Today’s episode is a first for the podcast. We’re talking about regtech, the technology that enables a lot of the other types of fintech — lending, moving money, investing. Our guest today is serial entrepreneur Stephen Ufford. He’s started and exited multiple companies in the consumer credit and data space. His latest endeavor is Trulioo, a Canadian regulatory technology firm that was cofounded in 2010.
Trulioo verifies online identity of individuals, enabling trust and safety online as fraud and compliance systems worldwide use this information for all kinds of financial purposes. We talk about different approaches to regtech, how these technologies will impact the financial industry for years to come, and Steve’s vision for vastly more democratized financial services and products.
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Below are highlights, edited for clarity, from the episode.
What is regtech?
I actually think regtech is sexy. It’s the enabler of fintech. Fintech is about money movement and services like lending and banking. The purpose of regulation is to prevent bad things from happening and to enable people to do more things. Giving access to credit is real important to making life go smoothly. Regtech isn’t new — the notion of a credit file is decades old. You only have to know how important regtech is when you’re the guy who needs the money.
We think about how we can help businesses trust individuals enough that they can lend to them. We’re covering 4.5 billion people right now. That means that there are people in emerging markets, through all these tools, who can borrow money to start a small business. Those small dollar loans have been proven to impact generations to come. To me, that’s sexy.
The wily internet
The way the internet started was anonymous and many think it should be. With the upside that comes with anonymity, in terms of international trade, anonymity isn’t always the best thing. In an online environment, the same is true. The key is giving the option to people to remain anonymous when they want to and to be known when they think it’s appropriate.
I know firsthand one of the things that inspired Trulioo when we started it was a story I saw on CNN of a woman who walked 45 minutes each way to pay her electricity bill. She was standing there with Anderson Cooper and began crying after she was presented with her first mobile phone and Facebook account. They asked her why she was crying and she replied that the Facebook profile was the first time she ever existed on record anywhere. Because she existed and could be trusted online, she was able to get back hours to her life.
The world looks at identity in a variety of ways. When we know a person, trust is established. The internet is built upon trying to read signals with fraud detection tools — what’s their phone number? Is the phone number involved in other frauds? The other way to do it is based on identity as perimeter. When you sit in a room with people you know, their purses and wallets are pretty safe. We need a layer that when you’re online, when you come online, you have the opportunity to be known. Once you’re known, a lot of the other friction goes away. Once that happens the purses and wallets in the room are safe.