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FIs and fintechs can learn to partner more intelligently with Pacemakers’ Alessandro Hatami

open banking alessandro hatami

As the financial world evolves, open banking and digital transformation are opening up new opportunities. This comes with several challenges for banks and fintechs. In today’s episode, I sit down with Alessandro Hatami. He is a managing partner of Pacemakers, a consulting firm that offers a systematic approach that allows its clients to find the partner that is right for them.

Today we discuss some of these seismic shifts in the fintech industry.

Hatami has a unique background in financial services, spanning both upstart tech companies like PayPal and traditional institutions like Lloyds Bank. His background offers a compelling perspective on the future of financial services. “Financial services is the ideal digital product,” Hatami asserts. “because there isn’t a real tangible exchange,” he says. Yet, despite this potential, many institutions are struggling to embrace digital transformation.

I’ve been saying for years on this podcast that the ability for both larger and smaller institutions to partner – to partner well, at scale, quickly, and deeply – can be a differentiated, defensible model moving forward.

Hatami explains, “They have gone through an evolution. But they haven’t gone through a transformation.” The challenge facing the industry today lies in balancing adaptation with true transformation. from legacy systems to cultural barriers.

Through Pacemakers, Hatami aims to bridge this gap. He wants to improve partnerships between established financial institutions and agile fintech innovators.

Here’s my conversation with Pacemakers’ Alessandro Hatami.

Three stages of financial services innovation

Hatami outlines a three-stage model of innovation in financial services:

  1. Adapting – Banks begin by adapting existing capabilities to digital platforms.

  2. Evolving – Institutions develop new digital-only services not possible in traditional branch settings.

  3. Transforming – The toughest stage is rethinking financial services with a customer-centric perspective.

“What’s on the other side is a financial services proposition. It is not designed to sell a product to an individual. But it’s designed at understanding what the individual needs,” Hatami explains.

Overcoming challenges in fintech partnerships

Successful collaborations between incumbents and fintech face several hurdles:

  • Timing mismatches between fast-moving startups and slower corporate processes

  • Difficulty in translating innovative propositions into terms that resonate with traditional banks

  • Identifying the right internal champion with P&L responsibility

Hatami advises, “You have to explain to the big company what you could do for them. But you have to explain to them in their terms.”

Rise of open banking and banking as a platform

The concept of open banking is transforming the consumption and delivery of financial services. Hatami predicts, “The future in banking will be. The banks will become the gatekeeper of my financial relationship. The bank may or may not deliver the services and products I receive.

“Banking as a platform” is a major shift from the old model where banks made all their products themselves. Now, banks collaborate with others to offer a wider range of services.

Role of AI in reshaping financial services

Artificial Intelligence presents enormous opportunities for the financial sector. Particularly in data processing and pattern recognition. AI will likely support, not replace, human interaction in customer service roles.

“The way I think about AI is about it as an efficient, effective, interesting way of capturing data. Through the new visualization techniques. And also processing gigantic amounts of data,” Hatami explains.

Cultural Transformation: From product-centric to customer-centric

The biggest challenge is shifting from a product-centric to a customer-centric approach. This requires a cultural change. It needs banks to completely reorganize their operations. And change how they measure success.

Hatami notes, “In a customer-centric world, banks must use customer segmentation for their profits and losses. Not just product-based metrics. This requires a complete transformation of how banks operate.”

The Big Ideas

  1. Digital transformation in financial services is vital. “They have gone through an evolution. But they haven’t gone through a transformation,” Hatami observes. Banks must move beyond adapting existing services. They must reimagine their role in customers’ financial lives.

  2. Hatami highlights the importance of cultural alignment in partnerships. “You have to explain to the big company what you could do for them, but you have to explain to them in their terms,” he advises. Successful collaborations need mutual understanding and clear communication.

  3. Open Banking is the future of fintech. “The future in banking will be. The banks will become the gatekeeper of my financial relationship,” Hatami predicts. This shift will change the delivery of financial services.

  4. Hatami focuses on the role of AI in financial services. “The way I think about AI is as an efficient, effective, interesting way of capturing data,” Hatami explains. While AI offers significant opportunities, human interaction remains crucial in financial services.

  5. Hatami highlights the shift to customer-centric banking. “In a world where the customer is centric, they go through the segmentation P&L, not the product P&L,” he notes. This fundamental shift requires completely transforming how banks operate and measure success.

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Reshaping embedded finance with KeyBank’s Jon Briggs and Qolo’s CEO Patricia Montesi

KeyBank -- Qolo partnership on Tearsheet Podcast

Strategic partnerships – those relationships between traditional financial institutions and fintechs – have become really integral as banks seek to modernize their offerings and fintechs aim to scale their operations and get distribution.

KeyBank and Qolo have teamed up on an embedded finance offering. On today’s episode, we sit with Jon Briggs, Head of Product and Innovation at KeyBank, and Patricia Montesi, Co-founder and CEO of Qolo. 

Their collaboration story begins two years ago when a single slide in Qolo’s pitch deck caught KeyBank’s attention. “We still talk about it today,” Montesi recalls. “It was the ‘Series A: Winter Slide’, which was all about how fintech had created this spiderweb ecosystem of suppliers. And sort of put the burden back on banks and corporates to bring it all together.” Their shared goal of simplifying fintech sparked a partnership that’s addressing how treasurer think about and use banking. 

As Briggs explains, “We enter partnerships because they need a lot of mind share, a lot of sweat equity.” What set Qolo apart was their deep understanding of banking-grade compliance and operational risk. This makes the integration process less painful. The result of their collaboration? KeyVAM, a virtual account management system that simplifies money movement by consolidating balances and transactions in a virtual platform, reducing the need for organizations to manage multiple accounts or complex account structures.

KeyBank’s Jon Briggs and Qolo’s Patricia Montesi are my guests today on the Tearsheet Podcast.

Genesis of a Powerful Fintech Partnership

The collaboration between KeyBank and Qolo is a testament to the power of strategic bank-fintech partnerships. Briggs highlights the importance of cultural alignment. He states, “What distinguishes a partner from a vendor is that cultural and executive alignment.” Their shared vision has been key in overcoming the challenges of launching a new product.

Unveiling KeyVAM: A New Era in Treasury Management Solutions

KeyVAM represents a significant leap in core banking modernization. Briggs describes it as “a hyper-modern core ledger” that allows clients to open sub-accounts instantly. What sets it apart is its robust UI and API capabilities. This puts self-serve at the forefront of the product.

Rethinking Account Opening and Management

One of the most striking features of KeyVAM is its ability to streamline account opening. “We put our clients in the driver’s seat,” Briggs explains. “They can do it in as little as 60 seconds.” This quick speed and instant payment setup mark a major step forward in digital banking.

Strategic Importance of Embedded Finance

The development of KeyVAM is not just about solving current client needs. It is a strategic move in the evolving landscape of embedded finance. Briggs notes, “Deposits are going to become even more important for banks going forward, and it’s frankly going to be the gating item for growth.” KeyVAM allows KeyBank to compete with technology and innovation rather than just on rate.

Overcoming Challenges in Fintech Integration

Montesi stresses the importance of education when introducing new technologies in traditional banks. “It’s a really big part of understanding it at that level because a lot of real-time, instant, virtual – a lot of risk and compliance people get nervous when they hear these things,” she explains. This focus on education has been essential for adapting and integrating smoothly.

The Big Ideas

  1. Cultural Alignment has been crucial in navigating challenges and ensuring a successful partnership. Briggs shares, “What distinguishes a partner from a vendor is that cultural and executive alignment.”

  2. KeyVAM is a recent innovation in core banking systems. Briggs explains, “Nobody’s innovated around the core operating account which is at the centre of every banking relationship.” Such banking innovations represent a significant step forward in business banking solutions.

  3. Speed and Efficiency are the game-changers in digital banking. The ability to open accounts in as little as 60 seconds is a game-changer. Briggs notes, “We put our clients in the driver’s seat,” highlighting the focus on client empowerment and efficiency.

  4. KeyVAM helps KeyBank stay competitive by focusing on the value of deposits. This approach is key in navigating today’s changing regulations. Briggs highlights, “Deposits are going to become even more important for banks going forward.” KeyVAM positions KeyBank to compete effectively in this landscape. It results in efficient cash flow management by streamlining accounts. 

  5. Montesi stresses the importance of education and the integration of new technologies. He states, “You have to spend the right amount of time educating folks along that journey.” This focus on education has been crucial in overcoming integration challenges.

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Bridging tradition and innovation: Wealth Management with BNY’s Nader Souri and Arta Finance’s Caesar Sengupta

Arta-BNY podcast on Tearsheet

Tearsheet’s roots were in investment and wealth tech. As that world became more focused on plain vanilla robo-advisors about a decade ago, I expanded our focus to include banking, payments, and lending. That’s because with ETFs and low-cost providers, it felt like most of the focus of innovation was coming from removing costs. 

Things have changed since then. On today’s episode, we explore the changing world of wealth management with two industry leaders: Nader Souri, Head of Corporate Banking at BNY, and Caesar Sengupta, CEO of Arta Finance. You don’t have to listen closely to really feel their connection and the relationship they’ve personally forged through working together. I first spoke with Ceasar a few years ago when he was VP and General Manager of Payments and Next Billion Users at Google.

Our conversation reveals how these two organizations are leading how wealth management solutions are evolving for professionals. It also sheds light on the role of fintech partnerships in this transformation.

Caesar Sengupta opens the discussion by explaining Arta Finance’s mission. “We are a digital family office or a digital private bank for professionals, not the ultra-rich,” he says. The goal is to democratize wealth management and make sophisticated financial tools accessible to those who have worked hard in their careers. Nader Souri adds, “At BNY, we provide the platform upon which folks like Arta Finance can build their businesses.” He highlights the role of clearing and custody infrastructure. This helps in supporting innovative fintech solutions.

The Genesis of a Strategic Partnership

Nader Souri recounts the origins of the partnership between BNY and Arta Finance. “We have a history of working with fintechs and other advisory firms, both on the traditional and non-traditional side,” he notes. The shared vision of improving the user experience in wealth management drives the collaboration with Arta Finance. Sengupta emphasizes the importance of reliability and trust in choosing a partner. He states, “We wanted to provide that assurance to our members that their assets are safe.”

Technical Excellence and Innovation

One of the standout features of Arta Finance’s offering is its technical sophistication. Caesar Sengupta elaborates, “We use technology to bring the same kind of services that a private bank would offer to high net worth individuals, but to people with hundreds of thousands to a few million dollars.” This includes advanced investment strategies such as direct indexing with tax loss harvesting. This was available only to the ultra-wealthy before.

Navigating Regulatory Landscapes

Both Sengupta and Souri stress the importance of understanding and navigating regulatory requirements. Souri explains, “You have to work within regulatory guidelines, and that’s different from coming from an unregulated industry.” Sengupta appreciates BNY’s guidance in this area. He says, “A big part of it is also helping us understand and set expectations correctly.”

The Big Ideas

  1. Sengupta’s vision for Arta Finance is to make sophisticated wealth management tools accessible to a broader audience. “We believe we can unlock the same financial superpowers that the ultra-wealthy have had all this while,” he says.

  2. Souri highlights the importance of strategic partnerships in the FinTech space. “You have to be cautious on who you want to partner with, but when the mission aligns, it makes a ton of sense,” he notes.

  3. Arta Finance leverages advanced technologies to enhance wealth management. Sengupta explains, “We now do direct indexing with tax loss harvesting at a minimum of $25,000, making it accessible to more people.”

  4. Both leaders emphasize the need for compliance in regulated financial services. Souri states, “Resiliency is key, and being resilient isn’t just about having a strong financial position but also having the right regulatory and compliance procedures.”

  5. The partnership aims to provide a comprehensive wealth management solution. “This is not just another wealth management offering in a digital wrapper,” says Souri. “It’s a holistic offering that even goes beyond what BNY offers.”

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