The Modular Business Model

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The full conversation with Jake Levant from Lightico. In a wide-ranging conversation, we chatted about how the COVID pandemic has really forced us to look at the design of our business processes and operating models. We have seen an acceleration in distributed workforces, distributed systems and distributed ideas… is this moving us much more towards the distributed modular company?

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Interview Transcript

So hi, everyone. I’m here with Jake Levant, who’s the VP of Marketing at lady, CO, and lazy co look after streamlining and automating customer interaction, so very involved in the digital space. So Jake, thanks very much for joining me today. Welcome,

Chris. Thanks for having me aboard.

You’re quite welcome. So so I thought it’d be interesting just to chat a little bit about some of the things that you’ve seen first off through the whole of the COVID, lockdown. I mean, we’ve been there for about nine months now. And it seems like it’s sort of been really sort of dramatically, you know, changing some of some of the industry industry norms that we’ve seen, it’d be good to hear just your kind of perspective of what you’ve seen the last nine months.

Well, Chris, like everybody, I think we went through a panic situation. And then once we got through that, we realised, heck, this is the direction we’ve been heading anyways. Whereas it’s certainly not the impetus that we would want, we came to an understanding that digital was something that we talked a lot about, but we didn’t really have the sharp need to act on, it had to front burner, all those activities that were otherwise sidelined. And what we’ve seen, of course, is that as consumers were unable to do their traditional branch visits, face to face interactions coming in papers have to move quickly, particularly on the customer facing components. So all the digital energies have been forced into the front facing directions to digitise those immediately.

And how much of a gap Do you think there was? I mean, we also there’s, there’s a quote out there, they’re saying that the future is actually already here. It just hasn’t been implemented yet. Right? I think it was one of the Sci Fi authors did that. I mean, how much of a gap? Do you think it was that we sort of were able to sort of accelerate? it to?

It’s a fair question, I don’t think that we’re missing the any particular piece, I think that what we’ve missed is the integration and providing an a coherent and easy fashion. Whereas before, we could have a silo based approach where over here, you would take care of the paperwork and over there you in the retail branch, you would identify yourself, and then you would pick up your cash over there. So we would have each of the pieces would be done in their own ways. But when it comes to a complete end to end interaction now is the proof is in the pudding, what we’re seeing is that we do have great points, where we are still asking people to log into portal, call the call centre for their ID that’s missing. Two, we are seeing where the interplays are actually broken. And the pain of that is much more sharp right now, because it’s falling on whatever frontline workers we have. And they’re trying to piece together systems, which on the one hand, are partially digital, but are in no way integrated. Easy.

And so do you think do you think integration is going to be the the new kind of theme that comes through? So we’ve all rushed out? We put in lots of different solutions. It feels like there’s I mean, there’s there’s a whole vast range of solutions and often different solutions. And it’s almost like, how do you knit those together? I mean, is integration is that is that kind of what you’re working on until it’s that can be the next the next big thing? Or?

Well, I think that there’s so many assets that we’ve invested over the last 20 years in the back in the core. And what we’ve seen is the we haven’t leveraged them towards the way customers can take advantage of them, you put them in piecemeal out in front of them and it you’ve taken an advantage in in part, but the real opportunity is orchestrating between them. And I would actually challenge us to do better than just integrate. And I would say what is the future proof environment look like? Where I can’t tell you what is going to be in five years from now. But I can tell you that it has to be a systematic approach. And so we need to have something that’s across all touchpoints. And that is future proofing that okay, it plugs in its API, it’s an open access, it’s secure. We know the the criteria and the basis from which we need to work, it has to be integrated, secure, future proof, integrated into the core systems, cohesive with one another. And I think that that is what’s coming to the fore is that all of our investments have been either a behind the wall and have been brought out and where they are brought out is that sometimes they’re going in? And up until March. It’s been okay.

Yeah, and what about so there’s this whole concept around sort of, I suppose, software as a service means definitely been a boon in that mean, again, it’s been around for a long time, but it’s the ability to be able to stand services up so quickly. It’s just been fantastic. But as you get into that, then, you know, customers tend to sort of they can pick sort of, you know, the best products off the shelf and and you have these integration issues. And and do you think are we going to a world where we’re going to see multiple different best solutions that have to integrate with each other? Or do you think or do you think, is that not gonna be a challenge? Having lots of different vendors with lots of different parts of the puzzle?

Well as the alternative, the alternative is terrible. It’s me being locked into a legacy solution. That’s unable to grow. And what we do need is, you know, like the lobster that grows and grows and breaks his shell and starts again. That’s been how we’ve been digital transforming now it’s in five steps in five years steps. It’s been terrible. Five years steps, who am I kidding? It’s been 15 years steps. So excellent. The nature of what’s going on in the back is, you know, is from last century. And no wonder people don’t want to deal with it. And so I would say the better challenge is having a platform approach whereby we have the smart back, and we’re able to make the modifications as needed be on the front, there’ll be a new president and a new prime minister does the new compliance is going to be a new touch point. And we need to plug in an app in a portal in a phone and Bitcoin and crypto. I can’t tell you what it is. I certainly like an environment that gives me the flexibility to plug in and unplug durable fashion.

And how do you think clients should go best about sort of managing that complexity? I mean, you got any any thoughts on that?

Well, I think that they need to understand what is really their pain point. And on the one hand, we’ve been thinking that the core, the core, the core, but we’ve actually come to understand that much the value is unpacked, where it impacts customers. And so we don’t necessarily put the business side into the equation of digital transformation, if we talk about it being an enabler, but it’s actually right. In business. It’s a blocker. When you think about the future of business, it’s the revolutes, it’s that those are the competition. It’s not the IBM mainframe, we need to think about how are we going to respond to the external challenges in the rising consumer expert, because those are the ones we need to manage. So when we think about how to prioritise, I would say, Where’s the Business View? Where are they and who can identify, oh, I, I’m going to get a squeeze in that my, I have the smartest products, I have the best technology in the back, I can adjust risk as I need the, I’m more compliant, and I have better brand than anybody else. But you know what, no one knows this. I’m limited by my old shell. And I can’t break out for another five years, because people who have to do fine tuning all need to know how to code from something. And that is business centric, that can be adapted to the different markets that I can have a shade in green in the shade of pink, and I can never shade for this market. And this Gen X and Gen Z. And I need that durability in the front. So I think that what as we look forward, we want to talk about one, something that starts with the consumer to something that talks about business ROI, not about some CEO, managed in digital transformation with moving gold, I said those are hardcore things that we know how to manage to, those have been noticeably absent at the table.

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I’m listening to you talking there about I’m thinking about modular coding or object orientated coding, actually, and about how coding used to be this big monolithic sort of, you know, code that used to sit out there and use to be very hard to understand. And then it’s sort of been broken out now. And you’ve got subroutine, separate routines, etc. And I just wonder if that’s actually happening with business as well. So you got it was like, Are we are we moving towards the modular business, where you have different areas of expertise, and it doesn’t all fit within the within within the business model. But it’s about having modules that you can plug and play?

That is a great question. I, I don’t know what the what the end state will be. But I can tell you definitively by giving the flexibility, such that a business can be a broad, or they can go niche, and then they can they can have this adaptability. We are empowering different financial service, this to take their own track. And when you talk about modular code, I thought, okay, that’s one step forward. But why are we not in a point where we can not get business leaders to do drag and drop type of systems, we are in that stage, if anyone’s built easy website, you don’t need to know how to code. And that is actually what I would say is the opportunity where we can unshackle some of the tools that used to be in the back that we would have to you know, go through endless prioritisation and funnelling of requests in order to get things done. If I need to pick a variant in German or a variant in French, it should be modular. And so I like that flexibility that you present it, but I don’t even think it has to be for the most part, depending on what we have in the back. And that’s what the API and SAS economy gives us the flexibility to make those decisions more agile.

And of course, I suppose the other things happened with with with the COVID, like global lockdown, really, is the fact that within Internet connectivity, I mean, we can all work remotely work in different areas, and that the ability to be able to work across borders as just as just dramatically changed. I mean, that’s the whole concept around working in the same country working in the same city is just sort of is just sort of disappearing. I mean, how’s that how That really affected you guys. I mean from from an approach point of view?

Well, the good news is that we are a by nature remote that we love to meet our customers, we were built in a in a SAS style. So we are able to engage, discuss, mentor be mentored partner learn together. And so we are quite adept. So on the one hand, this is unfortunate and we do have those site visits, we like to meet our customers and prospects and partners. The other hand is very familiar. We’ve got customers around the world. And we actually found at a certain point, that just much like our software that beyond the relations, which are very hard to grow the product, agility to be such that we can also run our business this way, I can meet you today. And I can meet a customer in Japan and a prospect in Australia without moving from there. And that is the nature of our business, such that we can grow that that doesn’t mean that we’re not missing the drinks in the lunch. And we love that. But it means that the way we approach business is such that we understand that this is the future of how we should build their businesses, not just ours, but how we want to empower banks to build their business as well.

I think what’s interesting is almost like almost like have that plug and play with businesses and you know, across across the world, and it’s so much easier to do. I mean, you really can sort of talk with people all across the world. And, you know, I mean, I’m sure they’ll be customer visits at some point. But it’s just that that immediacy means you can just talk to people very quickly, just like we’re doing now.

You’re absolutely right. I mean, we’ve had the good fortune of meeting this way. We didn’t meet at a conference, a debt collection conference in UK. That’s how many of my colleagues but I mean, making more friends in different ways. And, you know, just we will put together a virtual summit or hang out or we’ll get together for drinks. I know we’d rather do it in person, and I’m among for the day. But in the meantime, we’re not going to twiddle our thumbs. And as a business side, we also know what to do we know that many folks need to move forward, they need to think about better recovery strategies, they need to deal with new compliance regulation, we need to manage these agilely. And they can’t wait until we meet in a pub. We need to move now.

Yeah, I’m sure it’ll happen at some point. We’ll do that. At some point. There’s a report that came out recently, I think it was last week talking a bit about how fraud the banks have seen such a step increase in fraud. I mean, just be really because everything’s remote like we’re just chatting about. I mean, what’s what where do you think the digital solutions sort of fit in with that? And, you know, what’s what’s, how should we think about it? Because there is an exposure there, I think,

Oh, certainly. And the more we go from a community where I know you, I know your family for generations, to a remote and his people can hide in pretend and know this world of deep fakes. It’s, it is prevalent. And when it comes to financial transactions and collections, it’s risky. And though we, on the one hand, we have compliance, on the other hand, we have risk. And so we have to find mitigating factors to do that. There are many great technologies, which can enable it, they’re not foolproof, and it’s a cat and mouse game. But to say that, in yesteryear, where we would have someone fax in a significant wet, well, that’s, we know it’s you because it’s coming from a fax on a carpet. We know that we didn’t have it right, then we know that we are closed, broader. But we also have better tools today, we have, if you think about this device, you have a face print, IP or phone have fingerprint, you have a transaction history app, there’s incredible information on what’s in my pocket. And then you go into something which is, you know, to just talk about this, when we’re doing with high risk transactions in the financial spheres. We asked you have Kba know something about you one thing, password, you make sure you have multiple devices, you know, take a picture of your driver’s licence to give me a selfie, do a verification, making sure that they match. So not to say that they’re foolproof, but they take care of much of the risk when things are very high risk, then you need to escalate. And so what we’ve seen is that we are continuing to add in non friction steps into digital transactions, where there’s low risk. So if it’s, you know, adding a beneficiary, you have to determine according to the different risk policies of what’s happening to these, right, you add as many seamless as you can. And then you would add something like Oh, take a selfie and send it in and you’ll have to wait five minutes for the transaction because it’s more than the X amount dollar after that. And then certain transactions are still face to face, and they shouldn’t be. So what we’re seeing is a threshold and gated about based on where the risks are and where the exposures are. So I do think that he is, you know, we should be embracing this because it also means that our offering is broadly available But there are enormous risks and exposures. And so the good news is that there are incredible technologies that are not cumbersome. Some is just providing data to the decision. And others are even lightweight fingerprint, bio IP, those are relatively lightweight. And so as we were up, then we can decide what is the right risk profile? And when do we need to put on different rules.

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So it’s quite an interesting concept in terms of how do you manage the authentication and the friction, that’s the customer friction that’s related with the with the with the authentication method against the risk that’s involved. And you know, the higher the higher the friction that should be is matched against the higher risk that you have these low friction for the sake of say, low low value amounts, or, you know, whatever it’d be in terms just where there’s a lower risk,

and you’re seeing other data points come into play. Now, it’s a cat and mouse, if you’ll take social graph, you’ll take email authentication, just to give you a tip of the iceberg. If an email account is new, and there’s no email in the database, you have a red flag, if there’s no social graph, that’s another red flag. And then if you jump into an abnormal behaviour on the phone, where all of a sudden, you’re certain to trying to take a note moments, you’ve got a couple of red flags, and so you can decide how to manage those accordingly. But I’m saying you have data points, which are zero friction, which are now more readily available, then you have, we’ll call them light activities that can address some of them. And the combination of what you find there, plus the type of interaction that you’re having, and then inform the right risk policy.

And as you get like a scorecard, even if you’ve got multiple light fractions, the fact that they’re multiplied together then becomes you have a greater confidence. And you get into that sort of like modelling piece, even AI, I suppose will get gets used in that.

But those are how you make a decision. Because you can say, you know, it’s just no one comes in and on first day does that behaviour and say that sets up a red flag. And so they have a score based, there is a human element that about the rest policy, but this is certainly a cat and mouse and it continues to evolve. With every new opportunity comes a new GAP and a new exposure. And these are being managed. But I do see that as we are managing our risks, I think that we’re also becoming more efficient with the entirety of our operations. Whereas we used to put bandit on bandit in terms of how do we manage our risk come in again, bring your spouse bring a document, I mean, many of these things were just what not effective, and certainly very arduous. So I think that we’ve cluttered much of this and loose, we’re focusing on the edge we’ve taken and found and had to adapt quickly to manage. And we’ll call the initial steps of risk mitigation.

And certainly one of the things I found through lockdown with the digitalization is gone, and it’s saved so much time as a customer, it saves a lot of time, and you don’t have to go and you know, like you just talked about visiting the bank or going back again, I mean, it’s not just the actual appointment, it’s also driving, they’re getting there, those kinds of things. It’s, it just it’s a lot more efficient for people from an economic point of view, I think as well. So I know that you do a lot of business around the world, and you have an international presence. And it’s good. Just to touch on a little bit around what have you seen? Have you seen differences between the markets at all in terms of how that how they responded to this and and what are the themes you’ve sort of seen.

So in March and April, we saw a we saw a wave go across as different countries became aware, exposed, and then active, we saw it really coming across. And what we would see is that your businesses would shut down, particularly in the UK, it was a just went to zero very quickly, we had folks who work in call centre environments that had to figure out how to get in place. So the reaction of shooting Geo, like in UK was very dramatic. Whereas many parts in America, for example, things were less dramatic, there was there was a bit but then people came back to work in May. So we didn’t have such a dramatic stop start. And what we can see now is that the climatization of that we have in, you know, American core market, we have many more folks who are back to work in an office environment. In United Kingdom, we see a lot of folks have found their way to manage in a work from home. And to certain extent, the both will be more productive. So we see that different GIOS according to the government instruction have behaved differently, and then actually have had to adapt differently. It’s interesting to think that, you know, we’ve all been infected or to the greater lesser extent by the same pandemic, but it’s a little bit of the government and the tonality of the folks about how they reacted. Yeah. So I see the digitalization happening across the board. I see actually employers taking a bit of a different angle, depending on even which geography within the states or if it’s in Canada or UK so I think that that’s actually a little bit. In this instance, we will have some of the stereotypes come to come to play, but I do as it pertains to the digital transformation, there’s been this acceleration, where folks at first had to take care of their employees. That was the initial reaction, you know, nothing else matters. Now, what did we do next? How do we take care of them? That was the initial, so we’re gonna be really digital to I need to put in hand sanitizer, whatever whatever the response was, but as employees first, okay, Operation second, we have some stable business working right now, continuation, how do we make this work? And the answers in the third is very much where we’ve come to grow our customer base significantly is, in order to adjust to how do we manage these compliance, regulated interactions with their consumer base, but not when they’re coming into to visit us or not when we can go to visit them. This is where we’ve seen, it’s almost in the third wave. And the pace of gains in the third wave was almost immediate in certain jurisdictions where they said, Okay, we got our elbow job, we’re ready to go, and then others, okay, now, we’ve got to work from home, we need our work from home environment, now we’re ready to go. That’s what we met them in different instances. And from here, I think that we’ve seen that people have become accustomed to this. And now that they know that they need to have these solutions. And then they’re looking, and they’re actually much more sharper, but what type of solution is to need, they can’t take compliant payments over the phone, for example, they can’t get paid on over the phone, because the regulations present prevent them from writing down information. Okay, so now after several months, we know that the problem now I know what I need to go shop for, and we come across the made up and do

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you think do you think the government suppose response, the amount of support and the way they set up the infrastructure is going to have a big impact in terms of like, what the future infrastructure is going to be? So for example, you know, how they responded? And how did how digital automations rolled out? I mean, is it going to have a, like a, almost like a future effect in terms of like the economics, right?

Well, it’s it’s a question that’s too big for me. I. And the one hand, I’d love to say yes, I, I’ve just seen that government initiatives have not necessarily been bearing the fruit. And they’re certainly not in touch. I think that they’re often laggard. And unfortunately, in this instance, we’ve had a external instance, what’s been the driver, but I do think that if it wasn’t the external, we’ll call it the pandemic. But we would have other things we would have Amazon coming into this business, we would have Netflix style approach to this. And we’re seeing that. And so though, I don’t know if it’s the government that I would rely on, as up in during effect. I think that there are things that are much more dynamic and more salient to the issues. If you’re going to drive lasting digital interventions.

It’s almost like the pandemic’s was like crystallised something that was already there. And it’s like, it’s almost like you can see the crystals going out. And it’s like it just acts as an accelerant. As you said,

That’s right. I would say that in different areas, you may see it a little bit more influenced with as much more oversight, for example, in health in a financial transaction, they’re more managing to make sure that things are done. Right there they are managing how they are done. And the actual in here with the telemedicine. I think in those arenas, we’re going to see much more intervention and much more guidance. And it’s actually driven by the efficiencies of that having necessitated by this pandemic, I wouldn’t say it’s government initiative that we’ve had 20 years of opportunity to do that. I’m saying that they’re they can play a more aggressive rule, mandating the ongoing in free market in collections in banking and finance we see much more drive is it’s closer to market and so they can find these opportunities. In the private Medicare’s field, for example, you’ll see telemedicine is much more developed in areas which are much more regulated, I think that the government can play and we have banking, financial matters, I think that it’s still for the most part on enterprise. And we’ll even call it external factors to lead and direct the digital transformation.

Where do we go from here? We’ve had it we’ve had this shock has happened to the economy. We’ve had crystallisation of in a lot of districts digital transformation that’s come through. What do you think, what do you think comes next?

Well, I think that we’ve learned about the value of being close to customer. I know that it sounds for businesses that have been very shielded by regulation or business I think that they’ve seen new ages being over there and our businesses over here and they had this false sense of, we’re not the same we don’t have to be aware of how Netflix interacts expectations are not there. We’ve had this merger and it’s what is going to be clear is that every business has to serve their customer. In that way. No matter what the excuse, no matter reads sale or digital, no matter your compliance, or free market, whatever the parameters are, I think that the bar has been raised and levelled. And I think that we, I can say this is a vector, I would say that we can’t just benchmark our behaviours with, Oh, we’re the best debt collector and Wales, it doesn’t work, doesn’t work, we have to understand that to be effective, we need to adopt the tools for money, many other spheres, because that’s where the customers are. So if we’re dealing with a business to consumer endeavour, we need to be more tuned to what the expectations are. And this has been one of the greatest learnings, we need to be more tuned in to what the consumers are, and how that impacts our business. So that front edge digitization, I think that that’s really, we’re going to see a lot more movement of that going forward.

I think it’s quite interesting, just what you’re saying around how do you learn from different industries, and the fact that some of these things around customer focus have been portable from elsewhere. So Netflix, to social media to, you know, to even legacy industries and banking and financial services, and, and you can sort that you can take the ideas and move them all across. And I think we’ve seen that that ability, that’s that sort of happened, really, as a result of some of this, I mean, sort of sort of brought those ideas to the fore exams.

Yeah, and the good news is that these are so accessible, and they don’t have all the base infrastructure cost, it’s, you know, successful financial organisation has, they’re much more aesthetic, and they’re transparent. And we just need to adopt them much quicker, we have to have a different tempo. So it’s a bit interesting. You think about we have two paces the core, the back systems have been built over 100 years. And that’s financial wisdom. That’s, that’s domain expertise. On the front end, we need to work at a much faster pace to understand and this what I call the being future proof that we need to take whatever it may be years, we’re experts in insurance or expert in medicine. That is truth that’s in our DNA, but how we deliver them has to be much more agile

question. It’s very interesting. And Jake, thanks very much for talking to me. I really appreciate it. Some fascinating ideas there. we’ve chatted about switch, remember the the modular company and some of those kind of things. It’s very interesting. And it’s been a hugely interesting time. So, so I just say thank you very much. I really appreciate it. And it’s been great to chat with you. Thanks

again. And you Chris. Thank you. Okay.

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