg-Stok interfaces with regulators and policymakers around the world as the Global Head of Policy for Citi FinTech, a new unit spearheading the transformation of Citi’s Global Consumer Banking business into a mobile-centric “Bank of Tomorrow”. He joined Citi from an international personal finance startup and has served in a variety of digital roles, first for Citi Latin America, then for Citi's U.S. consumer businesses, and now globally.

Andres was one of the founders of Citi FinTech from his previous role as Global Head of Emerging Platforms and Services for Citi’s Consumer businesses. In 2015, Andres turned Citi into the world's first bank with an Apple Watch app. Earlier, as Citi Consumer's first global head of mobile banking, he invented Citi Mobile Snapshot, a patented 2014 breakout feature that made Citi the first major U.S. bank to offer no-login account access.

Prior to becoming a banker, Andres was an international correspondent and senior news executive. He had tea with mass-murderer military dictators; was driven, blindfolded and at gunpoint, around the capital of Paraguay after midnight; was arrested in Tierra del Fuego on suspicion of being a British spy; and raced in a car at 120 mph along the edge of a minefield in Croatia. He finds most days in banking very manageable.

More for our listeners

Please remember to review Barefoot Innovation on ITunes, and sign up to get emails that bring you the newest podcast, newsletter, and blog posts, at jsbarefoot.com. Be sure to follow me on twitter and facebook.  And please send in your “buck a show” to keep Barefoot Innovation going.

Support our Podcast

It was great seeing lots of you at the Online Lending Policy Summit this week in Washington. I’ll hope to see many more of you at upcoming events:

We have wonderful shows coming up. One is with Braden More, who leads an innovation payments initiative at Wells Fargo. Another is with Giles Gade, CEO of Cross River Bank. And we’ll have several from Money 2020, including Nerd Wallet CEO Tim Chen and the FCA’s Chris Woolard, whom I’ll also be talking with there in a fireside chat.

Speaking of Money 2020, I’m excited that the AML regtech firm I’ve cofounded, Hummingbird, has been selected to do a startup pitch there. Be sure to come and watch!

See you there!



The VC Perspective: Miles Reidy of QED Investors

Jo Ann Barefoot

Reidy 2.png

This episode is a special treat because it’s both fascinating and fun. My guest is Miles Reidy, partner at QED Investors in Alexandria, Virginia. Many people know that QED was founded by former leaders of Capital One, including Cap One co-founder Nigel Morris. They have a terrific track record of investing, focused mainly especially on fintech.

Miles and I discussed two topics. One is the outlook for regtech, which he’s excited about and so am I. The other, which I know is going to be an audience favorite, is how to find and work with a venture capital firm.

On regtech, Miles talks about the technology that’s about to make compliance both more accurate and less expensive, at the same time. He talks about compliance costs rising at 20% a year, the impossibility of traditional compliance systems preventing human errors, and how we can now move beyond old sampling-based compliance processes to 100%, real-time data that enables a financial company to know, for sure, if it’s compliance or not. I’m excited about it too, because technology is breaking the old binary choice between spending more for better results, or spending less and sacrificing performance. Innovators are making it possible to be better and cheaper, both. On regtech, he also has a cautionary note for the U.S., where our regulatory complexity creates headwinds for innovation.

The second half of the show is about working with VC’s. I talk all the time with venture firms and have done some angel investing myself, but most of Miles’ insights were new to me. He shares what he’s learned, especially, from seeing people do all these things wrong, at every stage, from how to approach a VC firm cold (he describes one thing to be sure NOT to do), to how the startup should evaluate the VC, to how to work with the VC when your firm hits problems, which it will.  

He’s especially interesting, I think, on what questions to ask a VC directly, from where their funding comes from and where the fund is in its maturity cycle, to how it handles adversity (he describes the four typical scenarios, three of which are bad!). He also has advice on truly doing diligence on them, including by talking with their companies. The typical startup is so eager for money that it gets seduced by it, and can pick the wrong firm.  

Miles also explains how he evaluates potential investments. Which factors count more than others? What key metric does he want to see that the founders totally understand?  What weaknesses are fatal? And once the company is funded, what are the common mistakes? What mistake is most dangerous for a young CEO? How do you avoid the death trap of hitting the end of the funding runway before you can take off (hint: “sip” on your funds).

After we turned off the mic, I asked one more question that people often raise, which is whether fintech and financial regtech firms should focus on the great east coast VC’s that specialize in the field -- Miles mentions several in the episode -- or try to get backing from the big, famous firms in the Bay Area. There are pros and cons to each, in terms of sector knowledge, sector network, reputation “glamor,” and drawing in talent. Miles has the answer:  get both.

If we were scoring shows by how many times the guest makes me laugh, I think this one might be the winner. I know you’ll enjoy my fascinating conversation with Miles Reidy.

More about the episode

This is the November conference QED is co-sponsoring (I’ll be speaking) RegTech Enable

Here is the past podcast I mentioned with Sanjay Jain on the India Stack Sanjay Jain Podcast

And here’s more on Miles:

Miles Reidy is a Partner at QED. Previously he was the Chief Financial Officer for Audax Health, Inc., which offered a digital health engagement product.Miles reoriented the business strategy, built out the analytics functions, raised capital, and oversaw the sale of the company to United Health/Optum.  Prior to Audax, Miles was Chief Operating Officer and Chief Financial Officer for Network Solutions, one of the largest domestic providers of Internet hosting and marketing services to small businesses, and Executive Vice President and Chief Financial Officer for Sears Holdings Corporation.

Miles spent almost a decade in several executive roles at Capital One Financial Corporation, including Executive in Charge of Banking Integration, Chief Corporate Planning / Financial Strategy Officer and Chief Financial Officer of Capital One Bank and Credit Card. His responsibilities included development and implementation of the corporation’s capital and financial strategies, oversight of the card businesses’ financials and consumer analytics, and strategic planning.

Miles serves on the Boards of the Royal Bank of Canada, US, Heinz School of Public Policy at Carnegie Mellon University, and the Easter Seals of Baltimore/Washington. He is also a investor in Fenway Summer. He holds a B.S. from Georgetown University and a M.S. from Carnegie-Mellon University.

More for our listeners

Please remember to review Barefoot Innovation on ITunes, and sign up to get emails that bring you the newest podcast, newsletter, and blog posts, at jsbarefoot.com. Be sure to follow me on twitter and facebook.  And please send in your “buck a show” to keep Barefoot Innovation going.

Support our Podcast

I’ll hope to see you at the events where I’ll be speaking this fall:

  • RegTech: Compliance Transformed, October 3-4th, Brooklyn, NY

  • BAI Beacon/Fintech Stage, October 4-5, Atlanta, GA

  • CFSI Network Summit, Fireside Chat with Thomas Curry, October 5, Chicago, IL

  • FISCA, October 5-8th, Las Vegas, NV

  • Money 20/20, October 25th, Las Vegas, NV (I’ll MC the Sunday regulatory track, host a town hall with senior regulators, moderate a panel, and do a fireside chat with the FCA’s Chris Woolard. Be sure to come for Sunday!)

  • Regtech Rising, November 2, London

  • Monetary Authority of Singapore Fintech Festival, November 13-17, Singapore

  • University of Michigan, November 17, Ann Arbor, MI

  • RegTech Enable, November 27-29th, Washington, DC

  • UN/ITU conference on financial inclusion in Bangalore (invitation only)

  • Fintech Connect Live, December 6th, London

  • S&P’s Fintech Intel, December 13, New York

  • Dutch Central Bank, December 20, Amsterdam

We have wonderful shows coming up. I’ll be talking with Andres Wolberg-Stok of Citi Fin Tech. We’ll have a show based on my recent fascinating experience with a U.S. Army Threatcasting exercise, learning how to creatively imagine cyber risk and then pinpoint how to prevent it. At Money 2020 I’ll record a show with Christopher Woolard, who heads strategy for the U.K. Financial Conduct Authority, and one with Nerd Wallet CEO Tim Chen.                                                                                                                                                    

I’m very proud to say that the firm I co-founded, Hummingbird Regtech, has been selected to present at Money 2020 in the startup pitch session. Be sure to come and watch!

Meanwhile, keep innovating!



A Healthy Credit Card: Jason Gross, CEO of Petal

Jo Ann Barefoot

Gross 1.png

I love having guests on the show who look at something that everyone takes for granted and said, why do we do it that way? That’s what today’s guest, Jason Gross, has done with credit cards. Jason is the CEO of Petal. He and his co-founders have designed a card that has a different business model and aims at a different market.

Credit cards have always sparked mixed feelings among consumer advocates and policymakers. On the upside, they provide incredible convenience and safety, over cash. On the down side, critics worry that that convenience factor is a double edged sword -- making spending too convenient and fueling over-consumption and under-saving.

People also worry that cards are hard to understand. For decades, policymakers have tried repeatedly to solve that by regulating card disclosures and practices with requirements to  disclose the annual percentage rate and fees; make key information prominent in the so-called Schumer Box (named after New York Senator Charles Schumer); require a grace period; bar retroactive raising of interest rates; limit marketing to college students; disclose the long-term costs of paying only the minimum balance and much more. Concern about credit cards prompted Senator Elizabeth Warren, back when she was a Harvard Law professor, to begin fighting what she called “tricks and traps” in financial products, and also business models that rely on penalty fees or interest for their profitability. That concern led to the CARD Act of 2009, and then to the creation of the CFPB itself.

The Petal card is trying to solve these challenges. It’s offering simpler, more transparent terms. It addresses the overspending problem by designing the card to encourage customers to pay the full balance each month, rather than revolve. And it’s tackling a third problem, which is reaching the tens of millions of people who don’t have a credit card. For most people, these cards are the first rung on the ladder to building a credit record so that they can later get a car loan or mortgage. Millennials have tended to avoid them, partly due to coming of age in the financial crisis and becoming leery about incurring debt. Jason notes that some young people are “sponsored” into the system by parents who provided them with cards, but for those who aren’t, it’s hard to build credit.

That’s a catch 22 -- you can’t get a card because you don’t have a credit record, and you can’t build a credit record because you don’t have a card. Petal is solving that with one of the most important kinds of innovations underway in finance, namely, use of alternative data to evaluate risk. They are looking at the person’s own payment and income history, as reflected in their bank account, to determine ability to pay.

Accessing that information has become controversial, as banks worry about allowing a third party to see this data even with the consumer’s permission, in case something goes wrong. However, the ability of consumers to allow such access is the life’s blood of most of the innovation underway in consumer finance. The CFPB is evaluating the issues arising around this, including questions like who really “owns” consumers’ bank account data, whether third parties’ data uses should be regulated, and whether we need to clarify where liability should fall in the event data is misused or breached. A lot of people are working on this issue. Solving it is one of the most important steps we can take toward making finance more inclusive.

Listeners have often heard me say that I’ve spent most of my career working with efforts to promote consumer financial health and inclusion by regulating the financial industry, and that I think the results have been mixed at best! A few years ago, I realized that technology could do most of what we’ve been trying to do through policy (if we get the policy right). Petal is trying to do that -- use new data and technology to offer a product that they think will be highly profitable -- despite leaving some kinds of revenue on the table -- because consumers will choose it. Watching them will be fascinating.

More information

Articles on Petal’s September launch:

  1. https://www.paymentssource.com/organization/simple

  2. https://bankinnovation.net/2017/09/no-credit-score-say-hello-to-petal-card/

  3. http://paybefore.com/finance-and-strategy/petal-uses-machine-learning-underwrite-credit-without-credit-score/

  4. http://www.thisisgoingtobebig.com/blog/2017/9/8/introducing-petal-providing-access-to-credit-to-thin-file-consumers

  5. https://www.nytimes.com/2017/09/08/your-money/new-credit-card-option-for-those-with-scant-credit-histories.html?mcubz=1&_r=0

Jason's Article in Medium:

https://medium.com/@jasonbgross_/petal-ba2bb74718f4

My podcast with Digit CEO Ethan Block (another example of innovators leveraging bank account data)

http://www.jsbarefoot.com/podcasts/2016/2/25/effortless-saving-digit-ceo-ethan-bloch


More for our listeners

Please remember to review Barefoot Innovation on ITunes, and sign up to get emails that bring you the newest podcast, newsletter, and blog posts, at jsbarefoot.com. Be sure to follow me on twitter and facebook.  And please send in your “buck a show” to keep Barefoot Innovation going.

Support our Podcast

I’ll hope to see you at the events where I’ll be speaking this fall:

I’ll also be speaking in December to the Dutch Central Bank on financial innovation in December. I do many presentations for regulators and welcome those invitations. Regulators, in my view, have the hardest and most important role to play in financial innovation.

We have wonderful shows coming up. I’ll be talking with Andres Wolberg-Stok of Citi Fin Tech. And I’m going to do one on one of the most fascinating experiences I’ve had in years -- I participated this month in the U.S. Army’s Threatcasting exercise  -- sort of a war-gaming process where we “threatcast” technology risks ten years into the future, and then “backcast” thinking about what we could do, today, to prevent the problem. It was off the chart fascinating.                                                                                                                                                                                                                                                                                                    We also have a show coming up with Miles Reidy, Partner at the venture firm QED. Miles and I had a fun and fascinating talk about two topics -- the investment outlook for regtech, and then how to find and work with a venture capital firm.

Speaking of RegTech, we’re going to have a show with Merlon Intelligence, an AML regtech firm, and also a special show with my own co-founders -- at Hummingbird RegTech. I’m proud to say that Hummingbird has been selected to present at Money 2020 in the startup pitch session. Be sure to come and watch!

Meanwhile, keep innovating!



The ABA's Regulatory Compliance Conference (Part 2)

Jo Ann Barefoot

Gift from Gene Ludwig - Compliance isn't Mickey Mouse

Gift from Gene Ludwig - Compliance isn't Mickey Mouse

This is a very special show because we recorded it directly from the bustling floor of the American Bankers Association’s 2017 Regulatory Compliance Conference.

The RCC has long been the preeminent gathering of compliance professionals in the United States and, not surprisingly, it’s growing -- with another attendance record this year at 1800 people. That makes it one of the largest events of the US banking industry.

We gathered in Orlando this summer to grapple with the huge array of challenges facing compliance professionals, from bank compliance officers and attorneys, to industry vendors, to the regulators themselves.

The episode departs from our usual format. Instead of having one in-depth discussion with one guest, I had eight short conversations with a diverse group of compliance leaders. Each discussion is about twenty minutes. My guests, in order, are:


Part 1






Part 2





The episode kicks off with a lively discussion with Eugene Ludwig and Allstair Renee. As many listeners know, Gene was previously the Comptroller of the Currency and then founded Promontory Financial. Last year, he surprised the financial world by selling Promontory to IBM Watson, to form Watson Financial. At the conference, I also moderated a fireside chat with Gene and Allistair Rennie.  It was the RCC’s first-ever session on regtech. -- and I predict it won’t be the last.

On stage for our fireside chat, Gene Ludwig presented Alistair and me with...wait for it...Mickey Mouse ears (again, we were in Orlando). For better or worse, everyone in the room got the joke. People in finance have long complained about “Mickey Mouse” regulations that impose massive, hyper-technical requirements but produce only limited benefits. Gene’s gift signaled that technology is attacking that problem. We’re shifting from an analog-era regulatory approach to a digital-era one that will use data and machine learning to make compliance effective and efficient, through regtech. Watson Financial is part of a fast-growing regtech industry that is completely rethinking how compliance is done. Compliance isn’t Mickey Mouse anymore.

To the contrary, in fact, there was a theme at this year’s conference about compliance officers as heroes. I’ve talked in past podcasts about this idea of “heroic compliance” -- that compliance people will increasingly be leaders in shaping the future of the industry. That’s counterintuitive, since compliance has traditionally been seen as a side issue in banking. Today, however, as technology transforms both finance financial regulation, we will see compliance executives at the front, shaping how the industry moves forward. They will be gatekeepers on what innovation can and cannot take hold, blocking harmful change but also opening the doors of the banking industry fortress to allow in new, better, more affordable products, and delivery channels, that can serve more people, profitably and at scale, in ways that actively foster consumer financial health. I think we should all begin to use the hashtag, #HeroicCompliance.  

In the fireside chat, Alistair took this idea further, arguing that compliance officers may actually be the people who keep the banking industry competitive in a high-tech world. Why? As they adopt regtech, they’ll be at the forefront of innovating in how banks use data and AI -- and therefore leading the charge to break banks’ data out of it legacy silos and putting it to use -- first to transform compliance, and later, who knows? ...maybe to transform banking, itself.

The conversations in this episode vary widely. We talked about regtech; the regulatory burden on community banks (including how regtech can help); how banking is changing; how compliance is changing; how regulators should balance use of rulemaking, supervision and enforcement; the grounding of compliance in mission and ethics; and the psychology of compliance, including that people sometimes look the other way on ethical failures in order to get along. We also discussed some of the top issues of the day, like AML and TRID. My guests have a mix of experience as regulators, lawyers, compliance officers, auditors, and compliance leaders, working with a wide range of large and small institutions. They have a wealth of insight into where we’ve been, where we are today, and where we should be going.

More links

More for our listeners

Please remember to review Barefoot Innovation on ITunes, and please sign up to get emails that bring you the newest podcast, newsletter, and blog posts, at jsbarefoot.com. Be sure to follow me on twitter and facebook.  And please send in your “buck a show” to keep Barefoot Innovation going.

Support our Podcast

Meanwhile, I’ll hope to see you at the events where I’ll be speaking this fall:

Meanwhile, keep innovating!



The ABA's Regulatory Compliance Conference (Part 1)

Jo Ann Barefoot

From the main stage

From the main stage

This is a very special show because we recorded it directly from the bustling floor of the American Bankers Association’s 2017 Regulatory Compliance Conference.

The RCC has long been the preeminent gathering of compliance professionals in the United States and, not surprisingly, it’s growing -- with another attendance record this year at 1800 people. That makes it one of the largest events of the US banking industry.

We gathered in Orlando this summer to grapple with the huge array of challenges facing compliance professionals, from bank compliance officers and attorneys, to industry vendors, to the regulators themselves.

The episode departs from our usual format. Instead of having one in-depth discussion with one guest, I had eight short conversations with a diverse group of compliance leaders. Each discussion is about twenty minutes. My guests, in order, are:


Part 1






Part 2





The episode kicks off with a lively discussion with Eugene Ludwig and Allstair Renee. As many listeners know, Gene was previously the Comptroller of the Currency and then founded Promontory Financial. Last year, he surprised the financial world by selling Promontory to IBM Watson, to form Watson Financial. At the conference, I also moderated a fireside chat with Gene and Allistair Rennie.  It was the RCC’s first-ever session on regtech. -- and I predict it won’t be the last.

On stage for our fireside chat, Gene Ludwig presented Alistair and me with...wait for it...Mickey Mouse ears (again, we were in Orlando). For better or worse, everyone in the room got the joke. People in finance have long complained about “Mickey Mouse” regulations that impose massive, hyper-technical requirements but produce only limited benefits. Gene’s gift signaled that technology is attacking that problem. We’re shifting from an analog-era regulatory approach to a digital-era one that will use data and machine learning to make compliance effective and efficient, through regtech. Watson Financial is part of a fast-growing regtech industry that is completely rethinking how compliance is done. Compliance isn’t Mickey Mouse anymore.

To the contrary, in fact, there was a theme at this year’s conference about compliance officers as heroes. I’ve talked in past podcasts about this idea of “heroic compliance” -- that compliance people will increasingly be leaders in shaping the future of the industry. That’s counterintuitive, since compliance has traditionally been seen as a side issue in banking. Today, however, as technology transforms both finance financial regulation, we will see compliance executives at the front, shaping how the industry moves forward. They will be gatekeepers on what innovation can and cannot take hold, blocking harmful change but also opening the doors of the banking industry fortress to allow in new, better, more affordable products, and delivery channels, that can serve more people, profitably and at scale, in ways that actively foster consumer financial health. I think we should all begin to use the hashtag, #HeroicCompliance.  

In the fireside chat, Alistair took this idea further, arguing that compliance officers may actually be the people who keep the banking industry competitive in a high-tech world. Why? As they adopt regtech, they’ll be at the forefront of innovating in how banks use data and AI -- and therefore leading the charge to break banks’ data out of it legacy silos and putting it to use -- first to transform compliance, and later, who knows? ...maybe to transform banking, itself.

The conversations in this episode vary widely. We talked about regtech; the regulatory burden on community banks (including how regtech can help); how banking is changing; how compliance is changing; how regulators should balance use of rulemaking, supervision and enforcement; the grounding of compliance in mission and ethics; and the psychology of compliance, including that people sometimes look the other way on ethical failures in order to get along. We also discussed some of the top issues of the day, like AML and TRID. My guests have a mix of experience as regulators, lawyers, compliance officers, auditors, and compliance leaders, working with a wide range of large and small institutions. They have a wealth of insight into where we’ve been, where we are today, and where we should be going.

More links

More for our listeners

Please remember to review Barefoot Innovation on ITunes, and please sign up to get emails that bring you the newest podcast, newsletter, and blog posts, at jsbarefoot.com. Be sure to follow me on twitter and facebook.  And please send in your “buck a show” to keep Barefoot Innovation going.

Support our Podcast

Meanwhile, I’ll hope to see you at the events where I’ll be speaking this fall:

Meanwhile, keep innovating!



Access For All: CIIE’s Sanjay Jain and the India Stack

Jo Ann Barefoot

Jain 1.png

My guest today is Sanjay Jain, Chief Innovation Officer at the Centre for Innovation Incubation and Entrepreneurship (CIIE). Among many high-impact achievements, Sanjay helped lead creation of one of the most ambitious government infrastructure initiatives ever undertaken -- the so-called India Stack that is connecting everyone in India to the financial system and mainstream commerce, by providing a biometric ID.

I met Sanjay at the Jakarta international regulator meeting I’ve mentioned before sponsored by the Omidyar Network and Gates Foundation and put on by FintechStage. I sat next to him at dinner one night, and was astonished to hear him explain the project and to hear others at the table describe how it’s already changing India. I’d been vaguely aware of it and knew it was huge, but had no idea how fast and transformational it is. At the conference the next day, we ducked into an idle meeting room to have this talk.

We usually think of innovation as driven by the private sector. We think of government’s role as either to protect people from innovation-related harm or as just to avoid blocking good innovation. In reality, though, government has another critical role, which is to provide the infrastructure within which new technology can work..

A core component of infrastructure is a system through which people can be accurately identified. People need to be able to prove who they are, quickly and easily and inexpensively, and in ways that can’t be faked, so that no one else can pretend to be them, and so that they won’t be excluded from opportunities because their identities are in doubt, or are too complicated to be worth the effort to verify.

This identity infrastructure doesn’t necessarily have to be provided by government -- we’ll do a show at some point with my friend Greg Kidd of Global ID, who argues passionately that it’s better to have a decentralized identity authentication system. Traditionally, though, government has played this role by giving people identity documents like birth certificates, driver’s licenses, and passports, and also unique, standardized identity markers, like social security numbers.

With old technology, that approach was the best we could do, and it worked pretty well for people who had the right documents. However, it’s never worked well for people who don’t, including many new immigrants, and certainly refugees, and of course, the very poor. The very poor have, always, been locked out of the mainstream.

All that has changed today thanks to what is arguably the most democratizing technology ever invented -- the mobile phone. As of 2013, more people have access to cellphones than to toilets. As we’ve discussed before on Barefoot Innovation, we are headed toward total financial inclusion through the phone. This means that, technologically, everyone can be connected, easily and completely and inexpensively, to everyone else. In most of the developing world, a top goal is to enable full access to the financial system and commerce, through the phone, as a primary engine for economic growth and prosperity.

However, people can only connect to the financial system if they can be reliably identified. So UIDAI -- the Unique Identification Authority of India -- has undertaken one of the largest government projects ever -- the collection of biometric identity information on every adult and every child in the world’s second most populous country. They have gathered ten fingerprints, two iris scans and facial recognition data for about 1.2 billion people. And they have done it fast!

The “IndiaStack” is being implemented in phases around four “layers”: “presenceless” identity, paperless records, cashless transactions, and consent-based use of data. At its heart is the Aadhaar card, which contains the person’s unique identity number, authenticated through the biometric ID. With this tool everyone can, among other things, open and use a bank account.

Needless to say, all this has raised concerns about privacy and data security. The project has critics, and even its advocates agree that the challenges are daunting. India’s leaders, however, believe the risks can be managed and that they are massively outweighed by the opportunity to open the doors of the economy to everyone.

I’ve spent time in rural India, including with an NGO called Rising Star Outreach that focuses on micro-finance, education and health services for leprosy communities. India is curing leprosy, but leprosy-affected people and their families still face daunting challenges. As I listened to Sanjay, I found myself remembering people I’ve met in remote villages where families live in one room, sometimes in huts with thatched roofs and dirt floors, and I also thought back to being in Chennai, in southern India, with the streets teeming with cars and lorries and motorcycles carrying five people and bicycles carrying three or four and auto-rickshaws and people carrying bundles of goods on their heads. And I thought about all the languages -- India has twenty-two official languages -- thirty that are spoken by more than a million people -- and hundreds of minor languages and dialects.  What it took these IndiaStack teams to find every single person in this huge country, and document them all -- it’s stunning.

And thanks to their effort, all these people can be connected up with everyone else in India, and eventually everyone else in the world, through a cell phone and a reliable identity.

Listeners outside the developing world may be thinking this is interesting but not very relevant to them. However, the challenge of creating reliable and safe digital identity is one of the top issues facing finance. The digital age is not only enabling new forms of identity, it’s also undermining the old forms. The dark web runs a thriving market in selling and buying personally-identifiable information including social security numbers. In the U.S., the 2015 Office of Personnel Management data breach, alone, compromised identity information like social security numbers for over 20 million people. Banks are increasingly caught up in fighting fraud and crime based on fake identities -- security experts tell me that criminals are more likely that real customers to accurately provide identification information, because they don’t make typos. Meanwhile, regulatory “de-risking” standards for Anti-Money Laundering “Know Your Customer” rules have been cutting off whole sectors of people from financial access because they come from places, industries or groups that raise disproportionate risk, and banks find it too difficult and costly to sort out the good people from the bad ones

Financial companies and regulators everywhere will need better ways to identify people, and India is blazing a trail that will yield fascinating lessons.

Sanjay’s Biography

SANJAY JAIN, Chief Innovation Officer, Centre for Innovation Incubation and Entrepreneurship (CIIE) Sanjay Jain leads efforts to help create, promote, and encourage entrepreneurship in areas around digital technology. Sanjay is also a volunteer with iSPIRT, the software product industry think tank. He has been an active member of the India Stack, Open API, and Cashless teams. He has been working with the NPCI to define the next generation payment systems (the Unified Payment Interface), as well as with regulators and other bodies to help entire processes go paperless. He has been one of the key contributors to help create, and evangelize various government open APIs, which are collectively referred to as the India Stack.

Sanjay has been responsible for the development of many large scale, high impact systems. He was the Chief Product Manager at the UIDAI, where he led the product development efforts from its early days till well after launch. The UIDAI has issued over a billion numbers to Indian residents.

Sanjay was also responsible for the creation and launch of Google Map Maker - a crowd-sourced mapping product that is responsible for Google Maps data for 170+ countries (including India). He’s been a part of many entrepreneurial teams through his career, including most recently at EkStep, Khosla Labs, and as a founder of Novopay Solutions. He holds an M.S. in Computer Science, from the University of California, Los Angeles and a B.Tech in Computer Science & Engineering, from the Indian Institute of Technology, Mumbai.

More for our listeners

I’ll be speaking this fall at these events:   

Please remember to review Barefoot Innovation on ITunes, and please sign up to get emails that bring you the newest podcast, newsletter, and blog posts, at jsbarefoot.com. Be sure to follow me on twitter and facebook.  And please send in your “buck a show” to keep Barefoot Innovation going.

Support our Podcast

Keep innovating!



We Have Less Time than We Think: Singapore's Sopnendu Mohanty

Jo Ann Barefoot

I met today’s guest, Sopnendu Mohanty, about 18 months ago. I moderated a panel on blockchain for last year’s MIT Fintech Conference, and Sop, who is the Chief Fintech Officer of the Monetary Authority of Singapore, was a panelist -- explaining how MAS was building a regional innovation hub that included blockchain strategies. Since then I’ve seen him three more times -- once at Harvard, which he visited with the visionary head of MAS, Ravi Menon; once when I spoke at MAS’s enormous conference last fall in Singapore; and last at a regulator gathering in Jakarta this year, where we recorded this short conversation.

The thing that strikes me most is that, when I first met Sop, he was way ahead of nearly everyone else in thinking about regulating fintech and regtech for regulators -- and that the last time we talked, he had widened that lead even further. On these issues, he might be the most forward-thinking regulator in the world.

The Jakarta meeting was extraordinary. Funded by the Omidyar Network and the Gates Foundation and organized by the amazing Fintech Stage, it drew regulators from six continents, all coming together to share problems and solutions on how to modernize regulation as technology transforms finance. Many were from the developing world, where rapid mobile phone adoption and mobile money services have outstripped traditional regulatory frameworks. Many, though, were from developed countries grappling with how to become innovative, themselves. Notably absent was the United States.

In Jakarta, Sop and I ducked into an empty conference room during a short break and had this talk, as a teaser for a longer episode on his next trip to the U.S.

Singapore is widely regarded as a top world leader in regulatory innovation, right up there with the UK Financial Conduct Authority that started the worldwide movement toward governments adopting innovation agendas. That movement is burgeoning -- recent research by the Aspen Institute finds that more than twenty nations have launched or are exploring regulatory innovation initiatives. MAS was either the second or third one, depending how you count (Australia was early too). MAS has built a “tech stack” that includes giving innovators wide latitude to try new things, as well as “co-creation” of some regulatory change with industry and a sandbox for experimentation.

I’ve become convinced that regulators actually need sandboxes and reglabs, because hands-on testing will be the only way they can learn fast enough to keep up with today’s technology change. Here’s my recent article making that argument!

In our talk, Sop explains MAS’s  “pragmatic” approach, which emphasizes small-scale experimentation, partnering with industry to solve specific problems, and learning from industry which, he says, generally knows more than government does.

When you talk with Sop, you feel a palpable sense of urgency. I think that’s why his thinking is evolving so fast -- he believes we’re running out of time. He worries that the financial system will suffer a calamitous cyber attack and that we have to move much more aggressively to “future-proof it.”

Of course, Singapore has an easier challenge than we do in the U.S., since it’s smaller and has a vastly simpler financial system and regulatory framework (every country has a much simpler regulatory framework than the United States). When I pointed this out to Sop, though, he had a response that has been haunting me ever since. I think you’ll find it thought-provoking.

I’ll be speaking again at the MAS Fintech Festival in November and urge you to come. Last year it drew a stunning 13,000 people. This year, he thinks that could double!  That would surely make it, by far, the world’s largest financial conference. It will be an exciting place to be.

So, enjoy my conversation with Singapore’s Sopnendu Mohanty!

More for our listeners

I hope to see you at some of my upcoming speaker events, including:  

Meanwhile, remember to review Barefoot Innovation on ITunes, and please sign up to get emails that bring you the newest podcast, newsletter, and blog posts, at jsbarefoot.com. Be sure to follow me on twitter and facebook.  And please send in your “buck a show” to keep Barefoot Innovation going.

Support our Podcast

We have great new shows coming up. We’ll be posting the series I recorded from the floor of the ABA’s annual Regulatory Compliance Conference, including one with Gene Ludwig and Alistair Renee of IBM’s Watson Financial on how artificial intelligence will transform compliance. In addition we’ll have Sanjay Jain, who helped build India’s revolutionary “tech stack” project to capture customer identity on more than a billion people. We’ll have the exciting startup, Petal, and we have several coming up on anti-money laundering.

Keep innovating!



Banks and Community : CSBS President John Ryan

Jo Ann Barefoot

My favorite episodes of Barefoot Innovation are the ones that take a philosophical turn. That happened with John Ryan, the thoughtful president of the Conference of State Bank Supervisors, which is the organization that coordinates America’s state-level financial regulators.

As you would expect, John and I began by discussing the events that have CSBS in the news these days. One is the launch of its Vision 2020 project to streamline state licensing and examinations for nonbank fintechs, to address the costly and monumental task these companies face in trying to grow to national scale by getting licensed state by state. The other news, and bigger controversy, is CSBS’ litigation against the Comptroller of the Currency, seeking to block the OCC’s proposal to create a national bank charter for fintechs. From these themes, though, we went on to far-ranging pondering about the future of banking, community banks and America’s communities.

On the OCC charter proposal, as John knows well, I’m for it. After talking with him, I still am, but this conversation is the best case I’ve heard anywhere about what could be at stake if such a charter were to bring more consolidation of the banking system. I don’t think it would, but his insights are hearty food for thought.

On Vision 2020, let me say that CSBS’s innovativeness amazes me.  At one point in the podcast John said, “we’re not very imaginative, but we get the job done.” Actually, I think they’re very imaginative, and I think the 2020 effort deserves its “visionary” labeling. CSBS is a century-old body and it is, after all, a body of regulators. Neither of those factors makes it a likely leader in innovation, nor does its daunting mandate of coordinating fifty wildly diverse state regulatory systems. And yet it plans to design and execute a high-tech transformation of how states license and supervise nonbanks (a process that, as John notes, is often still paper-based). I think other regulators can learn a lot from watching this model, both in how to design new systems and how to build buy-in from a complex set of stakeholders.

This innovativeness shouldn’t be surprising because, since these states are the regulators of financial innovation. With some exceptions, the cutting edge of innovation is not in the banking system (partly because banks are so highly regulated), but rather in the nonbanks -- the startups and some of the large tech firms. And those are all almost entirely regulated by the states -- the federal government plays almost no direct role and in fact has very little contact with them. (This is one reason I support the OCC fintech charter -- because it would be the single best way for the federal regulators, who dominate national financial regulatory policy, to become expert about the technologies that are rapidly transforming all of finance. Today, they have little first-hand interaction with it. All that expertise resides in the states that license and oversee the firms that are pushing out the frontiers of the financial industry. For me, this puts a huge priority on the need for the U.S. to evolve new regulatory models, because our uniquely complex and fractured regulatory structure cannot effectively cross-fertilize the rapid learning regulators need to keep up with today’s technology.

John offered plenty of philosophical thinking about all these topics, but late in the discussion we moved on to even bigger challenges, including the stresses facing America’s rural communities -- the kinds of places where people voted for disruptive change in last year’s election. John grounds his thinking about CSBS in his concern about the seemingly inexorable centralization and consolidation of banking. He worries about the role regulation plays in that, and about the future of local lending, and about the future of America.

My home in New Mexico is in a small town, and I’ve done a lot of consulting in them. Years ago, I did extensive strategic planning consulting with small banks, mostly in the Midwest. I spent a many days in little towns where, when lunchtime comes and you walk to the sandwich place with the bank president, half the people on the sidewalk greet him by his first name. There’s a reason why these banks are called “pillars of the community.”  It’s because if they disappeared, things would collapse. Talking with John made me remember one holiday-season visit with a little bank, where the management team told me they’d had to cover an emergency year-end budget shortfall for three local nonprofits, which would have failed without the help. One was a health clinic, one the library, and I can’t recall the third. The giving was a significant hit to the banks earnings, but they’d done it anyway because, quite simply, no one else could -- and because without these facilities, the town’s population would continue to shrink, and age.

Think about this question….What would happen to America’s rural communities if they lost their banks?

And what would happen to America, if we lost our rural communities?

These places are the wellspring of much of our unique national heritage. It seems to me they matter, in ways both visible and invisible.

Their problems are hard to solve. They deserve new thinking, and the future of community banks has to be part of it.

More information on John Ryan

John Ryan is president and chief executive officer of the Conference of State Bank Supervisors, the national organization of financial regulators from all 50 states and U.S. territories.  Prior to becoming president and CEO in 2011, he was CSBS’s Executive Vice President, and Assistant Vice President of Legislative Affairs. Mr. Ryan also led the financial services consulting practice at a public affairs firm and worked on the U.S. House Banking, Finance and Urban Affairs committee. He has a B.A. in political science and economics from the University of California at Berkeley.

More links

Banking Exchange - Reglabs: Time for a major regulatory experiment? (My new article advocating for a new collaboration model for U.S. bank regulators, including through reglabs and a new alternative regulatory channel.)

Karen Mills’ Harvard paper on small business lending and fintech, and my podcast with her.

More for our listeners

I hope to see you at some of my upcoming speaker events, including:  

Meanwhile, remember to review Barefoot Innovation on ITunes, and please sign up to get emails that bring you the newest podcast, newsletter, and blog posts, at  jsbarefoot.com. Be sure to follow me on twitter and facebook.  And remember, on the website, to send in your “buck a show” to keep Barefoot Innovation going.

Support our Podcast

SUPPORT OUR PODCAST

We have new episodes coming up. We’ll be posting the series I recorded from the floor of the ABA’s annual Regulatory Compliance Conference, including one with Gene Ludwig and Alistair Renee of IBM’s Watson Financial on how artificial intelligence and machine learning will transform compliance. Those also include an interesting discussion with prominent regulatory attorney Andy Sandler. In addition we’ll talk with Sanjay Jain, who helped build India’s revolutionary “tech stack” project to capture customer identity on more than a billion people. And we’ll talk with Sopnendu Mohanty, the Chief Fintech Officer of Singapore.

Keep innovating!



Breakfast with the Best - Brett King

Jo Ann Barefoot

Brett King and I see each other often, partly because we often speak at the same conferences and partly because we’re both on the board of the Center for Financial Services Innovation. For some reason, though, we went for over a year trying unsuccessfully to find time to record a podcast.

So we we ended up getting together in London. We both participated in the wonderful Innovate Finance Global Summit at the Guildhall, in the old City, where we carved out some early morning time, met at a restaurant and, and over plates of hearty eggs and bacon and mushrooms and tomatoes, had a conversation unlike any previous one in the fifty-four episodes we’ve done so far on Barefoot Innovation.

As most listeners know, Brett is a four-time best-selling author of an acclaimed series of books on the future of banking and hosts the global podcast and radio show, Breaking Bank$ -- on which I enjoyed being a guest in May. He is also the founder of the fintech firm Moven. He is a prominent media voice, and he is certainly the most popular speaker anywhere on the future of financial technology, both for his insightful content and his entertaining, unforgettable style.

In recent years, Brett has also reached beyond banking to become an overall futurist, especially in his book Augmented, looking ahead at how technology will change our lives.

I usually introduce each show by pointing out some highlights of my guests’ comments and sharing some of my own thoughts about them. With Brett, though, I’m going to skip that, because the whole discussion is a highlight. My suggestion is that you listen to all of it, and then listen again.

And maybe take some notes, because this might be the easiest way to get a glimpse of the future of finance, from someone who has been exploring far beyond the mapped frontiers for many years. On that note, be sure to watch for his next book, Bank4.0, which will go even further in predicting a transformation of finance.

More on Brett King

Brett King is a four times bestselling author, a renowned futurist and keynote speaker, the host of "BREAKING BANK$, the First Global Fintech Podcast" and the founder of Moven, with its concept of a downloadable bank account that incorporates mobile payments and banking capability, along with a gamification based money management system.

King was voted as American Banker's Innovator of the Year in 2012, and was nominated by Bank Innovation as one of the Top 10 "coolest brands in banking". His books Augmented, Breaking Banks (based on the podcast), BANK 3.0 and Bank 2.0 have al ranked as a finance bestsellers and have been released in several languages in 19 countries.

King has been featured on FoxNews, ABC, CNBC, Bloomberg, BBC, Financial Times, The Economist, ABA Journal, Bank Technology News, The Asian Banker Journal, The Banker, Wired magazine and many more. He contributed regularly as a blogger on Huffington Post. He has spoken to more than a quarter of a million finance professionals in over 40 countries in the last 3 years alone.

More for our listeners

I hope to see you at events where I’ll be speaking this year, including:  Finovate in New York September 13; Money 20/20 in Las Vegas in October; SourceMedia’s Regtech Compliance Transformed, in New York in October; Fintech Connect Live in London in December; and others -- watch the website.

I’m also speaking at a lot of regulator events. For all the regulators listening, it’s great to see you all at these, and I’m glad that there are more and more of them.  

For everyone, remember to review Barefoot Innovation on ITunes, and please sign up to get emails that bring you the newest podcast, newsletter, and blog posts, at  jsbarefoot.com. Please also join my facebook fan page, and follow me on twitter @JoAnnBarefoot.

Support our Podcast

And watch for upcoming podcasts. These include a special series I recorded from the floor of the ABA’s annual Regulatory Compliance Conference, including one with Gene Ludwig and Alistair Renee of IBM’s Watson Financial on how artificial intelligence and machine learning will transform compliance. We’ll also have a provocative discussion with John Ryan of the Conference of State Bank Supervisors. We have a lively discussion with prominent regulatory attorney Andy Sandler. We’ll  hear from Sanjay Jain, who helped build India’s revolutionary “tech stack” project to capture customer identity on more than a billion people. And we’ll talk with Sopnendu Mohanty, the Chief Fintech Officer of Singapore.

Meanwhile, keep innovating!



From Analog to Digital Regulation - CFTC Acting Chairman Christopher Giancarlo

Jo Ann Barefoot

Today’s program is a very special one -- a conversation about regulatory innovation, with the very innovative acting Chairman of the Commodities Futures Trading Commission, Christopher Giancarlo.

As regular listeners know, I’ve spent many years in and around Washington where there is a deeply entrenched belief that regulations, and regulators, simply can’t change very much. Regulators are generally, by both nature and design, deliberate, and cautious, and risk-averse. That’s exactly how they’re supposed to be. The slowness of regulatory change can be frustrating, but I think most would agree that, broadly speaking, it’s been better to err on the side of carefulness than boldness, or inventiveness, when taking regulatory actions that will ripple through big swaths of economy and often force change on whole industries and, often, millions of customers.

Today, though, the tilt toward slow and careful under stress in finance, because the world that our regulators oversee is changing too fast for the old system to work well. Our familiar regulatory models -- stable, steady, solidly-rooted -- are being bombarded by technology that is knocking them off their axes. These technology trends, which are much bigger than finance, are developing so fast, and are so powerful, that they are moving us toward a tipping over, into a new world. And in that new world, we’ll face a new paradigm -- namely, that if our regulators are going to be risk-averse, they will have to address not only the dangers of changing, but also the rising dangers of not changing. Technology is growing exponentially, pulling finance along with it, and we’re still trying to regulate it with brains and institutions hard-wired for linear change. We will increasingly face the danger of getting things wrong -- very wrong -- due to falling behind.

Fortunately, a growing group of regulatory leaders, in the United States and other countries, see this shift and are taking on its challenge. One of them is Christopher Giancarlo. Last summer, he and I spoke at the same conference in New York  and happened to sit together at lunch, where he began talking about technology and innovation in ways I’d never heard before from a financial regulator. At the time, he was a commissioner at the CFTC -- he’d been named to that role by President Obama and confirmed unanimously by the Senate. This year, President Trump appointed him Acting Chairman and has now nominated him to be the Chairman going forward. Senate action is expected soon on that -- it may well be that, by the time this show is posted, he’ll be confirmed as the Commission’s chairman.

This spring, he launched an initiative that’s called LabCFTC. Its goal to focus and build the Commission’s extensive work in fintech and regtech innovation. As he explains in our conversation, the Lab will pursue a wide range of activities, from guiding innovators about how to work with regulatory requirements, to participating in research, to building stronger collaboration among financial agencies.

I knew it would be fascinating to have Chairman Giancarlo as a guest on Barefoot Innovation, but I wasn’t prepared for the full vision that he laid out in our discussion. I think this is the single most thought-provoking and eloquent case I’ve ever heard from a senior official about why and how regulators, of all kinds, absolutely have to change.

Remember...the CFTC plays an enormous role today in overseeing financial markets. Its mandate was expanded after the financial crisis, far beyond its traditional focus on commodities. It now oversees the derivatives markets and works to reduce risks to the economy associated with the futures and swaps markets -- areas where, as he explains, technology is rapidly changing everything.

I know you’ll enjoy hearing the Chairman’s far-ranging insights, from the historical reasons why payments are cleared in three days to his eye-opening experience visiting a modern-day, high-tech family farm.

More for our listeners

Remember to review Barefoot Innovation on ITunes, and please sign up to get emails that bring you the newest podcast, newsletter, and blog posts, at  jsbarefoot.com.  Please also join my facebook fan page, and follow me on twitter @JoAnnBarefoot.

And watch for upcoming podcasts. These include a special series I recorded from the floor of the ABA’s annual Regulatory Compliance Conference, including one with Gene Ludwig and Alistair Renee of IBM’s Watson Financial on how artificial intelligence and machine learning will transform compliance. We’ll also have a provocative discussion with John Ryan of the Conference of State Bank Supervisors; will hear from Sanjay Jain, who helped build India’s revolutionary “tech stack” project to capture customer identity on more than a billion people; and last -- but not least --  we’ll have breakfast in London with the great Brett King.



Regulators & Sandboxes: Wai-Lum Kwok on Abu Dhabi's Reglab

Jo Ann Barefoot

“Sandboxes.” “Greenhouses.” “Pilot tests.” “Labs.”

These are not words we normally associate with financial regulation. Yet suddenly, all over the world, regulatory agencies are giving these novel names to a new,  unconventional kind of initiative.

The break from tradition is being driven by a realization:  they are going to need to find new ways to do their jobs well, in the face of fast-moving technology change and fintech innovation.

My guest today oversees one of these fascinating programs -- Abu Dhabi’s Reglab. He is Wai-Lum Kwok, Executive Director for Capital Markets at the country’s Financial Services Regulatory Authority.

The world’s most famous regulatory sandbox is run by the UK’s Financial Conduct Authority (which was inspired, in turn, by the CFPB’s Project Catalyst in the United States). We will have a podcast this fall with the FCA, which has just put out a new progress report. Speaking as a former regulator myself -- I was once Deputy Comptroller of the Currency -- I view the FCA’s effort as a remarkable case of regulatory leadership. (Here’s an article I wrote about it for Fintech Law Report.)

When the FCA’s initiative was launched it quickly caught the attention of other regulators around the world. As of today, approximately twenty countries have some form of innovation hub or sandbox underway or on the drawing board, including notably Australia, Singapore, and Hong Kong. The Aspen Institute will soon issue a report with a global overview, which we’ll link to in this episode’s show notes when it’s published.

These sandboxes have a wide variety of designs and specific objectives. As Wai-Lum explains in this episode, the Abu Dhabi initiative accepts a wide range of companies and gives them two years to demonstrate that their innovations will be beneficial and safe. The Abu Dhabi approach, like the UK’s and others, links to a wider national strategy to attract capital and companies wanting to do business in a regulatory climate that welcomes responsible innovation. Some of these countries are cultivating regional and even global leadership positions in fintech.

Note that we recorded today’s episode late last year. In May of 2017, the Abu Dhabi Reglab announced its first cohort of companies.

We had this conversation in the bustling exhibit hall at the Fintech Festival sponsored last fall by the Monetary Authority of Singapore (think about that for a moment -- a central bank ran a 14,000-person fintech meetup, and this year’s will be even bigger).  Our discussion was short, but the topic is one of the most important ones we’ve ever discussed on Barefoot Innovation. I’ve been thinking hard about how regulators are going to keep up with technology innovation in finance, and the answers are not going to be easy. Our regulatory frameworks are designed to be deliberate -- and therefore slow-moving. And to be conservative, and to focus on preventing risk, not fostering change. Some countries have mandates to foster competition, but most, including the United States, don’t. I’ve been researching this challenge in the book and paper I’ve been writing for the past two years as a Senior Fellow at the Harvard Kennedy School Center for Business and Government. Over that period I’ve talked with regulators, innovators, and incumbent companies throughout the United States and all over the world.

I’ve come to an opinion that might be controversial, but here it is. I think regulators will not be able to do a good job of overseeing emerging technology change, unless they create mechanisms for doing empirical testing. I think sandboxes, in some form, are not just helpful, I think they’re necessary.

Of course, it’s far too early to tell how well they will work and which models are best. The regulators running them emphasize that they are figuring this out as they go along. No one thinks sandboxes are panaceas. Nevertheless, the very process of undertaking these experiments is moving a community of regulators forward in deeply understanding fintech innovation -- both its promise and, importantly, its perils.

Despite the sandbox movement sweeping the world, the term sandbox, itself, has fallen out of favor among many in the United States. For one thing, sandboxes sound, well, unserious. For another, there has been talk of using sandboxes to waive or suspend consumer protection rules while companies experiment on real, live human customers. In practice, such suspensions aren’t happening anywhere to my knowledge, but the issue is obviously politically sensitive. (Also, Innovate Finance in London is working on a “virtual sandbox” that could work by modeling innovations using pooled data, so that real consumers would not be affected).

So, fine. Let’s not suspend consumer protections (even though a lot of these laws don’t actually protect people very well). And let’s call these initiatives greenhouses, or pilots, or, as Abu Dhabi does, laboratories. In our conversation, I told Wai-Lum that I too came up with the name “RegLab” for a project I’m working on, exploring the idea of creating a non-profit that could function as an interagency regulatory sandbox in the United States. The U.S. is unique in the world in our dizzingly complex, fractured regulatory structure (five federal financial supervisory agencies, plus dozens of other federal agencies, plus 50 states). We’re going to have to figure out two things -- how to coordinate a coherent fintech regulatory strategy and how to keep up with exponentially growing technology change. If we don’t, we’ll lose our global competitive edge.

There is much more to say on all this -- again, I think it’s one of the most important issues facing the regulatory community -- and we’ll have more shows on it coming up. For now, please listen to my fascinating conversation with Wai-Lum Kwok about the Abu Dhabi RegLab.

More about Wai-Lum Kwok

Wai Lum joined the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) in June 2015.  He heads up the Capital Markets division responsible for admission and supervision of financial market infrastructures and capital market intermediaries.  The division also regulates the offering of securities, collective investments schemes.

Wai Lum also spearheads FSRA’s strategy and efforts to support the supervision of innovation in Financial Technology (FinTech) and development of the FinTech ecosystem in ADGM.

Wai Lum has more than 10 years of supervisory experience.  Prior to ADGM, Wai Lum served as the Director of the Capital Markets Intermediaries Division of the Monetary Authority of Singapore.  Wai Lum graduated from Imperial College, London with an M.Eng in Electrical Engineering and holds an M.Sc in Applied Finance from the National University of Singapore.  He is a CFA charterholder.

More links

More for our listeners

Please remember to review Barefoot Innovation on ITunes, and sign up to get email notifications for new podcasts, the newsletter, and blog posts at jsbarefoot.com.  

Also go to jsbarefoot.com to send in your “buck a show” to keep Barefoot Innovation going, and join my facebook fan page. I hope you’ll also follow me on twitter.

Support our Podcast

Meanwhile, watch for a summer of amazing shows, including CFTC Acting Chairman Christopher Giancarlo; John Ryan of the Conference of State Bank Supervisors; and breakfast in London with the one-and-only Brett King. And watch for our special show that I recorded at the ABA’s Regulatory Compliance Conference in Orlando, including a talk with Andy Sandler and one with Gene Ludwig and Allistair Renee of Watson Financial.

Here’s my perhaps counter-intuitive takeaway from the ABA conference:  #ComplianceIsCool!



Colleen Briggs : Financial Inclusion Innovation Powered by JP Morgan Chase

Jo Ann Barefoot

Today’s guest is Colleen Briggs, Executive Director for Community Innovation and Corporate Responsibility at JPMorgan Chase. Colleen leads a visionary effort that is part of JPM’s commitment to building “more inclusive growth,” globally, by finding innovative models that build financial access and economic expansion.

Our timing is great because just last week, the Center for Financial Services Innovation announced its new class of winners for the Financial Solutions Lab competition. The Finlab is funded by a $30 million, five-year commitment from JPMorgan that Colleen oversees, aimed at finding, supporting, and scaling innovative ways to promote consumer financial health. This is part of a $1 billion program that the bank has undertaken globally.  

Here is a link to the JPMorgan press release on this year’s competition, which includes an overview of the winners, and here is a further article by the American Banker.

Colleen comes to this work from a diverse background at nonprofits, on Capitol Hill, and now in the private sector, searching for better solutions for lower-income financial consumers. In listening to her, I was struck by the degree to which she has her finger on the pulse of the trends underway, both globally and in the U.S.  She shares insights on how to make it profitable to serve low income customers; how to win the trust of consumers who are wary of digital products; on the failures of traditional financial education; on the primacy of behaviorally-based product design; on the need for new business models; on how to build partnerships between banks, fintechs and community organizations; on how innovative cultures can take root in big banks; on platforms that can get new solutions to scale; on the business opportunity for banks -- and their corporate customers -- from building global inclusion; on mixing high tech and high touch and the limits of automation; and on how to shift the whole marketplace. She has wise advice for all the players.

Since we recorded this episode, I’ve become the board chair at CFSI. Last week we held the Emerge Forum in Orlando, where a record audience talked about exciting new ideas for financial health. There was huge enthusiasm there about the new Finlab winners. In a sign of the maturing of the fintech startup world, three companies in this year’s class are reaching beyond the typical millennial customer base and instead building new tools for seniors. Watch for their progress.

Here are my other podcasts with the Finlab and past winners Digit, Ascend, and Bee.  

More on Colleen Briggs

Colleen Briggs is Executive Director of Community Innovation within the Office of Corporate Responsibility and Global Philanthropy at JPMorgan Chase & Co, a global leader in corporate philanthropy with $200 million invested in communities annually. She is responsible for helping establish and execute the firm’s global philanthropic and corporate responsibility financial capability, including the Financial Solutions Lab, and community development strategies, including PRO Neighborhoods. The Lab is a $30 million, five-year initiative that convenes leading experts in technology, behavioral economics, and design to improve consumer financial health. PRO Neighborhoods is a five-year, $125 million program that works to increase the availability and accessibility of vital economic opportunities in vulnerable neighborhoods across the country. Colleen also manages the Foundation’s portfolio of global financial inclusion grants, impact framework and grant guidelines and works with the lines of business to share best practices to improve the firm’s products and services.    

Prior to joining, Colleen was the Economic Policy Advisor to Senator Debbie Stabenow. In this role, Colleen managed the Senator’s economic portfolio, including policy related to financial services, tax, small business, job creation, community development, manufacturing, and housing. Colleen managed the Dodd-Frank market reforms for the Senate Agriculture Committee, and helped draft the Recovery Act, TARP, the Dodd-Frank Act, and healthcare reform.

Colleen is a member of the Asset Funders Network Steering Committee and the Innovations for Poverty Action Policy Advisory Group. She earned an MBA from the Yale School of Management and a B.A. from the University of North Carolina at Chapel Hill.

More links

Some organizations Colleen mentioned:

Neighborhood Trust / FlexWage / Lending Club / LendStreet / Propel

And more for our listeners

Please remember to review Barefoot Innovation on ITunes, and please sign up to get emails on new podcasts and my newsletter and blog posts at  jsbarefoot.com.  

Also go to jsbarefoot.com to send in your “buck a show” to keep Barefoot Innovation going. Please also join my facebook fan page, and follow me on twitter.

Support our Podcast - Send "A buck a show"

And watch for upcoming podcasts. My guests include Christopher Giancarlo, Acting Chairman of the CFTC; Brett King, founder of Moven; John Ryan of Conference of State Bank Supervisors; and a special series we recorded at the American Bankers Association Regulatory Compliance Conference this month. The ABA show includes a conversation with Promontory CEO (and former Comptroller of the Currency) Gene Ludwig and Alistair Renee of IBM Watson, who have teamed up to bring artificial intelligence to compliance through regtech.

See you soon!



Making it Easy : Intuit's Al Ko

Jo Ann Barefoot

Here’s a question: Would you like to file your taxes with just a keystroke, after your electronic devices automatically organized all your information and prepared the return? Here’s another -- do you think you’ll still be driving, five years from now?

Today’s episode is a far-ranging conversation with Al Ko, Senior Vice President and Managing Director of the Consumer Ecosystem at Intuit. Among other things, he heads up Mint, which is deeply innovating about healthier ways for us to live our financial lives.

Al reminds us that Intuit founder Scott Cook pioneered PFM -- personal financial management that leverages technology to simplify financial tasks (That story is recounted memorably in Eric Ries’ book The Lean Startup.)  Intuit then acquired Mint. PFM tools work wonderfully, if you have the time and motivation to pay active attention. Unfortunately, though, most of us don’t. It’s been estimated that maybe two percent of people actively use PFM tools. The other 98% struggle, and juggle our many financial tasks, and sometimes drop those balls. Al says American consumers pay $77 billion a year, just in credit card late fees. Just for, basically, forgetting to send in even the minimum payment by the due date.

Fortunately, big trends are bringing new solutions are starting to make the juggling easier, or even unnecessary. Finance will still be complicated, but it will feel simple.

This is critical, because complexity is one of the main drivers of people’s financial problems and bad financial health. Financial services are just inherently complicated, intrinsically hard to understand and hard to manage. If we can make it easy, a lot of problems simply go away.

The foundational breakthrough is that technology can now easily consolidate our disparate financial information in one place, electronically. Once it’s all there, technology tools can easily organize and analyze it. Then that consolidated information can be teed up, through new PFM tools, to give us at-a-glance insight on where we stand -- comprehensively, always up to date, and also benchmarked, if we want, against our goals, like what we’re saving for, or against emerging standards that can help us know whether we’re financially healthy, or not.

Next, and crucially, new tools can also easily take the initiative to send us alerts, reminders, to do things like paying a bill, or like pausing before we make a payment that will cause us to fall short on the next rent payment.  Not wait for us to look up a bill or find a statement, but initiate a reminder, in the midst of our busy lives.

Now add in behavioral science-based tools, so that, instead of being boring, our financial management can become engaging, even entertaining and fun, or even funny (see my past podcast with Digit). Behavioral science can also “hook” us on good behavior through rewards and reinforcement that are psychologically effective.

And then, as Al explains in this episode, all this will become universally accessible across all our devices.  We’ll be able to get those reminders, or get our questions answered, anywhere, anytime, all the time -- in our house, our car, our phone, our watch.

And we’ll be able to do it, when we want to, just by talking. We’ll use smart voice assistants like Alexa, the Amazon Echo, or Google Home.  No need to open apps, or look things up. No need, even, to find the phone, or even press a button. We’ll simply be able to speak, into the air. That may not seem like a big deal to you if you’ve been using, say, Siri, but back to the point on behavioral psychology, the tiny nuance of easiness can make a huge difference in actually using a solution.

Your voice assistant increasingly will be your full financial assistant (Capital One customers can already use Alexa for banking). If you want it to, it will greet you as your pour your morning coffee and say, “The electric bill needs to be paid today. It’s $28.” And you’ll say, “Okay, pay it.” And then you can say, “What’s my account balance?” And, “Have I saved enough for my vacation?” And, “Where am I on my savings goals?”

Now add in geolocation. For better or worse, our phones know where we are. So we’ll soon have financial apps that will send us a text, or vibrate the watch on our wrist, with a message:  “I see we’re at the grocery store. We can spend $75 here today.”  Or, “I see we’re walking toward the coffee shop. You asked me to remind you that this week’s latte budget has already been spent. Keep walking!”

We’ll also be able to give our assistant, our helpful bot, a personality, an avatar, with a persona that is most motivating for us, whether it’s, say, a basketball coach or a friendly dog.

As Al explains in today’s show, Mint has a new bill-pay app that already does some of these things,  and it has many more tools like these on the drawing board. They are not science fiction. These technologies already exist, and innovators are working fast to bring to us.

Are there new risks in these new tools? Sure. There are risks and drawbacks in all innovations, and we should be working on addressing them.

But here’s how I view that trade off. I’ve spent my whole career working with efforts to protect and empower financial consumers through regulation. And now, I look at these new technologies and realize, these are the solutions. With tools like these (and many more that are emerging) everyone will be able to live a healthy financial life, in the sense of easily understanding and managing their money. Easy budgeting, easy bill-paying, easier saving, easier investment, easier selection of the best product, easier self-discipline -- all of it.

To make that happen, there’s a key challenge to solve for:  how will tools like these become profitable enough that providers will offer them to everyone? What are the business models that will evolve, and how can we be sure they’re transparent and fair?

I talked about that with Al Ko, and about the need for consumer empowerment on using financial data, and about what Mint does today, and will be doing soon, and about its ambitious future vision around for Powering Prosperity and Financial Freedom, globally.

More information

My past podcast with Colin Walsh of Varo, which offers a financial assistant chatbot.

More for our listeners

Remember to review Barefoot Innovation on ITunes, and please sign up to get emails that bring you the newest podcast, newsletter, and blog posts, at  jsbarefoot.com.  

Also go to jsbarefoot.com to send in your “buck a show” to keep Barefoot Innovation going. Please also join my facebook fan page, and follow me on twitter.

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And watch for upcoming podcasts including John Ryan of Conference of State Bank Supervisors, Colleen Briggs of JPMChase, and a series I’ll be recording from the ABA Regulatory Compliance Conference in Orlando. My guests will include Andy Sandler of BuckleySandler, and also Gene Ludwig and Alistair Renee of IBM’s Watson Financial on how artificial intelligence and machine learning will transform compliance.

Last but not least, I’m now the chair of the board of CFSI, the Center for Financial Services Innovation. Be sure to join us at the Emerge conference in Austin. There’s nothing else like it!



Fiat Currency Can be Virtual Too: Jonathan Dharmapalan, CEO of eCurrency

Jo Ann Barefoot

Bitcoin began in 2009 -- only eight years ago -- and set forces in motion that are only starting to show their potential power. One was a byproduct -- the creation of the blockchain, or distributed ledger technology, DLT, is now on its way to disrupting activities far beyond payments, from  value chains to contracts. The intentional innovation was establishing a new form of currency -- virtual or digital currency -- that functions as alternative payments system that operates on the internet rather than through banks and the ACH.  The financial system is still in the early stage of grappling with the potential benefits and risks arising from this mold-breaking model (I wrote about some of those issues three years ago in my blogpost on The Benefits of Bitcoin.)

My guest for today’s show brings yet another angle -- a unique one -- to rethinking money. He is Jonathan Dharmapalan, Founder and CEO at eCurrency Mint, Ltd. Jonathan spent 25 years in telecommunications field, including becoming Head of Enst & Young’s Global Telecommunications Center in 2011. His insight, at eCurrency, is that the best way to capture the power of digital currency is to have governments, themselves, issue it.

Jonathan and I met during the annual meeting of AFI, the Alliance for Financial Inclusion, in Fiji, and he explained his vision for building a new system based on government-issued e-currency. He argues that this concept can capture the best of both worlds, combining the stability and confidence that comes with well-managed traditional currency, and adding the advantages of virtual money such as speed, ease of use, and infinite divisibility.

I loved this conversation because it exemplifies how innovative thinking in finance, once it gets “released into the wild,” can spark more and more creative thinking, far beyond what the originator innovators had in mind. Often, it leads to solving problems we don’t even realize we have, because, well, we just assume the world is a certain way and we can’t picture anything else.

It reminds me of the quote attributed to Henry Ford -- apparently erroneously -- that if he had asked his customers what they wanted, they would have said, faster horses.

More about eCurrency

Jonathan’s Background:

Jonathan Dharmapalan is Founder and Chief Executive Officer at eCurrency Mint Limited. He became Head of the Global Telecommunications Center at Ernst & Young LLP in May 2011, responsible for leading a team of over 2,000 telecoms specialists across the world. He has had a 25 year career in telecommunications and the related sectors of technology, media and entertainment, and led Ernst & Young's Telecommunications Center in Beijing. He began his career in telecommunications at AT&T Bell Laboratories. Mr. Dharmapalan holds a Bachelor of Science degree in Electrical Engineering from Northeastern University and a Masters of Science degree in Electrical Engineering from The California Institute of Technology.

More for our listeners

Many exciting things are happening.

First, I’m happy to say that I recently became chair of the board of directors at CFSI -- the Center for Responsible Innovation.  If you haven’t signed up yet to come to our Emerge conference in June, be sure to do so!

Also come, that same week, to the ABA’s Regulatory Compliance Conference. The ABA is innovating in its format this year, including by having me record some very special podcasts straight from the conference floor. I’ll also be holding a fireside chat on the main stage with Gene Ludwig of Promontory and Alastair Renee of IBM Watson, on how regtech will change compliance, including through their formation of IBM Financial to bring Watson’s artificial intelligence to regulatory challenges.

And it’s not too early to put Money 2020 U.S. on your agenda for October. I’m going to MC the conference regulatory track, which has some fabulous speakers.

Remember to review Barefoot Innovation on ITunes, and please sign up to get emails on new podcasts and my newsletter and blog posts at  jsbarefoot.com.  

Also go to jsbarefoot.com to send in your “buck a show” to keep Barefoot Innovation going. Please also join my facebook fan page, and follow me on twitter.

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See you soon!



Outspoken: Bill Harris, Founder and Chairman of Personal Capital and former CEO of Intuit and Paypal

Jo Ann Barefoot

In the early days of Barefoot Innovation, one of my guests said something very provocative, that I knew would not sit well with some of our listeners. I considered whether to edit it out. Someone on my team pointed out that my website features a quote from Carl Sagan about the importance of truth-telling, and we decided that it’s the essence of this show to have a wide range of guests and let them speak as they want, without editing, and with the understanding that it’s their opinions rather than mine.

It’s a good thing we have that policy, because otherwise, I would have quite the project figuring out what to do with my very lively conversation with Bill Harris, the former CEO of Paypal and Intuit, and Founder and Chairman of Personal Capital. Bill and I got together, in a little office I was using at Harvard, and had a very far-ranging conversation. By the time we finished, I told him I’ll probably have to offer equal time to all the people he -- shall we say, critiqued -- during our talk.  

Seriously -- if anyone Bill mentions would like to come on the show to offer opposing views, please reach out.

A lot of Bill’s outspoken views these days focus on the controversy over customers’ right to use and share their financial data. Much of today’s most promising innovation works by having people give permission to a fintech to access their bank account, so that the fintech can help them save, invest, or manage their money. This is the model behind everything from Mint (podcast with them is coming soon), to Digit (see our past episode with Ethan Bloch). For the past year or so, banks have been raising concerns that these arrangements can be risky to customers because the fintech may have inadequate security, and/or because there may weak controls on how the fintech uses the data.

The innovators are countering that many of them have better security than banks do -- basically because they have new technology rather than the aging, siloed IT at most banks. They also argue that the potential risks can be managed, including through best practice by data aggregators like Yodlee. Bill is part of a newly-formed fintech group on Consumer Financial Data Rights  (which I have advised) and which is trying to build consensus on how to provide consumer protection while also assuring that consumers can access and use their data freely. The core argument is this information belongs to the consumer, rather than to the company that’s holding it.

There are huge stakes in this, because data is the life’s blood of financial innovation. Regulators and the financial community must assure that it’s protected and not abused, but also have to enable it to flow freely, with the consumer’s permission. If it doesn’t, most of the best innovation underway with wither and die.

In our discussion, Bill talks about this challenge, including the fact that the Dodd-Frank law authorized the CFPB to set out guidance on it. (Here is the CFPB’s request for information on the data rights issue.) Even more basically, he talks about the underlying problem, which is how to actually secure consumers’ data and establish reliable identity verification. Bill has helped to found three major security companies and shares his deep thinking about a security world beyond passwords (which he calls “stupid”).  He also warns against universal data security standards that are rigid or one-size-fits-all. And he offers a vision for how we will really solve identity authentication and security problems -- through the phone.

We talked about his current company, Personal Capital, which provides personal financial management software to about 1.3 million users, for free. For customers that want more help, the company then provides fee-based investment advisory services tailored for people with complex financial situations. It arose from Bill and colleagues deciding that people’s biggest financial challenge is the “chaos” that leaves people leading “unexamined financial lives.” Personal Capital has designed a solution that is simultaneously high-tech and high-touch.

Bill has wide-ranging views (including some praise) about new models emerging in investment management and robo-advising. (Here is the earlier podcast I mention in our talk, with Jon Stein of Betterment.)  Our discussion also included a look into how Bill starts businesses and scales them up, and about the challenges of legacy bank IT systems (stuck together with “bubble gum and sealing wax”).

I think you’ll especially enjoy his stories about past adventures, including the early days at Intuit, and the hair-raising startup of PayPal with Elon Musk, Peter Thiel and Max Levchin, in a “small second floor thing over a bakery on University Street outside of Stanford.”

And listen closely as he recounts an intriguing dinner conversation with Steve Jobs, about financial services.

More for our listeners:

Watch for our upcoming shows, including Colleen Briggs of JPMorgan Chase; Wai Lum Kwok, who leads the regulatory sandbox in Abu Dhabi; Jonathan Dharmapalan, founder of eCurrency; Al Ko, who leads Mint; and the one and only Brett King, among others.

Please review Barefoot Innovation on ITunes. Also sign up to get emails when the new podcasts come out and to get my newsletter and blog posts at  jsbarefoot.com. And go there to send in your “buck a show” to keep Barefoot Innovation going.

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I hope you’ll also join my facebook fan page, and follow me on twitter.



Heroic Compliance : Treliant's Lyn Farrell

Jo Ann Barefoot

This episode is incredibly special, in two ways.

First, Lyn Farrell is not only my former colleague, but one of my very best friends. We had such fun recording this at my apartment in Boston one weekend late last year. In many ways, it’s just a slice of a long conversation we’ve been having more or less continuously for years, including over countless meals on the road together, in the consulting life we used to share

Second, I love it when our podcast discussions are actual brainstorming sessions. This one hit the jackpot on that front. In our back and forth, Lyn came up with an insight that neither of us had when we started, and both of us have found it reshaping our thinking ever since. It comes late in the episode -- you’ll know it when you hear it. I hope you find it as powerful as we did.  

Lyn Farrell is former Managing Director, and now Advisory Board Member, at Treliant Risk Advisors.  She is arguably the foremost expert in the United States on regulatory compliance matters regarding consumer financial protection. As we note in our discussion, she literally “wrote the book” on compliance as the author, for more than twenty years, of the Reference Guide to Regulatory Compliance, published by the American Bankers Association as the foundation material that candidates must master in order to become Certified Regulatory Compliance Managers. Lyn is an attorney, in-demand public speaker, prolific writer, and consultant who has worked with every imaginable regulatory challenge, from the world’s largest banks to small community institutions and fintech startups, and from positive, proactive clients to cleaning up grizzly enforcement problems. She has, simply, seen everything.

Fortunately for us, she has opinions about it all and shares them with bracing candor in our talk. She describes what’s failing in our current regulatory regime and explains what everybody is getting right and getting wrong, from Congress and regulators to bank CEO’s to compliance and risk professionals to IT departments, to her fellow lawyers, to fintech innovators. She offers a cogent indictment, from the inside, of the weaknesses of what we’ve built -- the disclosures no one reads, the high costs of compliance, and the tragic mismatch between where we expend resources versus what consumers actually need.

She’s also expert in bank IT operations. It’s an open secret that most banks have antiquated IT, often accumulated through decades of mergers and acquisitions in which older systems were never integrated but rather, as Lyn puts it, stuck together with “bailing wire.” (We explored solving some of this through blockchain technology in my earlier Podcast with Blythe Masters of Digital Asset Holdings.) These old systems are a hotbed of compliance errors, for reasons she describes. It’s another area where startups have a counterintuitive advantage over banks, thanks to having no creaky legacy IT.

In our discussion, Lyn explores the regulatory present and past (it’s been a long time since I’ve heard anyone mention Regulation Q!), but she’s most thought-provoking about the future.  She works extensively with innovators and has a vision for how we should be using new data and technology to do better.

I always urge people interested in innovation to break out of their work silos and reach across disparate realms.  Lyn does this better than anyone I know. If it weren’t for her, I would never have attended a LEAN seminar, or done free-writing exercises to inspire creative thinking, or read Deep Work by Cal Newport, or watched the Amy Cuddy Ted Talk on “presence.”

Since we made our recording, Lyn has stepped back from her full time role at Treliant to serve on its advisory board, spend more time in the beautiful house she and her husband Brian are building in Colorado Springs, and lead the Treliant Institute for Strategic Compliance Leadership, her brainchild.  Lyn asked me to speak at it, which inspired me to create a dinner talk I call “Heroic Compliance.”  It’s about the need for compliance officers -- even though they often seem more like Clark Kent than Superman -- to save their banks, customers, and industry by leading them into the high-tech innovation age. No one embodies that leadership more than Lyn, and I’m titling this episode with the same name -- Heroic Compliance.

The same day we recorded this episode, Lyn told me she’s launching her own podcast show, aimed at compliance professionals. She said my dinner speech prompted her to give it the name, “Compliance Heroes.” You’ll find it on ITunes and the Android Market.

Here are two more titles in Lyn’s recommended reading:

Emotional Intelligence 2.0  by Travis Bradberry

Presence by Amy Cuddy  

 

And here is more on her background….

Kathlyn L. Farrell, CRCM, CAMS, AMLP

Senior Advisory Board Member

Lyn Farrell is an experienced Regulatory Compliance executive, with over 35 years of experience in banking law and compliance. She is a Senior Advisory Board Member at Treliant Risk Advisors, LLC. Lyn has led many diverse and complex compliance projects for large financial institutions, including:

  • Developing a regulatory compliance strategic plan for a financial institution that primarily operates in the Fintech space;

  • Assisting the CCO of a top 10 U.S. bank to make the regulatory compliance program more proactive, strategic and integrated with the businesses and other risk management disciplines within the organization;

  • Designing and building a comprehensive Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) audit program for the internal audit division of a top 10 U.S. financial institution, including developing the annual audit plan, scoping the individual audits, and writing the audit scripts;

  • Assisting a top 20 bank implement all aspects of the TILA-RESPA Integrated Disclosure Rule (TRID), including revamping business processes, enhancing risk controls, writing policies and procedures and creating job aids to assist first line staff to implement this complex regulation;

  • Developing the “UDAAP University” training program for the compliance departments at three of the top 20 financial institutions and for the internal audit departments at 3 of the top 20 US banks;

  • Overhauled the Community Reinvestment Act (CRA) program for a top 20 US financial institution, including writing a new program document, reviewing its assessment areas and investments, and implementing a shift in the critical focus of its nationwide community development staff;

  • Reviewing the potential acquisition by a top 20 U.S. bank of a large non-bank financial organization and provided advice on limiting the company’s regulatory risk by integrating and expanding the current compliance function and making it more strategic in its execution.

Lyn has a passion for leadership development and has designed the Treliant Institute for Strategic Compliance Leadership, a leadership program exclusively for compliance professionals in financial institutions She is a frequent speaker at banking events and regularly publishes articles on a variety of banking-related topics. Her recent publications include:

  • “Strengthening the First Line of Defense” in ABA Bank Compliance magazine, September-October 2016“TRID: A Checklist for Successful Compliance” in Mortgage Banking magazine, March 2016

  • Reference Guide to Regulatory Compliance, published by the American Bankers Association, the official study guide to the CRCM examination

  • “Is this UDAAP or Not?” in  ABA Bank Compliance magazine, July-August 2015

  • “FCRA: A Sleeping Regulation Awakes” in Banking Exchange, August 2015

  • “Effectively Managing UDAAP Compliance in Mortgage Servicing” in Mortgage Banking magazine, April 2015

  • “Managing UDAAP Compliance Risks in Financial Institutions” in Journal of Taxation and Regulation of Financial Institutions, Nov/Dec, 2013

She received her undergraduate degree from Texas A&M University and her JD from the University of Houston.  Lyn is a Certified Regulatory Compliance Manager (CRCM), and an attorney, licensed in the state of Texas.  

Lyn was the 2012 recipient of the ABA’s Distinguished Service Award.

More for our listeners:

I'll hope to see you all this week at FinXTech Summit in New York and of course CFSI’s Emerge in June.

Remember to review Barefoot Innovation on ITunes, and please sign up to get emails on new podcasts and my newsletter and blog posts at  jsbarefoot.com.  

Also go to jsbarefoot.com to send in your “buck a show” to keep Barefoot Innovation going. Please also join my facebook fan page, and follow me on twitter.

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I’m just back from London -- more on that later -- but one highlight is I recorded an episode with the one and only Brett King. Coming soon!