Celebrations rang out at Money20/20 as Bruce Parker, Modo Founder and CEO, and Rick Striano, Managing Director Digital Product Development at Deutsche Bank, spoke on stage about the recent Modo Deutsche Bank partnership. We're working to expand the bank’s payments business to fast-growing, non-bank platforms with a focus on mobile wallets and peer-to-peer networks. Continue reading the following write-up or watch the video below to learn more about the partnership and collaboration between Deutsche Bank and Modo.
Deutsche Bank is a huge bank. And we’re talking H.U.G.E. They are the largest clearer of euros in the world and largest clearer in dollars outside the US. Deutsche Bank has the volume to bring new ideas to major swaths of the marketplace, but is “very legacy oriented” according to Rick Striano from Deutsche Bank. Which is why Deutsche Bank began looking to collaborate with a startup like Modo. Working with Modo allows Deutsche Bank to take the technology and agility that comes with a startup and unlock the scale a large bank like Deutsche Bank brings to the table.
Modo is all aboard the collaboration train. Bruce Parker, Founder & CEO of Modo, said “[Modo] takes technology, some new interesting ideas about how to process payments, and rethinks how the cloud can help accelerate things. Then we unlock [bank] scale by rapidly accelerating the delivery of those capabilities into a whole bunch of new environments.” Bruce brought up the “fintech revolution” and how the amount of capital pumped into fintechs (although astounding) is completely dwarfed by the volume that is seen in an afternoon at some of these large banks. Fintechs need to partner with large financial institutions in order to see this scale, and large financial institutions need to partner with fintechs for the agility they can bring to the table. It’s a win, win!
Deutsche Bank understands the importance of partnering with fintechs for the “terrific ideas and great products being developed.” Rick said that the bank wants to make connections with these new technologies and solutions a painless process because “friction is what creates the slowdown. It creates the cost, it creates complexity, and ultimately a bad experience.”
Some of the new technologies Deutsche Bank is focused on are wallets in emerging markets. But due to banks’ legacy infrastructure, connecting to new wallets around the globe takes an overwhelming amount of time and effort, meanwhile clients grow restless for these connections.
“The growth of wallets in certain emerging markets is a fundamentally major driver of the way people use money, use value, it’s too big to not pay attention to.” - Rick Striano
As the number of wallets continues to grow around the world, connecting to wallets isn’t something that banks can overlook. Bruce explained that these new technologies act in a way that banks aren’t used to. Banks are used to account numbers whereas Alipay or Paypal might be asking for credentials like email addresses and passwords. That’s where working with Modo becomes vital. Modo creates interoperability between payment systems so banks can quickly and easily work with new payments technologies without changing their legacy infrastructure.
The time it takes to test a payments product is drastically shortened when working with Modo. Modo and Deutsche Bank were able to test a proof of concept in seven countries in seven different currencies in 90 days. Modo’s technology allows for rapid connections, and lets large institutions validate much faster than they would otherwise be able.
“One of the things that was pretty remarkable was we did proof of concept in seven countries in seven currencies in about 90 days. Which, for a bank like ours, is lightning fast.” - Rick Striano
Working with fintechs opens up a lot of opportunities, but partnerships don’t come without challenges. As large financial institutions that have the ability to move markets, banks “need to be absolutely certain that things are going to work exactly as we expect them to work” said Rick. This brings in the necessity of an “extremely, extremely rigorous vendor management process” which Rick sees as one of the biggest challenges of working with a large financial institution like Deutsche Bank. Many fintechs aren’t prepared for the due diligence process.
Luckily for Modo, we’ve been through the due diligence process before with Bank of America Merrill Lynch and now with Deutsche Bank. “Anyone who wants to partner with [Modo] and wants to do as detailed a dive as we did, [Modo] will already know what to expect and they’ll already have the answers” comments Rick. (Thanks, Rick!) Although the diligence process can be tedious and time consuming, it establishes transparency between partners so that when they start building products and solutions, they already know where the hang ups might be and how to work through them.
From a fintech perspective, working with large banks isn’t always a walk in the park either. Agile development, a model that many fintechs are committed to, occasionally doesn’t fit nicely with a traditional IT development model. Something else that Bruce finds challenging is coordinating the systems and technologies being used on both ends of the partnership. Modo’s technology uses Amazon Web Services (AWS), and Modo has helped a number of large global institutions get to the cloud but understanding how to operate in the cloud is equivalent to learning how to operate all over again. Once the organization understands the benefits of having all of the operational functions (that make sense) to put in the cloud done there, the efficiencies become obvious. Discussing these differences in delivery strategies and what services to use on the front end helps ensure a successful partnership.
Focus is key in successful deliveries. There are so many new ideas that can come alive with fintechs, but Rick believes containing the scope of the project is vital. He uses the idea of a “minimum testable product” instead of a “minimum viable product” in his projects. He is committed to getting the core of the project executed before beginning work on all of the features and additions that can add value.
“It’s very easy to look at a solution and go ‘Oh, could we use it for this? What about that? And how about this one?’ And now all of the sudden you’re dealing with something you don’t really know about, with technology you haven’t really used, and you’re already building castles in the sky.” - Rick Striano
Now that the core project work has been tested and completed with Modo, Deutsche Bank is eager to explore the other products Modo can enable for the bank. Rick could not contain his excitement for the series of ideas Deutsche Bank and Modo will be able to roll out in the future due to the flexibility of Modo’s technology.
“One of the things I enjoyed about our collaboration was in our early days, as I started to learn what Modo’s offering was, I started to connect some dots in my own head, and I said to Bruce ‘we’re not changing the scope of the project but let me ask you a question: what if we used your thing to solve this thing?’” - Rick Striano
Deutsche Bank and Modo are currently working on product development and are excited to announce the go-live product soon. Be on the lookout for more!
ICYMI: If you missed out on the Money20/20 conference, here’s a video of the drummers who helped promote our session. Try not to be too sad you missed it.