Ronen Assia Of Team8 On The Future Of Money and Banking

An Interview With David Liu

Move fast, but try not to break anything. Mark Zuckerberg famously said “move fast and break things,” but the financial services industry is very different from social media. Skirting regulations can come back to haunt your business in a big way. So can errors that occur when you’re dealing with people’s money. Towing the fine line between moving quickly without placing the business at risk can be a tricky art. Venmo paid hefty fines for moving money without money transfer licenses, but they might never have gotten off the ground if they had played strictly by the book.

The way we bank has changed dramatically over the last decade. It was not too long ago when you had to wait in line in a bank to deposit money. Today things are totally different. You can do your banking without ever walking into a bank. In addition, the whole concept of money has changed. In the recent past, money usually meant bills and coins. But today, the concept of money has expanded to include digital currency and NFTs. What other innovations should we expect to see in banking in the short and medium term?

To address this, we are talking to leaders in the banking, finance, and fintech worlds, to discuss the future of banking and money over the next few years. As a part of this series, I had the pleasure of interviewing Ronen Assia.

Ronen Assia is a Managing Partner at Team8, a venture group that partners with world-class entrepreneurs to build category-leading companies in the fields of fintech, cyber and digital health. For over twenty years, Ronen Assia has been successfully merging technology and design together into useful and accessible products, and defining user experience across various devices and platforms. Before joining Team8, Ronen co-founded eToro and served as the company’s Chief Product Officer where he managed product and engineering, and helped grow the company into a Fintech unicorn. eToro pioneered social investing, enabling every investor to see, follow and automatically copy the portfolios of other investors in the network. As of January 2020, Ronen serves as a non-executive director and member of the eToro board. Prior to co-founding eToro in 2007, Ronen designed products ranging from medical devices and household appliances to numerous desktop and web applications.

Ronen holds a BA in Industrial Design from Bezalel Academy of Art and Design, Jerusalem and an MA in Product Design from the Royal College of Art, London.

Thank you so much for joining us in this interview series! Before we dive in, our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started in this industry?

I was born in London in the winter of ’76, almost in the back seat of my father’s Mini Cooper which failed to start when my mom went into labor. When I was three, my father was keen to start his own tech business and my parents decided to move back to Israel.

Growing up in a tech-savvy home was a bit of a novelty in the early 80’s and I found myself particularly intrigued with computers (oh Apple IIc!) and art. For most of my childhood, I looked at these two domains as completely separate hobbies, one for each part of my brain. It was only when the first VGA graphic cards started to appear — and with them a whole variety of games — that I realized that I could fuse my two passions into one. I started tinkering around with computer graphics creating all sorts of designs and interfaces and I eventually landed my first intern gig at a studio that created interfaces for TV sets. From that moment on, I knew I wanted to work in technology, design, and user experience, so when it was time to choose a “profession” I decided to follow my passions and pursue both a Bachelor’s and Master’s degree in Product Design.

Fast forward to 2006, after graduating from the Royal College of Art in London, my brother Yoni came for a visit and we started brainstorming about what we could do to change the brokerage industry and make it more accessible to the “rest of us.” We were both fascinated with financial markets but the platforms back then were really dated — they looked like something in a soviet submarine, filled with endless screens, buttons, and intimidating charts. We sat down in a local pub and started envisioning what an investing platform for our generation would look like, something that would encourage engagement, education, and accessibility.

Can you share the most interesting story that happened to you since you began your career?

A good story that’s relevant to me (and that is still in the making) centers around the emergence of fintech for retail investors. The old saying “revolutions don’t happen overnight” definitely applies to this phenomenon. When we started thinking about making financial markets accessible to all, people thought we were out of our minds. No one did direct-to-consumer fintech or talked about UX, especially not in Israel. This was the moment we realized we were on to something. Our pitch was that younger generations required different solutions, that people felt left out of “the game” and wanted to communicate with like-minded investors (think pre-social apps). During those first couple of years, ads for investment platforms looked the same. They targeted wealthy investors and shouted “low fees,” “full anonymity,” and “low latency quotes and execution.” Our homepage was all about communication, transparency, and ease of use. When I look at where the industry is today, I smile knowing how long it took to get here.

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

The late great Groucho Marx once said, “Those are my principles, and if you don’t like them… well, I have others.” I started my journey as a stubborn entrepreneur and I got irritated when things didn’t go my way or when my colleagues thought differently. Usually, people tend to grow more stubborn with age. For me, it’s the opposite. I learned to listen more, talk less, remain open-minded about ideas, and never rule out anything during a good brainstorming session. A lot has happened in the world over the past decade that no one could have anticipated, so I’ve learned that being narrow-minded and deterministic won’t get you very far.

Ok wonderful. Let’s now shift to the main focus of our interview. Can you tell our readers about the most interesting projects you are working on now?

This may sound odd coming from a design school graduate but I’m a little obsessed with the tax domain, and I’m particularly excited about April, a Team8 portfolio company that’s focused on streamlining and simplifying the tax experience for US taxpayers. April has built an entirely new tax engine optimized for the digital era — a massive undertaking given the complexity of the US tax code. Ironically, despite the proliferation of financial apps in recent years, the tax domain has long been neglected by fintech companies. This is especially surprising when you consider that most financial decisions carry a tax implication and every individual and business has some tax liabilities. April’s embedded approach to taxes enables banks to better serve customers in their ecosystem by providing them with hassle-free tax filing services. And as part of their broader mission of financial wellness (with which I’m fully aligned), it’s helping taxpayers maximize their returns and get early access to refunds.

How do you think this might change the world?

Beyond the ever-expanding tax code that no one really understands, there are lots of global trends underway that carry cumbersome tax obligations. Take remote work and the gig economy as an example. They’ve given rise to a new class of professionals spread across jurisdictions that have different tax reporting requirements for workers and employers alike. Or look at the e-commerce industry where online sellers who transact across borders have to navigate complicated tax frameworks that vary from country to country. And in the crypto space, where trading has gone mainstream, reporting gains and losses from a multitude of platforms has become a nightmare for all stakeholders: traders, accountants, and regulators.

Clearly, the world is ready for a new breed of tax solutions that are built for the modern era and can provide meaningful ‘tax relief.’ By leveraging AI, machine learning, and other technologies to develop fully integrated, automated tax services, I believe that TaxTech companies will solve many of the tax challenges described above. On a human level, TaxTech will reduce anxiety around taxes, improve taxpayers’ quality of life and ultimately help people make healthier financial decisions.

How would you articulate how the concept of money has changed in recent times? Is it really a change? How is it still the same? Can you explain what you mean?

Explaining the role of money in a paragraph is a lot more challenging than a Tweet, but I’ll give it a go. I think the basic concept of money hasn’t changed. Money wasn’t invented as a result of legislation or some central initiative. Rather, it emerged through social interaction as a natural outcome of human economic activity. Money’s core functions (count it, exchange it, save it) won’t change, but the underlying infrastructure will definitely undergo a serious transformation. If you think about the roles of governments, central banks, commercial banks and other financial institutions today, they have largely evolved to create means to support money’s functions. All of the recent calls to disintermediate and decentralize the system could be debated for years, but at the end of the day, truly digitizing money — whether centralized or not (CBDC vs crypto) — renders many aspects of the current system redundant and inefficient. This change won’t happen overnight and probably not even over a decade, but it will dramatically impact the way we operate in the financial system today. Do we still need banks that were created as trusted vaults if the money rails are trusted and secure by design?

Another core challenge of the current system centers around identity, one of many functions that were oddly delegated by governments to the banks. You need an identity to interact with financial institutions today (even though you didn’t need one for thousands of years before). Regulation and compliance around identity continue to get more and more complicated. The impact it’s having on financial inclusion, which I believe to be the greatest challenge today, won’t get any better without real reform. Governments will eventually have to facilitate access to digital financial services by developing customer identity solutions (and yes, I’m aware of all the privacy concerns).

How has the pandemic changed the way banks interact and engage with their customers?

Beyond the obvious acceleration of digital transformation across the sector, the biggest surprise has been the adoption of apps by the elderly. For the past decade, most banks have embraced a transformation strategy that has centered around younger generations, with a core assumption that older generations won’t adopt new technologies. This phenomena is driving more focus and interest in designing solutions for the Silver Generation (broadly 65 and above) which, until now, has been largely overlooked.

You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)

I hardly have influence over my kids, let alone anyone else:) Having said that, I’m a great supporter of the concept of Universal Basic Income. UBI is a program where every citizen receives a flat monthly payment, regardless of whether they’re working and earning an income. Different programs designate who is entitled to receive the income, from anyone above a certain age to only the neediest segments of the population. Although the concept of UBI has been around for centuries, it’s finally getting some attention due to advances in modern technology, the digitization of money, and rising inequality challenges. That’s also why at eToro we’ve decided to sponsor the GoodDollar protocol, a community-driven, distributed framework designed to generate, fund, and distribute global basic income via the GoodDollar token. To implement UBI on a national scale, we need new financial infrastructure to make the system run more efficiently, and to ensure that money actually gets delivered to those who need it (in contrast to various stimulus packages).

What most excites you about the banking or payments industry as it is today? Can you explain what you mean?

Over the last decade, traditional banks have been challenged like never before to broaden their scope of services and provide more user-centric financial solutions. A lot of this pressure stems from open-banking reforms, and the conveyor belt of competing neo-banks that have emerged in recent years. But banks are well able to thrive in a pressure cooker environment, and they’ve managed to stay relevant (and competitive) by embracing fintech-driven innovation and embedding fintech solutions into their offering. I’m really excited about all the new, and yet-to-be-built, services which will inevitably get rolled into existing banking apps to create a better overall experience for customers. I’m also excited about the commoditization of basic banking services, and the separation of financial apps from regulatory layers, which free up development resources and enable banks to focus on value-added services that extend beyond the baseline needs of their customers. And of course I’m excited about new opportunities in decentralized finance which I believe will prompt a more open and efficient financial system that can greatly benefit customers.

What most concerns you about the banking or payments industry as it is today? What would you suggest needs to be done to address that?

At the moment, I suppose what’s most concerning to me is the rising politicization of the banking system. Imposing economic siege on a state level has never proven to be beneficial, primarily because broad-sweeping financial exclusion cuts off millions of people from basic goods and services, and ultimately increases the segments of a population that are most underserved. Sadly, I don’t think there’s a quick-fix to this challenge, but I do believe we — as a society — need to consider the longer term implications of this trend. If left unchecked, the politicization of banks has the potential to severely undermine confidence in our most trusted financial institutions.

Based on your vantage point as an insider in the finance industry, what innovations should we expect to see in banking in the short and medium term?

In the short term, I think we can expect to see more companies embracing open APIs and integrating third-party financial solutions into their apps. It makes a lot of sense for businesses to expand their offerings through open API infrastructure, as this empowers companies to offer holistic solutions that can drive customer acquisition. The open API approach leads to better UX which, in turn, facilitates customer stickiness and strengthens the brand-customer relationship. Companies that implement an open API strategy will also benefit from greater customer segmentation — they will be able to offer highly tailored products (versus a one-size-fits-all offering) where different consumer demographics (i.e., kids, the elderly, the underserved, etc) will have access to services based on their individual needs and behaviors.

In the long term, I believe we’ll witness a transition to digital money where banks will be able to seamlessly track digital assets, gain significant operational efficiencies where payments become faster, cheaper and safer, and offer a host of new financial services and products.

In your particular experience, how has the pandemic changed the way you interact with, and engage your customers?

At eToro, and at most of Team8’s portfolio companies, the pandemic prompted us to rethink a broad range of processes, including how we engage with customers. In addition to holding more virtual events, webinars, and Zoom calls, we’re now using digital channels to manage communications with clients. We’ve also modified our SLA contracts to provide customers with a better user experience by handling support issues in real-time via a range of live chat, messaging apps, and video platforms.

I’m very interested in the importance of user experience. How much of your interactions have moved to digital such as chatbots, encrypted messaging apps, phone, or video calls? How has this shift impacted the user and customer experience? What challenges do these apps present when used as a customer engagement tool?

The majority of our engagement with customers has shifted to real-time, digital channel communication, and they have been very receptive to this pivot. It’s a lot more convenient for them to get immediate responses, depending on the type of interaction they require, on the channels and devices they’re already using. Customers no longer need to visit the bank branch or wait patiently for an email to be returned or their phone call to be answered, taking the user experience to a whole new level. For companies, it allows them to differentiate themselves with a higher standard for quality of service. By far, the biggest challenge to adopting an omnichannel UX strategy is managing and synchronizing all the communication that happens with customers across touchpoints. Getting this right is very important when serving a digital-first demographic that expects to start a conversation via email, continue via chat, and conclude with a push notification.

If you could design the perfect communication feature or system to help your business, what would it be?

I think the most important thing for companies adopting an omni-channel strategy is to have a channel-neutral, backend platform that delivers a user-friendly, holistic view of all communication with customers from one centralized location. Having seamless cross-channel management is critical on two levels. Firstly, it enables support staff to get the information and context they need when handling an issue that’s getting addressed across different touchpoints. Secondly, for customers, it ensures a continuous high level of support — irrespective of which channel/device they’re using for communication.

Here is the main question of our interview. What are your “5 Things You Need To Create A Highly Successful Career In The Modern Finance, Banking and Fintech industries?

1. It takes time and empathy to build trust with consumers. This is important for any business, but especially so in fintech. Fintech isn’t like other domains that require light-touch or little commitment from their customers. Customer livelihoods and business success depend on sound financial decisions so, naturally, money elicits all kinds of various emotions, including skepticism of new solutions. Expect customers to be suspicious and cautious of new products, particularly in the early days. Fintech is a marathon — if you’re looking for a quick exit, try something else. Regulation, trust, and dealing with people’s money takes time, patience, and usually lots of capital.
2. Domain expertise is critical. Regulation and competition are just details. Building products in financial services is more complicated than any other domain, except maybe healthcare. There are endless legal and regulatory restrictions, the user flows are more elaborate, and operations can be absolutely critical — a single slip-up can completely tarnish a whole company. Getting this right means building a team of experts, and finding the right mix of people who can bring both new blood to shake up an industry as well as legacy experience to help you avoid mistakes from the outset. The fintech market has some of the smartest people in tech, or really any industry — getting out there and building your network now will make it easier to hire them later.
3. Move fast, but try not to break anything. Mark Zuckerberg famously said “move fast and break things,” but the financial services industry is very different from social media. Skirting regulations can come back to haunt your business in a big way. So can errors that occur when you’re dealing with people’s money. Towing the fine line between moving quickly without placing the business at risk can be a tricky art. Venmo paid hefty fines for moving money without money transfer licenses, but they might never have gotten off the ground if they had played strictly by the book.
4. It’s all about the right plumbing. I always joke that managing a product for a fintech company is like being a plumber — you run around connecting various parts that nobody sees to make sure the user experience on the top flows. The typical fintech stack is complicated and you’ll probably have to rely on dozens of different vendors to make sure everything works, connects and complies. Luckily, these days we can pick and choose what’s best depending on pricing, features, and SLA. Decide early on where you want to focus and innovate — if it’s on the user experience side, don’t rebuild the infrastructure yourself (and vice versa). Most parts of the stack have already been unbundled so a good understanding of what’s available in the marketplace will take you a long way. These options change quickly though, so staying on top of the latest and greatest can be important as some of your competitors might be gunning for a competitive edge with a newer stack.
5. Niche is the new king. Gone are the days where there was little innovation in financial services and you could go-to-market with a one-size-fits-all approach. I’m always concerned when I see entrepreneurs pitching me a new service that caters to SMB’s, people above 50, or anyone with income above a certain salary. In today’s fintech reality you have to deeply understand your audience, including their behavior and habits, as well as the competitive landscape. That’s why we see more companies expanding vertically after first proving success in some specific use case or audience. Loans for dental care, BNPL for auto repairs, saving for immigrants, banking for the LGBTQ community, factoring for cross-border eCommerce sellers, etc. Start from a niche you understand and that has specific needs, prove you’re viable, and continue from there.

How can our readers further follow your work online?

LinkedIn: https://www.linkedin.com/in/ronenassia/

Rethink (Team8 blog): https://team8.vc/rethink/fintech/

Thank you so much for the time you spent doing this interview. This was very inspirational, and we wish you continued success.