Can KYC product really be sexy?

A VC that I know said a really cool thing: “If you are solving a sexy problem then you are already too late.” I have been working on this KYC (Know Your Customer) challenge for a while at TransferWise and now as a Product Lead one of the biggest challenges for me has proven to be hiring a Product Person — 6-month long grind with very little results.

Potential candidates seem to think that KYC is just something that companies need to do in order for the rest of the product to work. Let’s explore.

Part I. From cars to KYC product

My own story of how I ended up building KYC product might be a good place to start. When I was 16 years old I was certain that I’d become an automotive engineer — all my notebooks were filled with car drawings and Top Gear was pretty much the only show that I’d watch. By the time I was 19, I was committed to designing and building a car from scratch — I studied car suspension, CAD (Computer Aided Design), welding, etc on my own to realise this dream.

CAD assembly of the car that I designed and started building

While studying Integrated Mechanical and Electrical Engineering in the University of Bath in England I finally got a chance to design, build and !test! real cars as a research engineer at Jaguar Land Rover. The main thing I learned though, was that I don’t like cars as much as the 16-year-old Laur liked them. I didn’t feel that I was making a difference in the world — just being a little nut in a big machine.

I went travelling and started soul-searching. I became interested in why and how we think as well as finance which lead me to build a prototype of Bob (an Artificial Intelligence that trades on the stock market). Sexy stuff, right? Blinded by my first successes with trading with Bitcoin derivatives, 25-year-old Laur was certain that banker is what I shall become.

Random screenshot of Bob in the gym (AI training)

I registered myself to take the CFA level I exam and moved back home to Estonia after graduating university in order to get a quiet job that could bring me some income while I spend most of my time studying. And the plan was to go back to the City or Wall Street after 2 years to earn the big bucks.

Completely by accident I ended up doing a not so quiet job instead… I become a Product Person at one of the fastest growing fin-tech startups in the world — TransferWise. I actually applied to do some fx trading in the company but ended up in Product. And my product? Fraud.

Fraud product is part of KYC. And like in the rest of KYC, the main mission is to make sure that our customers can focus on what they want to do in TransferWise — send money quickly, conveniently and affordably across borders; and not to worry about their security… Not much to do with making money from buying and selling papers (stocks) nor making cars.

Random. It must have been them beautiful startup people and interesting problem of Fraud, that had machine learning scent all over it, that had me. Still cannot believe that I ended up doing something so different from what my vision of becoming a banker was — but I am very glad that I did.

Main takeaway — It had never crossed my own mind that I’d like to build KYC product.

Part II. What is KYC?

Before we can dig into understanding why hiring a KYC Product Person has proven to be so difficult for me, it’d help to understand in broad terms what is Know Your Customer.

As I already mentioned above, the purpose of KYC product is to let our customers to do what they came in to do — transfer money with no worries. In order to provide our customers a seamless experience we need to solve quite a few problems on the background as part of KYC product:

• Fraud — Criminals taking over people’s bank accounts or using stolen bank card information to steal money.
• Money Laundering — Criminals have obtained illegal funds and try to make it ‘clean’ by inserting it back into the economy.
• Terrorist Financing — Money being sent towards funding terrorist activities.
• Compliance — making sure that we follow the base-line requirements set by regulations in order to have sufficient amount of info to contribute towards global financial crime fighting.

And the last one is the main reason why you are often asked for ID and a utility bill as an address proof (Who has utility bills on paper these days!) and proof of the source of your funds and so on when you use some financial service. . For instance by regulation if you are sending more than 1000 EUR then you are required to provide a proof of ID. Passport for instance.

There is quite a lot of legacy in there as the technology has advanced. Could it be done better than just following the rules and regulations :O? Ha! Yes it can (spoiler).

Part III. Who is a Product Person?

Using the Google term of ‘smart creative’ known from the book ‘How Google Works’ by Eric Schmidt and Jonathan Rosenberg might be the correct term for the person who we think of as a Product Person*.

I once even created a diagram that should illustrate what we expect from a Product Person but some people talked me into not using it for advertising the position (might be one of the reasons why it has taken me 6 months!? )

I guess it was the calibri font that people didn’t like.. can’t remember anymore… The arrows are not very well placed either. #MVP

This customer focused breed of a person should be everything that the diagram says (besides being naked.. and don’t care about genders or skin colour either). Product Person should be a smart creative who is the CEO of her/his autonomous team, figuring out why, how and what needs to be done together with the team. Furthermore, I’d like to note that there is nothing mentioned about previous experience in a certain field such as KYC nor about a super-duper paper that proves how much of a master you are in Scrum.

*Actually position listed on the TransferWise careers site is ‘Product Manager’ — but as the M-word reminds me of the corporate times at jaguar, I shall call the position ‘Product Person’ in this blog post. transferwise.com/jobs

Part IV. Why is it so difficult to attract good product people to KYC product?

After countless CV reviews and interviews I’d like to explore some stuff that I came up with when I started noting down the reasons why I haven’t succeeded in attracting good Product People into KYC. I am leaving out the targeting as this is the only method that has produced some results — but not very scalable.

There can be largely 4 kinds of reasons for potential candidates not to apply:

1. Potential candidates don’t know about TransferWise and hence don’t end up on the jobs site.
2. Potential candidates know about TransferWise, they are happy in their current job and hence don’t end up on the jobs site.
3. Potential candidates know about TransferWise, but have zero interest towards KYC as they don’t know anything about it — scroll through and apply for Viral Growth Product (sexy!).
4. Potential candidates know about TransferWise, but have zero interest towards KYC as they have heard that it’s mostly legal box ticking — scroll through and apply for Viral Growth Product (SEXY!)

Let’s focus more on the points 3 and 4 — What reasons have caught my ear of why one wouldn’t want to apply for a Product role in KYC:

- ”This KYC thing sounds too easy — you ask a few documents so that the regulators are satisfied and that’s it”

Boring, just asking a few documents. Not challenging enough.

… Not quite. See below.

- “This KYC thing sounds complicated with too many barriers”

It is part of human nature to make assumptions. And people are afraid of the stuff that they don’t have much info about. There are quite a few moving parts to it indeed:

• How to detect criminals to make sure that people’s value (money) wouldn’t be stolen from them,
• How to gather information so we are able to contribute to global crime fighting,
• How to enable growth by making information gathering convenient for the customer,
• How to be cost effective so that the service would be affordable for the customer,
• How to ensure our customer’s safety so that customers could focus on using the service with the mind at ease,
• How to make sure that regulators and partners are able to trust us.

So yes, you are correct. KYC product is super complicated:

KYC product = complex (UX + analytics + technical implementation + legal requirements)

- “What problem does this KYC thing solve? I wanna make viral growth happen instead”

“Sending money should not be any different than sending an email. It’s all just bits and bytes. It should be instant, convenient and free.” — Martin Sokk, Product @ TransferWise

Let’s add safety and trustworthiness to the list…

The truth is that the above never happens if there will not be innovation in the way we fight online crime and ensure customer’s safety through KYC product.

• Safety and trustworthiness — If we’d use only old ways of rules, document verification, etc, in order to make customers’ usage of the product safe and find criminals; We would struggle preventing crime going through TransferWise.
• Instant — if we need to get a lot of information by contacting the customer and need a human finger on to click a mouse button to do something with this info, we’d never be instant.
• Convenient — Again, who has a utility bill on paper to use for verification these days!? Drop in conversion.
• Free — On one side TransferWise loses money when criminal commits fraud successfully through TransferWise. On another side it would be rather expensive if there were a lot of people looking over all the transactions to make sure that it’s safe. And that is priced in the fee.

So viral growth is heavily handicapped without a good scaleable KYC product.

It is not only solving a complex problem for TransferWise. But stopping financial crime effectively without harming the user experience is as big of a problem to solve in the world as is the fairness and transparency in finance (which is the problem that TransferWise is solving). It’s happening in every place where value is exchanged — all the banks, cool fintech startups and other financial institutions need to do it.

Part V — so is KYC product sexy?

Everybody can relate to the stuff that is visible and gets attention in the media. Moving people and stuff around wasn’t so sexy before Uber and similarly moving money across borders wasn’t so sexy before TransferWise.

From part IV we can take away 2 main things:

1. KYC product is super complex
2. KYC product solves a huge problem

We need to solve KYC in order to enable value to flow faster, more securely and more conveniently between people; and it is highly complex which means it takes balls to solve and not everybody is up for it. No money moving product works without KYC.

And does that make it sexy? F*** YES!