How Open Finance Fuels Innovation and the Democratization of Data
May 3, 2022 | 2 min read
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Ryan Caldwell, founder and CEO at MX, recently participated in the Virtual Speaker Fintech Series with Bank of America Securities to discuss disruptive digital banking infrastructure, the size of our market, the future of data sharing, and more. The interview was wide-ranging and full of insights about the current and future state of fintech.
You can watch the full interview and read some highlights below.
Caldwell starts by talking about the evolution he’s seen in the industry over the past decade. “In the early days, a lot of people were trying to wrap their heads around why data matters,” Caldwell says. “It was tough to go into banks 10 years ago and explain why having the ability to access, enhance, understand, and use data to better serve customers and predict their needs was going to become a critical part of banking and the entire fintech arena.” He says that while MX started with a focus on building personal financial management (PFM) tools, the end game was always much bigger. “The original goal was always to be able to help [companies] leverage data to build a real understanding of what their customers are going through, to anticipate their needs, and to create experiences that are delightful, generate loyalty, and bring in a greater share of wallet.”
Today, MX is focused on building collaborations between banks, fintechs, and beyond. “This collaborative approach is a big differentiator because if you want quality connections — if you want the right data elements reliably and quickly — you have to have a strong partnership with banks, fintechs, and the entire financial ecosystem,” Caldwell says. “That's a very different approach.”
This collaborative approach lends itself to open banking and open finance — both of which are essential for fintech companies that want to scale. “Take a fintech company that starts with a niche application, for instance,” Caldwell says, “Customers love it, and it rapidly grows, but eventually it either can't justify its unit economics, or it can't really become a sustainable business unless it expands. We've seen this happen time and time again. As this fintech company expands, they're thinking about new sets of problems. They might want to offer an automated savings app or a debit card, or offer the ability to help customers re-finance a mortgage or even become a full-fledged bank. … That’s when they need a partner that has really strong relationships with banks.”
This need for a partner in the financial services ecosystem extends well beyond banks or fintech companies. Since all companies deal with finances at some level, there’s potential for every company to need easier ways to connect with financial services. Caldwell says, “As this data gets used to not just provide little insights, but to also predict behavior three to six months from now, the market is completely changing. Banks and fintechs and even companies outside of the industry are realizing the implications. They’re realizing, ‘Well, I either pay a lot of people, or I take a lot of payments. So I have to worry about this. If I'm going to be obsessed about customer experience and my employee's experience, I can’t sit on the sidelines anymore. I have to engage and connect to this data in ways that I previously didn't think that I would have to.’”
One example of how this data can be put to use is showcased in Pulse from MX, an AI-driven automated financial guide based on internal and external data that has been enhanced by MX’s money experience platform. “It's analogous to someone driving a Tesla on autopilot,” Caldwell says. “It's constantly reinforcing and feeding information back into that loop that it made the correct decision, and the model gets a little bit better and a little bit stronger.” The same is true for Pulse, which improves every time it gets used. And it’s growing quickly. “In the last few weeks, we deployed it to another 6-8 million users,” he says. “It's incredibly powerful to see how many people are connecting to this Pulse product.”
“It's all about the end user experience,” Caldwell adds. “You can't create compelling experiences if you can't get access to quality data so that you can have the right information and insights that you need. ... If the user gets fields populated incorrectly or if the data's unreliable or inaccurate, the entire process breaks down.”
Caldwell then talks about recent MX partnerships with fintech companies, including Moov and FormFree. “What I love about the partnership with Moov is that it's about open innovation and open source,” he says. “It's about being able to provide an ecosystem where things aren't blocked off, and where the community is rapidly innovating in an open-source environment. MX really is aligned with that.” Similarly, Caldwell explains, “FormFree is an excellent partner. ... What's interesting about working with a partner like FormFree is it really underscores why modern connectivity is so important. If you think about needing to rely on data, the last thing that you need is a non-friendly bank connection from someone who is adversarial to a bank and is either getting incomplete data or populating fields incorrectly because of a mal-written script.”
Finally, Caldwell speaks to the future of MX, including the possibility of more funding or an IPO.
“We have a lot of partners who are leaning more heavily on us than ever, and they're asking us for the next set of innovations,” he says. “So, we're working hand in hand with them as we look at these different options that exist, whether it's funding or whether it's a path towards an IPO. We're always considering our options in context of whether it helps accelerate our ability to deliver for our customers. If it does, then we're going to pursue it aggressively. If it doesn't, then we're lucky and that we have complete optionality; we don't have any pressures in any of those directions with how well-funded we are and with the fact that we've been profitable and are cashflow positive.”
Want to see why companies like Moov and FormFree have chosen MX? Request a demo today.
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