Brett King on the Death of Traditional Banking. What's Next? | Curiosity Code 012
09 May, 2024
In this episode of Curiosity Code, Alex sits down with Brett King, a trailblazer in the fintech industry, best-selling author, and co-founder of Moven. They delve into the inception of Moven, the world's first mobile banking app that allowed users to sign up for a debit card directly within the app, disrupting traditional banking models. Brett shares insights on the innovative features Moven introduced, such as real-time receipts and personalized financial health indicators, which have since become industry standards. The conversation shifts to the evolution of Moven from a mobile challenger bank to a B2B platform, spurred by a pivot during the COVID-19 pandemic. Brett also discusses his book, Bank 4.0, exploring the concept of 'banking everywhere, but never at a bank,' and the technological trends supporting this vision. The interview touches on the regulation of AI in financial services, the impact of fintechs on traditional banking, and the future of AI-driven financial services. Brett's involvement in longevity projects and his views on the intersection of technology, climate change, and inequality are also highlighted. The episode concludes with Brett's predictions for the next big trends in fintech and beyond, emphasizing the potential of AI in transforming financial services and the broader societal implications.

Alex: Hey, welcome to today's next episode of Curiosity Code, where we talk about the future of finance with Brett King, a visionary whose fingerprints on the pulse of fintech innovation. Brett didn't just adapt to the future, he actually created it. From coding prodigy to formidable forest in the fintech arena, he is a best-selling author, Australian futurist, and co-founder of Moven, originally a New York-based mobile banking startup. Welcome to the show, Brett.

Guest: Thanks for having me on.

Alex: All right, let's dive in. There are so many things that I want to cover. Let's start with Moven. So you launched Moven Bank in 2010, the premier of mobile app based banking. How did this innovation disturb the traditional banking model at that time? And what were the prerequisites for the revolution? What led you to it?

Guest: So we were the first mobile banking app in the world where you could sign up for a debit card. There were other mobile banking efforts that sort of predate Moven, Perc street, and Banksimple was a few months before us, and Gobank was around the same time as us, but none of them had signed up in the app. So that was the big innovation, not having a signature, you know? And we also established a number of firsts in the, in the, in the space where now you can see those as design patterns. For example, we didn't use the homepage for a list of accounts, which is still common for most of the big banks.

Alex: Right.

Guest: When you sign up, you know, the first page is checking, savings, credit, you know, mortgage, whatever the product view if you like. We went for a personalized money view, and so there was a spending meter that showed you how much money you were spending in the month. The app would turn red if you were spending more than traditional, and green if you were spending below, illustrating good financial health. Those sorts of design patterns, those artifacts now appear across the banking space, particularly in the challenger banks that they adopted that early as well. So I feel like we created some good design patterns. We had real-time receipts. So you tapped your card or swiped your card at a point of sale, and you would get a receipt through a notification on the phone before the paper was printed off the point of sale. So back in 2012, when we started our beta, obviously that was very well ahead of the time. There are still banks that don't have that type of exactly. Design approach today. So I feel like we did our work in setting some really strong design patterns. We also had an alternative credit scoring mechanism, which we called cred score. And that was sort of looking at your financial wellness as a score, but it sort of created a little bit of confusion between credit score and so forth. So we sort of de-emphasized that. But we had some really interesting innovations.

Alex: Yeah, that's impressive. Even, like. Like you said, even these days, I don't know, one single bank that I use that would give you a receipt, like, online, even before it's printed.

Guest: Well, you know, we see the wallets do it by Apple Pay. You know, Apple does. And that you, you know, we would have. I mean, that real-time receipt, we had. We had instant categorization. So it would say, you know, you walk into a Starbucks, it would say you spent $300 on coffee this month or dining out or Uber to be taxi service. And that was a big behavioral changer because people would see that and they'd be like, oh, I've spent that much on coffee already this month, and it would change their spending behavior. So it was really interesting to see how the real-time receipt could be more than just a receipt. It also was a great fraud, anti fraud mechanism, because if people had their app and their phone and the card got used, they would see an instant receipt for it and they could turn the card off in the app again. That's something that you don't get. A lot of banks can do that in the app today, and we were doing that back in 2013, I think we launched that feature. So it was fun, man. We were pushing the envelope. It was a great time.

Alex: How did you come up with the idea? How did that happen?

Guest: So I wrote, my first book Bank 2.0, and that was launched in early 2010. It was actually on the book launch tour in the United States, where I was attending a breakfast in Los Angeles. And I'd been toying with the idea of starting my own bank because I'd heard about what Josh and Shamir were doing at simple, and I was like, you know, I could do this. And so I was thinking about how I would use social media and mobile to create sort of a unique experience, sort of blending that influence piece with financial health and financial wellness. Sort of a weird combo for banking, but that was sort of the line of thinking. And I attended this book launch, and there was a bunch of VC's at this book launch. It was in Santa Monica with my friend Ken Ratowski, his metal group, and William Quigley, who was the founder of Tether. He was there and he said, yeah, I absolutely get this because I gave this vision of this downloadable bank account and how banking would work in ten or 20 years. And he said, I get this. But he said, banks won't do this. So who's going to do it? And I was like, I'm going to do it. So that afternoon I went home and registered the domain move and bank. Move and bank.

Alex: Impressive. Impressive. Now, the bank or the app, the company started as a mobile challenger bank and then it evolved into basically, it's a platform essentially now.

Guest: Yeah. So how did that happen? We've got players from 17 different geographies in ecosystem. Now I'm not as actively involved in the company. I've stepped away the last couple of years and let the team run it. But in 2020, when COVID hit, we had a series C ready to go. And when COVID hit, the investor got cold feet. So we had to sort of decide because we had at that point had both businesses, the platform business, doing B two B, which had been very successful with banks like TD bank in Canada and even various fintechs licensing our technology banks throughout Asia and so forth. TD bank has said that my spend, which is movin's version for them, is the most successful product they've ever launched. So that was great, but we had to make a decision and the b two B business was relatively profitable and the b two C business was losing a couple of million bucks a year. And we had had legal challenges from some of our investors in respect to spinning off the bank and the software business separately. And that's a long story as to why that was. So we had to basically make a decision. So we did a deal with Varro, with the team there for them to take over our client base. So we exited out of the consumer business and stuck to the software business.

Alex: But it's quite interesting transition and as usual in startup world, yeah, but in.

Guest: Terms of how the banking as a service platform came to be, it largely came to be because other banks saw what we were built and built and they came to us and just asked to license the tech. So that's how we got into the enterprise and the business. Banking as a platform side of things.

Alex: That's perfect. I think it's more fundamental future for the business than just think in the BTC segment. Let's change the subject a bit and chat a bit about your, one of your books, actually, bank 4.0, you discussed the concept of banking everywhere, but never at a bank. Can you elaborate on how current technological trends are aligning with this vision?

Guest: Yeah, well, you know, that is even more true today than it was back then. In fact, my new book, which comes out later this year, branch today, gone tomorrow, we have some updated statistics on that. And some of the statistics are that, remember when I wrote Bank 4.0? It's five and a half years old now. So it's still, I think, very relevant to this conversation because I talked about embedded banking and I talked about the rise of challenger banks globally, that they were going to be the biggest banks in the ecosystem. And today on Amazon, the book is still in the top three best sellers in banking. So it's had excellent longevity. But the real key to sort of that framing of banking everywhere, but never a bank, was understanding that banking is becoming digital, it's becoming technologized, and AI is only going to advance that significantly in terms of our reliance on the technology. And that essentially means that the existing banks are at a penalty because they don't have all of the latest tech. It's hard for them to integrate new tech, especially things like AI. Yes, they've got data, but it's not. The data is in all different silos. And you're going to have to build a data lake before you can mine that data for AI. Whereas the challenger banks, the wallet ecosystems and so forth, their tech stacks allow that sort of agility. Plus, they're growing much faster because they have lower acquisition cost, because they're digitally aligned and so forth. So today, if you take the top 20 fintechs in the world, they have 3.83.9 billion customers, the top 20 banks, 2.7 billion. So fintechs are already a third larger, you know, 30% larger than the banks in terms of customers and audience they serve. In terms of growth, over the last five years, the fintechs have grown 200%. Big banks, 3%. Average annual revenue growth for the fintechs over the last five years has been 45%. For traditional banks has been 15%. So if you don't take sort of portfolio or assets under management as the metric, and you look at the fastest growing, most profitable acquirers of customers out there in the financial services arena today, it's all fintechs. All of the fastest growing FIS are fintechs. I would say banking everywhere, never at a bank is a pretty good way to describe that.

Alex: When you talk about fintechs, do you attribute crypto technology to fintech as well in this context, or it's a separate thing?

Guest: Look, in the early days, I definitely would have, but it's become a different beast now, such that in the early days, as a fintech guy, you could be across crypto and you could understand it enough to be competent in that arena. You know, I used to hang out with Brock Pearce and Charlie Shrem and Roger Ver and do events with them and sit on panels with them and things like that. So, you know, fintech and crypto in the early days were very aligned. And, you know, we had Brock on the show when, you know, Bitcoin reached parity. Then we had him back on the show when he hit $1,000. So it was, you know, we had Charlie Shrem on the show two days before he went to prison for the bit instant issues, and we had him on after he got out. So, you know, yeah, I mean, yes, in those early days, definitely, but today, no, it's a different beast. You know, web three, metaverse, the digital twin environments. Not only that, but just the way the regulatory environments on cbdcs and stablecoins and tokens and all of that smart contracts, how that's going to change the world of banking. The fact is that crypto and fintech are set to be intersecting all throughout this revolution over the next 2030 years. Yeah, I still think crypto is obviously a form of technology in the financial services space, so it fits the definition and it's still going to be tightly correlated and connected. But you need now deeper domain expertise to really be in the space.

Alex: Makes sense. Speaking about regulations, you frequently meet with central bankers and policymakers worldwide. What are the most pressing topics in these discussions, and how do you influence global financial strategies?

Guest: So obviously, regulation of AI as it pertains to financial services, identity, wallet integration into the ecosystem, the role of real time payments, the role of identity in that, how AI might be placed in terms of bank accounts or wallets to create a smart bank account layer, what that sort of looks like, that's the true version of embedded banking and embedded finance. Then I do talk about AI based commerce and marketplaces and the need for smart contract infrastructure, because I make the point that no banking core system that's out there can run a smart contract today. So if you are going to do AI based banking, you need smart contract layer and you need to build that as a net new competency. So that doesn't necessarily mean that traditional banks are in a good place to do that. Yes, they have the customers, but they don't have the infrastructure. So it's still pretty wide open. And I ask regulators to sort of think about that, the role of alternative banks in that ecosystem. You know, we've seen, for example, deposit taking in many markets has been limited to banks. And yet I argue quite strongly to regulators that they're going to have to fundamentally change the way they think of what is a bank. So in the past, we've talked about a fintech charter, and we've talked about that almost as if it's a sort of a subset of banking. It's not a real bank, but it can be regulated entity over there. But actually, what we're learning is that wallet ecosystems and fintech challenger banks are probably going to be the preferred model moving forward in terms of operational efficiency, in terms of financial inclusion, in terms of profitability. All of those metrics, the challenger banks, these wallet plays are ticking the boxes on now. So we know they're going to be the dominant form of financial institution in the future. So now a fintech license looks like the primary way of doing banking. And then we have to start thinking about artificial intelligence and heavily AI based banks. How would we license those? And the reality is, you realize we're getting further and further away from the model of regulation that we have today.

Alex: Right. And I think you also touch the subject in your book, the rise of technosocialism, which is sort of intersection of AI, climate change and inequality. Let's chat a bit about that. What prompted you to explore these themes, and how do you envision this force is shaping the future of the industry?

Guest: Sure. Long, big question. I'll try to keep it brief, but it's hard. So I wrote, I've done, obviously, the banking futurist stuff, but I also wrote a book called Augmented Life in the Smart Lane back in 2015, which ended up being on President Xi's desk during his national address, which was like, so cool. But the problem with augmented was it was very personal view of how technology, like AI and smart glasses and, you know, having an AI companion will change your life, how gene therapy and longevity treatments are going to change the way we live. You know, so it was very personalized view of how we are going to live with these, these technologies in the future. And, you know, since I wrote that, it's nine years now, a lot of the things that I wrote about are sort of leading it stuff are now starting to become real, like gene therapy and so forth. So, you know, I feel like, as a futurist is a good piece, but it missed the systemic issues. How's this going to change work? How's it going to change economies? You know, how does living longer change the way we think about education? How does climate change change the way we allocate resources globally? How does it change the need for consensus? How does AI impact broader regulation and the advances that these technologies will bring us the ethical questions around that and so forth. How does it change politics? How does AI change our ability to revolutionize government? By making government massively more efficient, by using less resources, by just designing systems, better living, longer living healthier. All of these things are potential outcomes. There's a lot of disruption to get through to get to that point, such as the fact that it's toppling traditional industries, that it is going to massively impact employment. AI, this is, and climate is, we completely underestimate the impact of that on the global economy. Eco refugees, trillions and trillions of dollars of damage to the 500 or so capital cities that are on the coast, food scarcity issues, etcetera. So I wanted to really tackle that and say it's going to be okay, but this is grown up time, and this is about us having a different philosophy as a human species, that our focus on economic growth and the market and all of that, we have to mature beyond that because the free market won't fix the problems of climate. It will power us through to this period of technology, unemployment with artificial intelligence, because of the rewards that that brings to corporations. You know, eliminating humans from the workforce and all of those things are going to create massive social pressure that is going to change the way we prioritize humanity as a species, I think. And it was really that sort of conversation that I wanted to have. Pretty, pretty big picture, I guess.

Alex: Yeah, I think it's even too big for the context of this conversation. Quite a large question. Let's narrow down to longevity. I mean, I'm curious about the subject, and every time I come across someone who is involved actively into longevity stuff, I can't resist to ask a question. So I see that you are involved into the project in Saudi Arabia focusing on AI based digital twins for health management.

Guest: Yeah.

Alex: What's, what's that? What like?

Guest: So we're actually, I mean, look, there's some really amazing progress has been made in the longevity field in just the last few years. We have players like Brian Johnson now who's able to manage his biological age. At least that's what the data is showing us. We have better models for this now, so we can approximate your biological age with the right sort of data, and that's going to get more and more accessible over time. So what we wanted to do was essentially build a longevity scoring algorithm that can take in your data. And the more data we have over a period of time, obviously the more accurate a model that we can build. It starts off as just data science using sort of basic elements, because let's say we're aiming for a biological age of 35, then we know what the biomarkers should be for that, and we know the divergence. And then it's a matter of just saying, what are the supplements or medical interventions or pharmaceutical interventions that we can make to improve on that? Or do we need to use gene therapy or stem cell therapy or something like that to make those advances? Right. So we're getting pretty close to that type of ability to manage your longevity based on data models. And I think that's hugely interesting. Look at project blueprint if you're interested in this, which is the work that Brian Johnson's been doing. But we're on the cusp of some pretty significant advances. Obviously, AI based modeling makes this type of ability to model this much better. Gene therapy is going to be a huge element because we can flick some of the longevity genes and start tweaking on that side. So there's some really interesting things that are going to happen in the next few years.

Alex: That's fascinating. Is there any insights that you can share, like technologies or innovations that may extend human lifespan like that are happening now?

Guest: Yeah, I mean, we, you know, there are certain things, for example, that are showing some real progress or real promise. Metformin, which was originally a diabetes type two medication. What we found is people have been on metformin for a couple of decades and they're living longer as a group, which is an anomaly, given that they're diabetes sufferers, which normally meant premature death. Metformin has shown some real benefit there. Rapamycin is another one, but that's a transplant immunosuppressant drug, but it's shown some promise in longevity. But there's also things like NAD injections or NMN, which you can do as an infusion or with capsules. And that's sort of the core building blocks or amino acids, or generates the amino acids for cell production. So it aids in cell senescence, getting rid of the dead cells, autophagy, and those sort of things. So there are some things, but generally, I would say that caloric reduction still is important. Although there's been some interesting research about fasting and things like that, I think there's still benefits to that. And the other thing is exercise. I think if you're really serious about living longer, it's a combination of those elements and diet.

Alex: All right, let's chat a bit about your podcast, the Fish. So we've been hosting it for a while and to talk to future thinkers and leaders. Any observation about common grounds of the future vision. What are your thoughts on this?

Guest: You know, I used to say on the podcast, actually, I used to say that one of the things that futures had in common, that they were all in a rush to get to the future. But my co host doesn't necessarily agree with that. And I see his point is that some people are worried about the future, you know, and they're worried about this transition period, and they're worried that we're not putting enough thinking and effort into that transition. So we argue more about if artificial intelligence is going to get to Agi than we do talking about how we're going to transition to a world with Agi. And that's a big problem, right? Because the market, with the money that's being spent on artificial intelligence right now, we're going to get to AGI. It's just a question of what date, because the market is throwing billions and billions of dollars at this, hundreds of billions. So we know that the outcome is where it's going to be. So we should be just spending more time on figuring out how we're going to transition. What personhood rights will AGi have? How do we ensure that AGI is identifiable in media and so forth? Yada, yada, yada. Right? And we're not doing, how are we going to deal with technology unemployment impact? We're just not having those grown up conversations as yet.

Alex: Let's wrap it up with. So with your finger always on the pulse of emerging tech, what are the next big trends we should watch out for in fintech and beyond?

Guest: I would say, look, the next fintech boom in terms of venture capital is definitely going to be AI based fintech. I think that's a pretty safe bet or a safe call. But there are huge longer term or medium term opportunities for what I would call agency based ecosystems. So this is where you can give your AI agency to go out and do tasks that involve the financial system, right. Because this is going to be implemented in wallets, and everyone's going to want to buy this tech. So if you've got some ideas in that space or you're technically oriented, that would be a great area to play in. In addition, you know, just the whole embedded finance, real time finance stuff that leads off that. If you've got an AI or a data model that can support the embedded approach, then I think that's going to be, again, something from an infrastructure perspective that becomes very powerful. And the smart contract layer, obviously. So for more fully roboticized, you know, trading and financial systems. And that takes us through over the next 20 years or so. But essentially we get to the point probably in the, where most banks are primarily AI.

Alex: Rad, can you elaborate on this idea of AI agency services? I didn't quite get it sounds interesting, but I just want to understand in the real life examples, or at least in fictional examples that we can think of at the moment.

Guest: Yeah. So, I mean, I think the easiest way to describe this is actually just go over how AI will be integrated into society. Right now we're in the phase, what I would call the alignment phase. So the alignment phase is essentially trying to work out where AI fits in society, what laws it's going to break, what new laws we need, those sort of things, the ethical constraints that we might want on our, the second phase is advice, right. And advice is where we start to use AI to get better quality advice. Like we are in medical diagnosis now, but we would have that in accounting, in law, in medicine, in financial services. Right. Where if you want advice on how to save money, the best sort of advice you'll get is from AI. We'll learn that over the number of years with that at the end of that, because we know that's the best advice, then we'll start to trust AI to manage our affairs in line with our values that we've programmed into it and coded into it. So that's where essentially we give AI agency to manage things like managing our bills, helping us save money, managing our investment portfolio, managing our longevity plan, managing our children's healthcare plan, managing our retirement planning, all of that sort of stuff, tax planning and stuff, will delegate that to an AI. So that element of agency, it starts with fairly simple things like being able to just ask your phone, can you pay that bill or can you send money to this person? That's a very simple form of agency that we will expect AI to do. It will need to be secured based on our voice or other elements as well. But you know, that's sort of the simple version of it.

Alex: Yeah, now I get it. Now I get it. Thank you very much for sharing this. And Brett, thank you very much for taking the time, being a guest at the podcast. Really appreciate it. It's been you.

Guest: Very welcome and it was a great chat. So interesting questions. Thanks.

Alex: Thank you. And thank you for listening for our listeners. Don't forget to like and subscribe to the channel. See you next time. Bye.