How to Build Efficient and Secure Fintech Products

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Filip Sobiecki

Dec 16, 2021 • 10 min read
How to Build Efficient and Secure Fintech Products

Despite heavy regulations, the fintech industry still sees high rates of financial crime.

According to research from United Nations, the estimated amount of money laundered globally each year is 2-5% of global GDP.

This is an equivalent of $800 billion to $2 trillion in US dollars.

In 2020, the amount of money collected in fines related to anti-money laundering against financial institutions hit $10.4 billion. While there has been a big crackdown on it, financial crime remains a significant, costly problem to tackle.

With more fintech companies building financial products, anti-money laundering efforts are more important than ever. Money laundering spells wider problems for national economies, financial systems, and its associated corruption can even affect national security.

In this episode of Disruption Talks, Daniel Thomason, Financial Crime Prevention Product Manager at Wise, explains more about his job role and how it ties into anti-money laundering efforts at Wise.

Daniel works on the KYC (Know Your Customer) and AML side of things, which is all about detecting, analyzing, and investigating potential instances of money laundering. Daniel discusses what makes a good product manager and how he helps to build secure products that both meet customer needs and heavy regulations.

The role of anti-money laundering

Anti-money laundering or AML is a set of laws and regulations to combat criminals disguising illegally obtained money as legitimate income. With strict regulations in place, the idea is that AML will help to deter criminals and make it harder for them to launder money.

Generally speaking, AML regulations require financial institutions to monitor customer transactions and report any suspicious activity. It’s something that all fintech product builders need to bear in mind because if the product doesn’t meet regulations, it’ll be quickly shut down.

Filip Sobiecki: Can you tell us a little about yourself?

Daniel Thomason: I’ve had quite a varied life, both geographically and career-wise. I grew up in Australia and studied at university there. Straight out of university, I joined the Australian Central Bank as an economist, so I spent two years studying econometric models, banknote movements, financial stability, and so on.

After that, I pivoted into becoming an escape room founder but eventually made my way into product working in a few different companies in Berlin. Now in Estonia, I’ve found my way into the fintech space.

My two passions are solving interesting problems and surrounding myself with great people, so I think my life has been a series of finding better and better ways to do that.

Can you tell us a bit more about your role at Wise?

It was an amazing place to join because the mission is something I really believe in. It’s really clear to everyone working there and our customers that Wise wants to make international money movements more transparent, convenient, instant, and eventually free. They’re our four mission pillars.

For the role itself, I actually fell into the compliance product management space by accident. Before Wise, I was at N26, a neobank based in Berlin. I just applied for a product management job, and they put me in the KYC team.

Working with compliance managers and the operations team to solve business problems while also fitting within the regulations is an amazing experience."

What lessons did you learn about KYC in your previous role at N26?

KYC at a fintech company is such an interesting beast because it fits so well within the growth space, but it’s also a critical compliance function.

If you don’t know your customers, you can’t mitigate financial crime risks.

You can’t know if they are sending money to a sanctioned entity. More broadly, if you don’t know your customers, you can’t serve them well either so it’s also a critical business function as well.

As a product manager, you become used to making trade-offs. You’re used to saying, this is going to cost a lot, but it’ll get to our customers faster. On this level, it’s more like we need to do X to meet regulations, but it’s going to be a pain for our customers. In that case, it’s about figuring out a way to comply with the rules while also minimizing pain for customers. Adding those additional lenses is like a Venn diagram of optimization.

What makes a good product manager?

There’s a lot of talk about only hiring A players, but not everyone can start as an A player. You might start as a zero. I’ve been a zero a few times in teams where the job or domain was new. As long as you’re not dragging the team backward, that’s good.

Some red flags when hiring product managers are big ego and lone wolf mentality. When people use only the first-person pronoun and take credit for things others have done, this is a big red flag.

If I was hiring people, I’d look at how much ego is on display and what their sense of collaboration looked like.

As a product manager, how do you work with stakeholders in compliance, operations, engineering, and risk management all together?

It’s certainly challenging. Every link in the network multiples how many conversations you need to have. It’s a role where conversations are key as it’s about managing conflicting goals, deadlines, and priorities. The advice I tell my junior product managers is there’s no such thing as over-communicating.

Over-communicating and heavily investing in relationship building is how we make it all work.

There needs to be a relationship where stakeholders trust what I’m doing and that I’m looking out for their interests. Without trust, it becomes a transactional relationship which slows everything down.

What criteria do you use to validate product ideas?

We started validating product ideas with our four mission pillars front of mind – instant, transparent, convenient, free.

The next aspect that we need to add to that is the risk aspect. This will help us determine how risky a new project is to work on. The important thing is that we don’t fill our entire portfolio with those riskier bets.

How do you use data to build a better fintech product?

Wise is very data-driven, and there’s democratized access to data as well. Throughout the whole company, everyone can create their own dashboards, run their own queries, ask questions, and get a sense of how they’re creating value. I think one of the key pillars of making good data-driven decisions is not hoarding the data.

In fintech, everything is extremely regulated. How do you experiment in such a regulated environment?

It also comes back to communication and relationship building. A big mistake I see is that banks and other fintech companies treat the regulator either as their worst enemy or as a teacher-like figure.

People should treat regulators as another stakeholder who wants the same things you do – to have a safe, functioning financial system.

It should be a conversation where you tell the regulators how you want to experiment safely, and then the regulator steps in to advise on what’s good or bad about the idea. It’s about working together to try and achieve the goals we both have.

What is your decision-making framework?

In my role, there are constant decisions to be made, but there are only 40 hours in a workweek so what do you devote time to? I have two methods; one is the Eisenhower Matrix which is where you prioritize tasks by separating them into four different sections – important versus non-important, urgent versus non-urgent.

The second thing is just working in public as much as possible. Don’t disappear behind a garage door and make your decisions there. Share them with your team and give yourself some exposure to that feedback loop.

If you had a magic wand that could give all 12-year-olds in the world a brand new skill, what would it be?

I’m on the side of letting kids be kids. I think there’s too much emphasis on homework and not enough on play and doing what you enjoy.

If I could change the question for 21-year-olds instead, I’d say basic statistical literacy. I’m not talking about advanced econometrics or theoretical stats. I mean a basic ability to read a graph and figure out what it means. I think if more people understood that, we would all collectively make better decisions.

This discussion is part of our Disruption Talks recordings, where we invite experts to share their insights on winning innovation strategies, the next generation of disruptors, and scaling digital products. To get unlimited access to this interview and more insights from industry experts, sign up here.

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Filip Sobiecki

Senior Executive at Netguru and host of Disruption Talks
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