Name: BaaS: What does the future hold for banks and fintechs?
Uploaded: 2023-06-20T13:31:58.423Z
Duration: 501.43
Description: Vlad Lounegov, Founder & CEO, Mbanq, shares how his passion to innovate the financial services sector launched his journey into the fintech space and the future of banking as a service. Stay up to date with the community on https://finovate.com/ Find out more about FinovateSpring on http://www.finovatespring.com/

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Vlad Lounegov.vtt

English

{{00:00:05}}
William Mills: Hi, I am William Mills.

{{00:00:06}}
I'm here at FinovateSpring in
San Francisco, and I'm pleased

{{00:00:09}}
to be joined by my friend Vlad
Lounegov, who's CEO  of Mbanq.

{{00:00:13}}
How you doing today, Vlad?

{{00:00:14}}
Very well, thank you very much.

{{00:00:16}}
It's terrific.

{{00:00:16}}
Listen, you founded Mbanq in 2016
after a very successful career.

{{00:00:22}}
Tell us a little bit about.

{{00:00:23}}
Your transition from being a consultant
and to a real FinTech innovator.

{{00:00:28}}
Vlad Lounegov: Thank you
very much for this question.

{{00:00:30}}
Will, so I started my career in
professional services in around 2006

{{00:00:37}}
in London when I used to consult
banks on digital transformation.

{{00:00:41}}
And then at some point
about 2008 I decided that.

{{00:00:46}}
Digital transformation was
always driven by technology and

{{00:00:50}}
technology providers, right?

{{00:00:51}}
And this is why I moved to the
beautiful state of California

{{00:00:54}}
and Silicon Valley back in 2011.

{{00:00:57}}
So from 2011, I specifically focused
on technology and the, driver for

{{00:01:02}}
innovation being technology, right?

{{00:01:04}}
So my in my consulting career
I, spent over a decade advising

{{00:01:11}}
banks on core banking system.

{{00:01:13}}
Really.

{{00:01:13}}
However, what I found myself was
that we were advising banks to switch

{{00:01:17}}
from one poor system to another.

{{00:01:19}}
And both are built in the nineties, right?

{{00:01:21}}
And some of them are as
old as 40 years old, right?

{{00:01:24}}
Imagine that.

{{00:01:25}}
So at some point in time, I
thought there must be another way.

{{00:01:28}}
So at that point in time, that's about
six or seven years ago, in 2016 I thought

{{00:01:35}}
there, there is some innovation that's
needed in the core banking space and

{{00:01:40}}
there was a lot of innovation that was
happening on the periphery of the core.

{{00:01:44}}
Back in payments, for example.

{{00:01:45}}
Sure.

{{00:01:46}}
K Y C digital onboarding and
there's a lot, there are a lot

{{00:01:49}}
more startups in, in that area, but
nobody was really touching the core.

{{00:01:55}}
So back in 2016 when I founded
Mbanq, our focus was on technology.

{{00:02:01}}
However, over time, Any young
company pivots so many times, right?

{{00:02:06}}
Sure.

{{00:02:07}}
And so one of our pivots
was towards services.

{{00:02:11}}
So we founded ourselves to be a
technology company first, but we moved

{{00:02:17}}
into services and now, We have probably
the most comprehensive as a service

{{00:02:21}}
portfolio in the United States market.

{{00:02:24}}
William Mills: So you've got more products
and services that you can provide as

{{00:02:27}}
a service for banking as a service
than anybody in the states, right?

{{00:02:31}}
Correct.

{{00:02:32}}
That's, I that's what I wanted to
think about is I think that makes

{{00:02:36}}
you unique, but what else makes Mbanq
unique, and who are some of your

{{00:02:40}}
key customers that folks may know?

{{00:02:43}}
Vlad Lounegov: Sure.

{{00:02:44}}
What makes us unique is that about two
or three years ago, we started focusing

{{00:02:49}}
on major brands like NFL teams, like
colleges and universities, right?

{{00:02:54}}
And helping them bring financial services
to their, what we call affinity groups

{{00:02:59}}
because they're so well positioned
with either student base or a fan base.

{{00:03:04}}
And now we're launching fan, base
accounts for for some of the big brands.

{{00:03:11}}
William Mills: Oh, can you tell, us

{{00:03:12}}
Vlad Lounegov: anymore?

{{00:03:13}}
I can, but we'll need to cut it out.

{{00:03:15}}
For example, Formula One.

{{00:03:17}}
So Formula One and Formula One teams.

{{00:03:19}}
I can talk about the teams
as opposed to Formula One.

{{00:03:22}}
Okay.

{{00:03:22}}
William Mills: All right, let's
get away from that topic now.

{{00:03:25}}
Banking as a service wasn't even
talked about here 10 years ago here.

{{00:03:29}}
Now it seems to be everywhere.

{{00:03:31}}
What do you see as the future
of banking as a service, both

{{00:03:35}}
in the states and worldwide?

{{00:03:37}}
Vlad Lounegov: Thank
you for this question.

{{00:03:39}}
So United States market is probably
the most lucrative market in the world.

{{00:03:43}}
However, to be able to launch
banking operations in the United

{{00:03:47}}
States whilst not being a bank.

{{00:03:49}}
It's very hard in places like
United Kingdom for example,

{{00:03:53}}
or Europe, there is always an
alternative to a banking license.

{{00:03:56}}
You can get an e-money institution
license, you can get a payment

{{00:03:59}}
services license, whereas in the
United States, this doesn't exist.

{{00:04:02}}
Therefore, United States market
relies on the partner bank, right?

{{00:04:06}}
So once you bring a partner bank
into the picture, then this becomes.

{{00:04:10}}
Banking as a service.

{{00:04:12}}
The first iteration of banking as
a service was literally providing

{{00:04:16}}
a partner bank to sponsor financial
products and services, right?

{{00:04:20}}
However, very quickly the industry
moved on towards other services,

{{00:04:25}}
like compliance as a service, right?

{{00:04:27}}
Cause you have to be compliant
at every step of the way.

{{00:04:30}}
And compliance in the United
States is, very complicated.

{{00:04:34}}
I have heard there are so many
regulators at that, at sometimes you,

{{00:04:37}}
you don't even know who regulates who.

{{00:04:39}}
You have the federal regulator, you
have the state regulator, you have

{{00:04:42}}
the financial services regulator.

{{00:04:44}}
So, there's a lot of, there's
a lot of regulation going on

{{00:04:47}}
the back end of compliance.

{{00:04:49}}
You also need to be able
to handle complaints.

{{00:04:52}}
We also need to be able to
handle disputes, chargebacks,

{{00:04:56}}
and all of the stuff that's,
that nobody really wants to do.

{{00:04:59}}
There's no value in complaints, right?

{{00:05:01}}
There's no value in chargebacks.

{{00:05:03}}
But you have to provide it as
a part of your cost business.

{{00:05:06}}
No business.

{{00:05:07}}
Exactly.

{{00:05:07}}
You have to provide this as
a, as part of your banking as

{{00:05:09}}
a service value proposition.

{{00:05:11}}
So right now we have probably
the most comprehensive banking

{{00:05:16}}
as a service value proposition.

{{00:05:18}}
However, to answer your question,
moving forward the, biggest driver

{{00:05:23}}
of value in banking as a service
is lending as a service, right?

{{00:05:27}}
So now almost every BaaS provider
wants to go into lending, right?

{{00:05:32}}
So lending really is the key driver.

{{00:05:33}}
So if you ask me this question next
year, I'll tell you that we are now.

{{00:05:38}}
The lending as a service provider as
opposed to banking as a service provider.

{{00:05:42}}
Very cool.

{{00:05:43}}
William Mills: Very cool.

{{00:05:43}}
You've been a successful entrepreneur
in FinTech for quite some time.

{{00:05:47}}
What would, what advice would you
give to younger entrepreneurs that

{{00:05:50}}
want to create a better FinTech world?

{{00:05:54}}
Vlad Lounegov: Thank you
very much for this question.

{{00:05:56}}
Yes, that's true.

{{00:05:57}}
It's been a, it's been a long time.

{{00:06:00}}
First of all, you have to
be ready to pivot, right?

{{00:06:05}}
Everybody pivots we pivoted we started
off with this technology company, and

{{00:06:09}}
then soon enough we realize that there's
more money to be made in services, right?

{{00:06:13}}
So now we position ourselves
as a services company.

{{00:06:16}}
Number two, partnerships.

{{00:06:18}}
You need to embrace partnerships, right?

{{00:06:20}}
We have some of the most spectacular
partnerships in the industry.

{{00:06:24}}
It's very hard to deliver
any value proposition alone.

{{00:06:28}}
So you have to find
like-minded individuals.

{{00:06:30}}
You have to find like-minded
companies, bring them all together,

{{00:06:34}}
stitched stitch a joint value
proposition, and bring this to market.

{{00:06:38}}
And number three, of course,
you have to have a product

{{00:06:40}}
that fits to the market, right?

{{00:06:42}}
If there's no market for your product
or your product is not really quite

{{00:06:45}}
there, I think you will struggle.

{{00:06:47}}
So don't be afraid to try and try again.

{{00:06:50}}
Don't be afraid to fail.

{{00:06:52}}
You have to fail, right?

{{00:06:53}}
So without a failure, there's no success.

{{00:06:56}}
And as we say, at Mbanq, success has many
fathers and the failure is an orphan.

{{00:07:03}}
I

{{00:07:03}}
William Mills: think
I've heard that before.

{{00:07:04}}
Lastly what do you see the biggest
challenges facing in the coming years?

{{00:07:09}}
For both traditional banks,
challenger banks, and non-bank.

{{00:07:15}}
Vlad Lounegov: If you talk about the
United States, I would say regulation

{{00:07:18}}
is really challenging because there's
just so much of it going on and at

{{00:07:22}}
the end of the day, you don't know
which way it's going to pan out.

{{00:07:27}}
About 12 months ago, probably same time
everybody was talking about crypto, right?

{{00:07:31}}
Where is crypto now?

{{00:07:32}}
It's gone, it's disappeared.

{{00:07:35}}
So nobody's talking about crypto.

{{00:07:37}}
It's, that's a taboo subject right now.

{{00:07:39}}
Now, Is it going to come back?

{{00:07:40}}
Probably it can't just go away, but
the regulator needs to be ready.

{{00:07:44}}
So as it stands right now, there is a lot
of potential regulation that's likely to

{{00:07:49}}
happen, including banking as a service.

{{00:07:52}}
I personally believe that banking
as a service, as a discipline

{{00:07:55}}
needs to be defined and regulated.

{{00:07:57}}
So if we, if you ask me this question
again, 1, 2, 3, 4 years from now,

{{00:08:03}}
most likely our company, Mbanq
will have some kind of regulation.

{{00:08:09}}
William Mills: That makes sense.

{{00:08:10}}
Glad we really appreciate the time today.

{{00:08:12}}
And again, we're here at
FinovateSpring in San Francisco.

I'm here at FinovateSpring in
San Francisco, and I'm pleased

to be joined by my friend Vlad
Lounegov, who's CEO  of Mbanq.

Listen, you founded Mbanq in 2016
after a very successful career.

Your transition from being a consultant
and to a real FinTech innovator.

Vlad Lounegov: Thank you
very much for this question.

Will, so I started my career in
professional services in around 2006

in London when I used to consult
banks on digital transformation.

And then at some point
about 2008 I decided that.

Digital transformation was
always driven by technology and

And this is why I moved to the
beautiful state of California

So from 2011, I specifically focused
on technology and the, driver for

So my in my consulting career
I, spent over a decade advising

However, what I found myself was
that we were advising banks to switch

And both are built in the nineties, right?

And some of them are as
old as 40 years old, right?

So at some point in time, I
thought there must be another way.

So at that point in time, that's about
six or seven years ago, in 2016 I thought

there, there is some innovation that's
needed in the core banking space and

there was a lot of innovation that was
happening on the periphery of the core.

K Y C digital onboarding and
there's a lot, there are a lot

more startups in, in that area, but
nobody was really touching the core.

So back in 2016 when I founded
Mbanq, our focus was on technology.

However, over time, Any young
company pivots so many times, right?

And so one of our pivots
was towards services.

So we founded ourselves to be a
technology company first, but we moved

into services and now, We have probably
the most comprehensive as a service

William Mills: So you've got more products
and services that you can provide as

a service for banking as a service
than anybody in the states, right?

That's, I that's what I wanted to
think about is I think that makes

you unique, but what else makes Mbanq
unique, and who are some of your

What makes us unique is that about two
or three years ago, we started focusing

on major brands like NFL teams, like
colleges and universities, right?

And helping them bring financial services
to their, what we call affinity groups

because they're so well positioned
with either student base or a fan base.

And now we're launching fan, base
accounts for for some of the big brands.

I can talk about the teams
as opposed to Formula One.

William Mills: All right, let's
get away from that topic now.

Banking as a service wasn't even
talked about here 10 years ago here.

What do you see as the future
of banking as a service, both

Vlad Lounegov: Thank
you for this question.

So United States market is probably
the most lucrative market in the world.

However, to be able to launch
banking operations in the United

It's very hard in places like
United Kingdom for example,

or Europe, there is always an
alternative to a banking license.

You can get an e-money institution
license, you can get a payment

services license, whereas in the
United States, this doesn't exist.

Therefore, United States market
relies on the partner bank, right?

So once you bring a partner bank
into the picture, then this becomes.

The first iteration of banking as
a service was literally providing

a partner bank to sponsor financial
products and services, right?

However, very quickly the industry
moved on towards other services,

Cause you have to be compliant
at every step of the way.

And compliance in the United
States is, very complicated.

I have heard there are so many
regulators at that, at sometimes you,

You have the federal regulator, you
have the state regulator, you have

So, there's a lot of, there's
a lot of regulation going on

You also need to be able
to handle complaints.

We also need to be able to
handle disputes, chargebacks,

and all of the stuff that's,
that nobody really wants to do.

But you have to provide it as
a part of your cost business.

You have to provide this as
a, as part of your banking as

So right now we have probably
the most comprehensive banking

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Vlad Lounegov, Founder & CEO, Mbanq, shares how his passion to innovate the financial services sector launched his journey into the fintech space and the future of banking as a service. 

Stay up to date with the community on https://finovate.com/ 

Find out more about FinovateSpring on http://www.finovatespring.com/ 