‘Developers have become as central a figure as the banks’: Fiserv’s Niranjan Ramaswamy
- VP and GM of embedded fintech at Fiserv, Niranjan Ramaswamy, joins us on the Tearsheet Podcast.
- Listen to our conversation about how Fiserv empowers developers to build products that bring fintechs and FIs together.
The following was produced by Tearsheet Studios. We worked with payments provider Fiserv to create a podcast series about open finance and the work of empowering fintechs, brands, and FIs to collaborate and innovate together.
In our fifth conversation in the series, we’re speaking to Niranjan Ramaswamy, vice president and general manager of embedded fintech at Fiserv. As we continue talking about the evolution of open finance, Niranjan shares how Fiserv is helping developers create amazing experiences as they bridge the gap between fintechs and FIs.
The following excerpts were edited for clarity.
Niranjan Ramaswamy, Fiserv: My name is Niranjan Ramaswamy. I'm part of the fintech division at Fiserv, and I’ve been at Fiserv for over a dozen years.
A couple of years ago, fintechs, banks, and credit unions looked at each other as competitors. Recently, they realized that collaborating amongst themselves is a better game than competing. We're seeing those worlds come together more and more, and the consumer is starting to benefit.
As the general manager of the embedded fintech segment, I've got a front and center seat. Embedded fintech is when fintechs want to embed themselves with the bank. There is a movement happening in front of us, and it's exciting to see that as we start to bring fintech and bank tech together. That journey starts with the developers and the tech part of both those organizations, and that demographic is becoming as important of a client to us as bankers.
Today we're talking about one particular audience that has come to the forefront in the discussion about open finance: the developer community. As open finance emerges as the next evolution of financial services, why is there such a focus on the developer?
When open banking came into force in 2018 and started with the API movement, it focused on payments and aggregation. That's still maturing. But, it caused fintech to boom. It created this sort of AWS movement with fintechs by reducing the capital a company has to invest in a start-up because they could lease storage infrastructure as a service. What open banking and open APIs did is the same for fintechs, where it reduced the amount of capital needed because they could not start to get API or financial functionality as a service. We've seen that boom over the last few years, at least to 2021, where fintechs are growing. Even in 2022, I think one in every five VC funding was for fintech in the second quarter. There's been at least $20 billion worth of funding in fintechs. As fintechs are maturing from open banking to open finance, they're creating incredibly fascinating experiences.
Bank tech is also going up, and you have the demographic of the developer community within these two organizations. What they're trying to do is find the digital pieces to the puzzle they're putting together. Once you understand that, you realize that we have to make it easy for them to put that puzzle together, and not be burdensome or complicated.
This is a significant shift even for Fiserv because we serve banks and credit unions in the community market. These banks and credit unions look to us to provide that tech stack – they rely on us for technical expertise. What we've done is offer deep vertical technologies and financial stacks that have been integrated a lot so far.
Our shift is now to provide more of that horizontal stuff that enhances collaborative innovation so that fintech and bank tech can come towards one another. Developers have become as central a figure as the banks, and we are looking at them as a demographic of customers – except we serve them different assets to create that journey.
What's important for working with developers? What drives them, and what is an ideal experience like for them from your perspective?
What we're starting to see is that fintechs are exceptionally good at ideation. When they're ideating, they may have a strategy for what they want to do. But their developers are also iterating on several side projects. So it's not just one thing – they're doing proof of concepts and some of it may work while some may not. But they're moving very fast and creating all these other assets. It could be they have the main project, but they also have a side project they monitor or want to enhance. They come at us with an assortment of projects and things they want to do. And once we realize that what we want to do is entertain all of it, we don't want to stop any of it. That's a little bit tricky.
Whether they want to create a virtual account, debit card, or crypto account, all of the above may be part of one strategy. We need to understand all of that and serve the assets that do all of that. It could be a core banking asset, a current asset premiere, a funds asset transfer, or a KYC asset – and we have to bring all of that together. Often the fintechs are good at tech, but not at finance. We must educate them on different aspects and help them navigate that experience. Those are some of the things we're doing here at Fiserv.
Traditionally, this process has not been self-serving or automated. You have other companies that are reasonably good at payments of cards or aggregation. But with Fiserv, it's all of the above, and that has traditionally been services-based, so we have to make sure that it's automated.
We live in an age where you don't have to sit for six hours if you want to buy a car and sign a sheet of paper. You can have four clicks, order a car, and it shows up at your doorstep. The development experience has to be simple so they can get to the endgame as fast as they want. We're working on a lot of stuff that hasn't developed; it's not easy, but it's a fun place to be. I'm lucky to have a front-row seat.
Why is it such a challenge to be able to work with developers? What's preventing every tech company from giving developers exactly what they need to do their thing?
The average consumer has about three to five apps. Those may be a traditional banking app, a PFM app, a crypto app, a wealth management app, and HSA app. From the consumer's perspective, you may not be able to see your fintech bank accounts through your banking channel, as an example. We're starting to get this feedback on the omni fintech experience of wanting to see all of that on a central base.
Fintechs sometimes don't focus on that. They're coming through to a niche play and saying, ‘This is what we want to do.’ We educate them that consumers have other channels to manage and move their money. There are still some branches in the US to access your experience through them, not just through the app. And definitely through your digital and mobile banking channels.
We have to guide the fintechs through this. As you're crafting your experience, you amplify what you're doing by adjusting to what the consumer is already familiar with. It takes a little guidance and is challenging because financial services are complex. It leads to dealing with security, consent, and consent management because banking links depositors and borrowers. But it's also the business of providing trusted services around your money. Trust as a service is something that every bank looks at because if they lose that, they lose their brand.
With the advent of CCPA, GDPR, and the rulemaking with the CFPB, that will harden. As a consumer, for you to provide consent to access your account, the bank has to be regulated. If the GDPR thing comes into play, controllers will get regulated. Fintechs and processors have to be aware of that. It's not just about accessing an API to get your account. You must ensure you account for the account owner's consent and can do entitlements. Fintechs don't always think that way. This brings a lot of complexity to how you produce the right experience.
A lot of fintechs launch something of a monoline product. And as their customers want to expand their relationship, they launch new things that may not be as core to what they do. Is there a value that Fiserv provides in helping the fintechs expand into new products?
When a fintech company starts somewhere in the monoline world, and as they diversify their portfolio, they may start in crypto and then offer bill pay and cards. Wherever they expand that portfolio, they start thinking about those multi-line assets. If they have started their journey on a sponsor bank, as they diversify their portfolio they may want to diversify their sponsor bank portfolio. They may want to diversify the activity and provide those experiences through whatever channels they're coming to, whether they embed themselves in a banking channel or a complimentary app. However they choose to amplify the experience, they may provide that app through a marketplace or partner with another fintech company.
That's creating this multi-line sort of experience. We're starting to see that it's not matured because there's complexity in terms of security. But, we're seeing that mature and grow and that trend can go in a couple of directions. You start getting a lot of these from one provider like us. We have the capability of bringing several sponsor banks. If a fintech company wants to diversify its portfolio, we have a lot of banks that want to get into this space and channels. So this is something that's manifesting itself in front of our eyes as well. We're watching it and have ideas of how to help the fintechs and banks because it's both sides of the equation. Bringing together those that want to collaborate is a little bit of an art and science.
The other thing is fintechs that provide experiences for the banker, the CFO, the call center, the IT department, and the venture side of the equation encountered in the totality of this experience. We see that coming together, and it starts with the developer because they're the ones crafting this.
In the early versions of fintech, we saw a very strong reliance upon a single sponsor bank. Do you see value in connecting to multiple sponsor banks as a fintech expands?
There are many reasons why they may want to do that. For example, they may want to diversify their portfolio. Let's say they started in PFM, and they're branching into crypto – that may influence them to have two different sponsor banks.
I look at this phenomenon as fintech having its AWS moment, and banking having its Intel Inside moment. Rather than go direct to the consumer, banks are providing the services through the fintech experience and realizing that's great. As they take on that strategy, banks are trying to figure out what kind of Intel Inside strategy they want. As you know, there's a transformation required because that analogy is important. After all, Intel moved from memory chips to CPUs.
Banks have to decide between traditional banking to open finance banking. As more investment banks get into that rhythm, fintechs start to have a geographical, demographic, market segment, and strategic choices. That's why we see these fintechs want to go across many sponsor banks. One of the things we have done in our investments in the Finxact acquisition is to help everyone with their intelligent design and strategy approach. It is an exciting time to be in the financial services space.
I'd love to know what Fiserv is doing to power these types of powerful experiences.
For us, it starts with having the developer in mind because that is our client, along with the fintech – so how do we serve both? And how do we make it easy for them to start their journey? Whether they're exploring, doing proof of concept, or building a product. And when they build a product, how do they get a sponsor bank? We should be able to provide them with those choices.
Whether it's a developer portal or an app market, storefronts in my building, or shopping carts, everything that we associate with Cloud today is how you create that easy responsive service: bank as a service and trust as a service experience. That is the journey that we're on.
A fintech company doesn't necessarily have to create a bank; they can have collaborative innovation with a bank. The coexistence of those two is a powerful equation. That is what we're trying to nurture with our various approaches.
I'm curious to know, from an organizational perspective, how has Fiserv evolved to be able to service the developer community internally with skill sets, people, and CSA-level-type stuff?
We launched a developer portal last year, so we've got an excellent workforce. We have a team at Fiserv that is living and breathing how to serve the developer community.
I mentioned we started the fintech and growth segment – that was a formal approach on how to look at this market segment. Associated with that, we're also recruiting to be able to sell these new markets. We recently created our purple Innovation Park in Berkeley Heights, New Jersey. It's a brand new facility, one of our best fintech hubs, and we put it in that location for all the right reasons – it's a fantastic place to be.
We are now getting exposed to and partnering with fantastic developers worldwide. We want to do this right because that's also a great recruitment tool; when we meet these people, we show them what we can do. It's also a way to impress them, so they come and work for us.
From our conversation, it’s clear that you have a sensitivity to the bigger picture at play. I’m curious, what gets you fired up and excited to come to work? What part of your job engages you?
I am lucky to be on the frontline of this financial services movement. Not only am I getting connected with so many innovative fantastic companies worldwide in the fintech space, but we also work with banks and credit unions, and that's a wonderful world. There's so much innovation and the people that innovation brings. And, quite frankly, they are thinking about things that we haven't thought about. That’s what sparks your mind and gets me fired up – I have ‘aha’ moments every day. It’s challenging to put together that puzzle because you start to see pieces. We can talk to five fintechs, and figure out how to bring them together to create something better. That's the motivation factor, and it's a fun journey to be in this space at this point.