Our conversation continues with ⁠Todd Schweitzer⁠, CEO and co-founder of open finance solutions platform ⁠Brankas⁠. After getting a fresh introduction to how Brankas and open finance works as well as developments in the open finance revolution in Southeast Asia (see part 1 of our conversation here), Todd takes us across the world to the Middle East and what Brankas has been doing to meet the banking transformation needs of markets in the region. But first, he shares learnings from selling software to banks and working with us at Insignia Ventures.  

A quick recap, in case you’re not familiar: how does Brankas work? 

As Todd puts it simply, “We work with tech companies, consumer and SME apps that are looking to have financial services integrations. We also work with the banks themselves to become suppliers of these products. That creates a marketplace where you have the institutions on one side and the tech companies on the other. Brankas is making it much easier for those two groups to connect.”

They provide services across Indonesia, the Philippines, Vietnam, and Thailand. In 2023, they expanded into MENA, particularly Bahrain, UAE, and Saudi Arabia, which we talk about more in this episode!

Check out their recent whitepaper on the future of financial services and trust in the MENA region!

TLDR

What we’ve learned about the open finance opportunity in the Middle East from Brankas

(1) The Middle East countries have taken a very top down approach to open finance. It’s also a lot more holistic (i.e., one comprehensive open banking regulatory framework) compared to the more targeted approach in Southeast Asia markets (specific countries focusing on payments or data protection, etc.) 

“In the Middle East, this has come top down very quickly. And that is combined with an overall vision in places like Saudi Arabia, UAE, Qatar, and Bahrain, where they are pushing hard to diversify away from typical income sources, particularly oil and gas…it’s really a region-wide phenomenon where all of these governments are quite forward-thinking about their economic development plans…”

(2) Development in open finance, among other new knowledge industries, is being driven by healthy economic competition across the gulf countries. 

“It’s an underappreciated aspect in the Gulf is that there’s healthy economic competition…competing to be the Middle East hubs for different new knowledge industries, whether it’s financial services or crypto or trading or even things like sustainable sustainability and green tech.” 

(3) With mandates and frameworks coming straight from the top, banks in the region are thus eager to learn from and partner with open finance platforms, and this is where Brankas has come in. In 2023, the company set up a small team and onboarded its first clients and partners in the region. 

Brankas is contacted very frequently…by Middle East banks that have heard about Brankas saying, “Hey, we’re looking for a technology partner to help us build out our open finance capabilities. We heard about you because we saw this report or we heard about you on the Insignia podcast and we’re looking for some advice and maybe a technology solution to support our open finance roadmap because we have to do it…how do we, as the bank or the financial institution, build monetized commercial products on top of whatever we need to do for compliance?”

(4) The willingness to work with companies like Brankas in the Middle East has in some ways made it easier for sales, but at the same time, there’s a lot of relationship and trust building that takes time and thoughtfulness. The good news is that Brankas is no stranger to this whole process driving open finance adoption in Southeast Asian markets. 

“This is a market that’s used to working with local people that they trust. And Brankas does not have a history of working in the Middle East. We’re just now building our team out there. And so just like in Southeast Asia, local relationships are really important and building that trust with local decision-makers. And that takes time. That’s even if there’s demand. From a macro and industry point of view, it doesn’t replace the relationships that we need to build locally.”

(5) Apart from the wealth in the region driving large investments into frontier tech and experimental products, there is also the opportunity of developing migrant worker solutions, core to the labor economy and interestingly also a fundamental piece of the Southeast Asia region’s cross-border banking needs as well. This opens up synergies with Southeast Asia markets for Brankas now that they are building in Middle East (e.g., In 2022, Saudi Arabia accepted a record 1.5 million workers from Asian countries and regions)

“There’s a lot of learning around cross-border payments, cross-border trade, and actually, migrant worker solutions because, as in the Gulf, usually more than half the population are overseas workers in that country.”

Timestamps

(00:00) Make or Break Corner: Patience and Partnerships in Open Finance;

(00:05) Catch up to part 1 here:

(02:50) In the Orange Corner: Finding Partners to Expand Ambition;

(04:40) Brankas’s Approach to the MENA Opportunity for Open Finance

(11:14) Brankas’s Approach to AI Tooling;

(13:57) Rapid Fire Round;

The content of this podcast is for informational purposes only, should not be taken as legal, tax, or business advice or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any ⁠⁠⁠⁠⁠⁠Insignia Ventures⁠⁠⁠⁠⁠⁠ fund.

About our guest

Todd Schweitzer is Co-founder and CEO at Brankas. Todd has held senior roles in private equity and management consulting, spanning technology, public sector, and financial services. He holds dual Bachelor’s degrees with honors in Economics and International Studies from the University of California, Irvine, and a Master’s in Public Policy from Harvard University’s Kennedy School of Government with a focus on economic development policy.

Transcript

Make or Break: Patience and Partnerships in Open Finance

Paulo: Moving into our make or break corner, a new corner for this season. [Todd] came to the region [from the US] 2015, 2016 so it’s been a while since you’ve had that exploration into open finance and really started Brankas. So maybe you can share with our audience, what has been the biggest make or break moment for Brankas so far? And what have you learned from that?

Todd: I think there were two things.

One is relying more on partners to access large deals and more complex deals, particularly working with banks. These are large risk-averse institutions. They’re not usually shopping for a particular technology tool. They’re usually looking for a bundle of solutions that are solving a big problem at their scale.

And call it naivete, call it arrogance, or just optimism. But realizing that working with partners, local technology partners working together, where we can offer a bundle, has been really valuable and it’s actually much more efficient in onboarding bank partners. So that’s been really a useful make or break moment. 

The other one is acknowledging that not all bank leaders are believers yet, and being at peace with that and recognizing that it’s okay, not everybody’s on board yet. Finding the bank executives that are believers and want to make a big bet on digital or on embedded finance, those are the ones where you’re going to be able to really have some wins together. 

And so there are some traditional banks, maybe they’re primarily focused on serving corporate needs. And they’re just saying, look, like digital or embedded finance, this is not our DNA today. And maybe we’re being too slow, but this is a choice we’re making because we rely on our relationship managers and then the rapport that we have with our corporate customers. And we’re going to focus on that. And if we need to offer higher quality consumer digital products later, then we can catch up. 

You can argue whether or not that’s the right approach, but regardless, what we’ve learned as a make or break moment is finding the banks and the leadership teams within the banks that have already said, yes, we want to be competitive as a digital financial institution. And that we want to partner with tech companies to do more as a bank. That’s really a key one in acknowledging that. It’s not going to be the whole industry. It’s going to be these executives that are really motivated to work with someone like Brankas.

In the Orange Corner: Finding Partners to Expand Ambition

Paulo: Yeah. I can imagine it must be really challenging to balance a marketplace where on one hand you have a lot more like faster-moving, leaner players like startups, and on the other you’re working with very large institutions like banks. 

I wanted to go into another corner of ours, a new corner for the season where you can share a little bit of, since we’ve had the privilege of joining Brankas on this journey since, late 2021, early 2022, maybe share a little bit of what that experience has been like working with an investor like us and how that has contributed in any way to Brankas as a company.

Todd: Yeah, so Insignia led our Series B fundraise in 2021, 2022 and Insignia has been a tremendous partner not just Yinglan, but also the whole crew, whether it’s you, Paulo, in supporting us on public affairs kind of initiatives, or whether it’s the legal team or the operations team and portfolio management team. 

I think what’s cool about Insignia is number one, this is a really talented group of people that know how to work with startups and see the patterns from other startups. 

Number two, just the connectivity. The Insignia team is just connected globally, not just within fintech, but across industries. And so the introductions and the partnerships that have come out of those introductions have been just really valuable.

And then third is just ambition. What I appreciate about the Insignia team is they’re pushing us to be to think really to be as visionary as possible and think what will it take for Brankas to have an impact globally? And what do we need to do between now and getting to that scale?

So it’s been a great experience so far with Insignia and I’m just really impressed by the team and support.

Brankas’s Approach to the MENA Opportunity for Open Finance

Paulo: Yeah, and thanks for also, at least on my end, being very game to have these conversations on the podcast. And it’s been very helpful to also even just educate our audience and open finance as well and let the world know what Brancus is doing. 

And speaking of widening horizons and really thinking about what kind of global impact Brankas can have, I do want to talk about the Middle East as well. And recently you guys also released a MENA report. Maybe you can share a little bit of the takeaways. 

We’ll include a link for people to check out the report. But maybe tidbits and maybe a sort of a motivation why you guys wanted to explore this region in particular.

Todd: So the Middle East region and particularly the Gulf countries, it’s a fascinating place for financial services and for open finance in particular. 

Number one, it has completely transformed in the last, let’s say, three years because of the government authorities mandating very quickly open banking requirements of banks. And this is very different from Southeast Asia. 

In Southeast Asia, you don’t really have a complete kind of end to end open banking regulations in any market. It’s piecemeal. Indonesia has pretty good and comprehensive payment regulations. The Philippines is strong on data protection and consented data sharing. But there really isn’t one market in Southeast Asia that has a comprehensive open banking regulatory framework in place. 

By contrast, in the Middle East, this has come top down very quickly. And that is combined with an overall vision in places like Saudi Arabia, UAE, Qatar, and Bahrain, where they are pushing hard to diversify away from typical income sources, particularly oil and gas. 

Saudi Arabia is the biggest and best example of this, but it’s really a region-wide phenomenon where all of these governments are quite forward-thinking about their economic development plans and saying, look, we cannot continue to rely on commodities wealth. 

And they’re actually competing among each other. I think it’s an underappreciated aspect in the Gulf is that there’s healthy economic competition between even between Dubai and Abu Dhabi within the UAE, but also between the UAE and Saudi Arabia and Bahrain and Qatar and even Kuwait that are competing to be the Middle East hubs for different new knowledge industries, whether it’s financial services or crypto or trading or even things like sustainable sustainability and green tech. 

Anyway, so why are we interested in the Middle East? Because all of a sudden the entire industry, whether it’s banks, digital banks and non-bank lenders and startups that are serving financial services are all very quickly adapting, and frankly, needing new technology to support open finance. 

Brankas is contacted very frequently, including actually as recently as this week by Middle East banks that have heard about Brankas saying, “Hey, we’re looking for a technology partner to help us build out our open finance capabilities. We heard about you because we saw this report or we heard about you on the Insignia podcast and we’re looking for some advice and maybe a technology solution to support our open finance roadmap because we have to do it. 

The regulator, the central bank or the FinTech regulator requires it, but we want to look also beyond the compliance to say how do we, as the bank or the financial institution, build monetized commercial products on top of whatever we need to do for compliance?”

So we’re really, we’ve been listening to the market. There’s a lot of demand and a lot of knowledge gaps, and the eagerness to learn and eagerness to partner in this region. And so in early 2023, we set up a small team and some capabilities and onboarded our first clients and partners. And it’s been really successful so far.

Paulo: I think it’s interesting that sort of the challenges that you face here in Southeast Asia. Have already been in some ways solved in a way in the Gulf region because it’s very top down, as you did mention. 

So has the transition been a lot easier than you expected? Were there any advantages because Brankas started out in Southeast Asia, expanding into the Gulf coast markets?

Todd: It’s not been easier. It’s easier in certain ways, but it’s harder in others, as you can imagine. It’s easier because the demand is actually there already, because a lot of institutions have to do this for compliance reasons. They don’t have a local partner available. And so their willingness to bring in Brankas and for us to support their journey is very high. 

But it’s harder, because this is a different market. This is a market that’s used to working with local people that they trust. And Brankas does not have a history of working in the Middle East. We’re just now building our team out there. 

And so just like in Southeast Asia, local relationships are really important and building that trust with local decision-makers. And that takes time. That’s even if there’s demand. From a macro and industry point of view, it doesn’t replace the relationships that we need to build locally. 

So we’re putting in a lot of effort and thoughtfulness into building that trust on the ground in the markets where we operate in the Middle East.

Paulo: Conversely, have there been any sort of synergies from the Middle East going into Southeast Asia so far in the time that you spent there?

Todd: That’s a good question. There’s a lot more wealth in the Middle East, and so the financial institutions and the tech companies are able to make large bets on new technologies and experimental products. 

I think there’s a lot of learning around cross-border payments, cross-border trade, and actually, migrant worker solutions because, as in the Gulf, usually more than half the population are overseas workers in that country. It’s non-citizen expats, everything from construction workers and hospitality and even members of government civil service. And kind of migrant worker, blue-collar, or white-collar migrant worker solutions is an area that’s core to the labor economy in the Middle East. And I think there’s that additional data point on financial services for expats.

Brankas’s Approach to AI Tooling

Paulo: And that actually just shows that there’s probably a stronger relationship between MENA and Southeast Asia than meets the eye. 

And before you wrap up, I did want to ask about AI as well. I feel like this is a really important question for everybody these days. How is AI playing a role in open finance or even Brankas own growth as a platform? 

Todd: I don’t have a sexy answer for FinTech and Open Finance because we’re really just building version one for these guys. It’s a brand new industry. 

I will say for Brankas, though, and really any software company, the speed at which programming tools are powered by AI and productivity for our software engineers and our QA quality assurance testers and really for our technical staff. That is where we found usefulness with AI. 

We’ve been experimenting with a few different copilot type tools for our engineering staff just so they have faster, basically faster programming and debugging and testing. And so that is the, where we’ve seen the benefit of AI in our operations are really for internal tooling. That gives superpowers to our technical staff.

Paulo: Any advice in terms of implementing AI technologies, especially third party ones within your organization?

Todd: Yeah, just experiment. It’s all brand new, right? Experiment, be thoughtful about what you experiment, but then give it kind of a start and end date with clear expectations. Try out a few different tools. 

I’m trying to do it myself with things like presentations. There’s a lot of presentation materials where you can create slide decks and visual aids for presentations. Some of them are not that interesting. It’s basically just a faster way to create images. But it’s getting better and better almost by the month. 

The other piece of advice I have is, there was a CTO I was talking with in a different industry, but, the way he described AI tooling is there’s a new skill set in prompt engineering, right? Which is another way of saying, it’s a new skill set to learn how to talk to AI programs to get what you want.

I think all of us have dabbled with ChatGPT at this point. And you experienced it a bit with ChatGPT, learning how to write your messages in a way that you get the answers you want. And it’s not as simple as just writing down into the chat box the idea that’s in your head, you have to be thoughtful about what is the output that you want the machine to provide back to you. And learning how to be a prompt engineer is actually useful, whether or not you’re writing software or just using ChatGPT to help with a document.