Thomson Nguyen Of Nearside On The Future Of Money and Banking
An Interview With David Liu
Intense user empathy. User empathy means understanding the pain points of the small business owner and our customers, and some of those things could be directly related to their bank account. Some of it is knowing how they open up a bank account or what features do they care about? Some of those things could have nothing to do with us — like pricing their products, setting business hours, and incorporating their business.
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 Thomson Nguyen.
Thomson Nguyen is the founder and CEO of Nearside, a financial services provider and neobanking platform built on the belief that starting a business should be easier. A data scientist turned entrepreneur, Thomson focuses on providing an estimated 60 million entrepreneurs, micro-SMBs, freelancers, gigsters, and unbanked individuals with fair financial products, including free small business checking accounts with no monthly, overdraft or ATM fees and cashback rewards. He holds a B.A.from the University of California, Berkeley, and a graduate degree from the University of Cambridge in applied mathematics and computational biology.
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?
Thanks for having me. So, I’m Thomson, the founder and CEO of Nearside. We provide banking services for small businesses, and we’ve built our company on the belief that starting a business should be easier.
In terms of how I got my start in this industry, I originally studied mathematics and computational biology, and I decided that it was time for a change, and that led me to my first job in tech. This was 2009 and 2010 as a data scientist, and I really enjoyed working on applicable problems that serve society and help people at large. I’ve worked on cybersecurity for different companies, and this was before so much of what’s available today in the field had been developed. From there, I started my own company on machine learning and user churn. We predicted when users would turn away from a platform, and we ended up selling that company to Square in 2016.
When I started working at Square, running the data science team for Square capital small business lending, I started to understand and appreciate the complexities and difficulties that small business owners face. After I left Square, I realized that there was still a huge opportunity to serve small businesses. To date, it continues to be extremely hard for small businesses to succeed in getting the first bank account or their first loan, and to understand the hero’s journey of how to start a business. Now I cater to those new business owners, which include 60 million entrepreneurs and freelancers in today’s creator economy.
Can you share the most interesting story that happened to you since you began your career?
You know, there hasn’t been any one thing — but the thing that I always reflect on is that I didn’t come into the tech industry thinking I was going to start a company. I came into the tech industry wanting to work on interesting problems that were applicable to society at large, and that’s always been the sort of guiding principle on which I’ve conducted my professional career. And so, when it came to pass that in order to fulfill that — to make it easier for businesses to understand user behavior, or, with Nearside, to make it easier for small businesses to start up — that I needed to start a company, that was really interesting for me to realize.
In short, my entire career here in Silicon Valley has just been like a sprint from point to point, with the endpoint being entrepreneurship for the sake of serving other entrepreneurs. I find this to be pretty exciting.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
One message that has stuck with me is to be present. I think so many people in FinTech or in tech — or just in general — are looking towards the future. There’s all of this boundless ambition. But one thing I’ve realized in my 14 years in tech is that even just being where we are today is a gift in itself.
The ability for us to help small businesses succeed, or the ability for us to build products and services for the most vulnerable small businesses, is such a huge opportunity — but also a privilege. And so, the one thing I’ve always pushed myself to remember is to be present and enjoy what we have right now. It was true when I was a college student. It was true when I was looking for my first job. It was true when I was at Square, and it’s true today. We’ve got a whole bunch of ambitions for Nearside, and an amazing growth path and trajectory in front of us, and I’m excited to get there. But I’m also thankful and grateful for what we have here today.
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?
As I mentioned, Nearside is a neobank and financial services platform for the smallest small businesses, individuals, and incorporated businesses that are still getting off the ground. The most interesting product we have today is our checking account. It’s a checking account that’s easy to use because you get an account and a virtual card in 10 minutes, and then your physical card is sent to you the next day through next-day shipping. We have an unlimited universal 2.2% cashback rewards program on all business purchases for the year with no hidden fees. This allows small businesses to get up and running really quickly. That’s the main focus of our company right now, helping small businesses get a checking account as easily and simply as possible.
How do you think this might change the world?
Everyone needs better funding, especially people trying to create something new. Many people and communities don’t have access to fair financial resources or can’t afford the fees tied with traditional banking, and they end up without any way to save up wealth or grow the resources they do have. I want to be able to change that. It shouldn’t cost an arm and a leg to have access to banking tools and solutions.
Consider something as basic as a checking account. It’s hard to reconcile how a checking account or a financial product might change the world, but if you think about what it means to be an underserved business or an underserved person with respect to the modern financial system, most folks have a really hard time getting the financial products they need. Most people find it difficult to understand how their banking account works or even how to apply for a checking account. And so, when I think about what unlocking financial services looks like or what it means to empower people to get access to financial tools, it may start with something as fundamental and basic as a checking account. But ultimately, it means access to funds, a path toward financial stability, and the ability to start a business. It is life-changing for a lot of people who otherwise would not have access to financial tools.
And even within that checking account, the ability to provide a free account that doesn’t charge you $35 for an overdraft, or that doesn’t charge you $5 for an ATM withdrawal, is actually quite unique. You know, it’s prevalent in the FinTech industry today, but it’s a trend that has only just started in the last couple of years.
The world is rapidly changing in terms of how we consume financial services. I remember growing up, I had a paper checkbook, and my parents would teach me how to balance my checkbook, and that modality of how we pay people is rapidly changing. Today, we can use Venmo or a cash app to send money to people for consumer purposes or to make a personal transfer — we can instantly remit payments. And the B2B payments network is something that we care about a lot in terms of how businesses transact with one another in a modern economy.
What most excites you about the banking industry as it is today? Can you explain what you mean?
Even going through the pandemic and traditional banking resources not catering to specific needs, so many entrepreneurs are entering the workforce. I think that’s amazing to see and shows people that, despite the hardships we’ve all been through, you can still go after your goals. And that’s really exciting.
There are two things in particular that I see happening. One is that, for a newer generation of small businesses, whether they’re younger millennials or Gen Z-ers, or the generation after Gen Z, there is a stark difference in how they approach banking and lending, and even business itself. If I said you can make money by listing spare rooms on Airbnb, that didn’t seem like a small business ten years ago. And creating YouTube videos and streaming content to make money as a creator felt odd as well. Those revenue streams weren’t seen as money made through business. And so, what I take from that is that we might not even know what the future of business looks like.
As the line gets blurrier and blurrier between an individual and a bonafide business, then what constitutes a business in another few years may not fit into the “business” mold today. That title shift from “side gig” to “small business” or “microbusiness” also maps to different banking behaviors. We don’t necessarily need a physical branch anymore. We don’t necessarily need paper checks. They’re still prevalent in modern financial society today, but we’re trending towards a society where it might not be a requirement to ever walk into a bank branch because everyone has a mobile phone in their hands.
The second trend that I’ve noticed occurred to me fairly recently. With the global pandemic and with COVID, we realized that people don’t necessarily have to work in offices to get work done. And so, as the Great Resignation continues to occur, and as people are understanding what they really want to do in their professional careers, what we’re realizing and seeing is a whole bunch of small businesses being created right before our eyes. People are leaving the “traditional workforce” to strike out on their own as retailers, online service providers or content creators. That is another interesting shift that we’ve seen in the last couple of years.
What most concerns you about the banking industry as it is today? What would you suggest needs to be done to address that?
Even with all the work we’ve done in FinTech, pretty hard infrastructural and institutional barriers to entry still exist for a large swath of people in this county, and especially for people who’ve recently immigrated here. It’s actually really hard to obtain personal consumer credit, let alone business credit, for a lot of people. There are so many barriers to building credit — recent immigrants could be here on non-resident visas, and American citizens who’ve grown up impoverished or distressed are likely to have very thin credit files that don’t provide a lot of reassurance to lenders and institutions. It’s extremely hard for them to obtain access to loans, or sometimes, even checking accounts. And even those who start out with good credit can end up with bad credit that is nearly unredeemable with a few missteps. For instance, if you’ve ever declared bankruptcy in the past, that’ll last for seven years on your credit history. So, that is seven years with little access to banking tools, which means little access to the tools you need to bring your credit back up.
And even if you’re back on the path to financial independence and doing all of the right things, you’re still penalized for that unfortunate event. So there’s still a lot of work to be done in terms of unlocking financial access and democratizing the services to as wide of an audience as possible. And, then, using what we’ve learned about writing software, billing automation, and real-time fair assessment of credit to provide that balance between financial empowerment and democratization whilst building things in a safe manner.
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?
In some ways, the concept of money is still the same as it pertains to commerce. If you are selling a product or a service, I will pay you for that product or service. Now, the product could change — like maybe it used to be a bronze bowl, and now it’s a ceramic dish — or maybe it isn’t a tangible object at all. Today, it could be an online video, or it could be an Airbnb stay — the goods and services change over time. But the idea of transacting between buyer and seller is exactly the same as it was two millennia ago. The idea of exchanging some fungible unit of money for some good or service has remained.
Now, what’s changed, perhaps, is the actual way this currency is transmitted or transacted. And in some cases, the currency itself has made a huge transition. It used to be that I would give you some coins or a paper dollar bill, and that represented the full faith and credit of a government in exchange for some goods or services. But if we take a look at how transactions are done today — even though a majority of transactions are still done through cash and through checks via ACH payments — we’re seeing this increase in digital payments and digital peer transactions in personal peer-to-peer transactions. And, as we understand how people are paying businesses for goods and services, a lot of it is driven by their mobile phones.
I could send you a payment through my mobile phone to your business, and you’ll receive a confirmation on your end that will signify the end of the transaction. And so, with no physical currency exchanging hands, I have completed a transaction, and you’ve completed a sale. There’s an ease of use in how we’ve changed the way in which we pay businesses. And as I mentioned earlier, even the currency is changing. Up until very recently, one hundred percent of transactions were done in fiat currency backed by some full faith and credit of a government.
It has been interesting to see the increase of cryptocurrency transactions for goods and services as well. You know, we’ll remain interested in seeing how that evolves and plays out, but even if we put aside cryptocurrencies, I think what I’ve found to be interesting is that this democratization of new banking services and financial services has actually created an increase in mobile payments, making it easier for people to pay.
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?
I think in addition to this transition from physical branches to websites, now we are moving to mobile-first experiences. How we open an account, check accounts, make transfers, even how we transact using digital payments — everything is available on mobile. And it’s also impacting the cards themselves. We are moving to digital payments through cards using Apple Pay and Android — cards need to be adaptable and usable even in mobile-first cardless solutions.
For me, the most interesting part is the bridge between the digital world and the analog world. The idea that if you do get a paper check, you can take a picture of it with your phone and deposit it into a new bank account. Mobile check deposits remain this bridge between the paper world and digital world. And even for cash deposits, we now have the ability to walk into a Walgreens or a CVS or anywhere with an ATM and deposit cash into the ATM. A lot of this “bridging the gap” mindset is fundamental to neobank accounts.
How has the pandemic changed the way banks interact and engage with their customers?
From the individual side, you had people leaving their jobs or getting laid off from their jobs. You had people sort of reassessing what they wanted to do in their professional careers. And for many of those people, it was the point at which they decided to take a chance and start their own business. I think the main ways banks have had to change is in providing digital-first, online-only solutions and to broaden business account offerings.
And I think what most people are seeing with larger incumbent banks is that it’s really impossible to maintain the older in-person structure. When everyone was locked down in quarantine, and even now, with certain areas having COVID-19 spikes, people may not feel comfortable walking into a bank branch to open up a business checking account. And so, I think the rise of this new banking space with the ability to provision a checking account and a debit card purely through a mobile app or purely through an online experience has actually been one of the biggest changes I’ve seen throughout the pandemic.
In your particular experience, how has the pandemic changed the way you interact with, and engage your customers?
I mean, obviously, we’d rather the pandemic didn’t happen. That can’t be stated enough, of course. But I think, given that we already started as a digital-first bank with no physical branches and an easy-to-use online experience and an easy-to-use mobile app, the pandemic didn’t necessarily change a lot about how we serve our customers. It may have changed how we communicate with them or the things that our customers are worried about, but some things have remained the same.
Now, many of our customers have shifted from being concerned with the early steps of starting their business to staying alive and shifting their business from a pure offline business to a blend of offline and online activities, or even just changing the way in which they conduct offline activities. So, for example, if you had a sushi restaurant during the pandemic, the focus shifted to learning how to bulk up their delivery arms or how to shift customer focus to delivery. Dealing with the business transitions of our customers has been a big part of our job and what we’ve been working on here at Nearside.
In my work in the telecom space, 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?
Yeah, I think creating a superior digital experience for customers can be a unique differentiator in the finance industry. And what I mean by that is that if you look at customer satisfaction scores across industries, finance comes up pretty low, if not the lowest across all industries. So even providing a route to voice the customer’s concerns or to respond to them in an expedient way. When I say expedient — we aim to do customer responses within 24 to 48 hours. But I think from our surveying, even just responding to them within the week is already a differentiator. At Nearside, you can call our number or email us, and we’ll commit to replying back to your request within 24 to 48 business hours.
We do have chatbots that help service the large majority of procedural or transactional questions. But we have a phone line simply because we’ve realized that for small businesses, there’s just so much to deal with that having that human contact can really help, not just to address their concerns, but to remind them that part of what we believe in here at Nearside is having that differentiated customer experience and helping them not just get their checking account up and running, but to really help them start their business.
If you could design the perfect communication feature or system to help your business, what would it be?
Having that phone number is pretty different compared to many in the industry and providing expediency of customer support is another one. And then, you know, our ability to hone in on and pinpoint our users’ needs automatically, and to get ahead of their concerns is another differentiator in terms of understanding our customers. They want to know the timeline of their deposits–when that money will be in their account or what will happen when someone has an insufficient balance, but they swipe their card.
So getting ahead of their questions by notifying them, ”Hey, the reason that transaction didn’t work was because you had insufficient funds,” and then providing as much information as possible about the user’s accounts and their experience with Nearside before they even email us or call us is actually a huge differentiator. Strong, transparent, and upfront communication is the foundation of the user experience itself.
In general, understanding why customers have the pain points that they have and then using that customer feedback to create product features or even just proactive comms about those experiences demonstrates to the customer that we understand their pain points, we understand their concerns, and we’re actively solving issues for them before they even come to us.
Fantastic. 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? (Please share a story or example for each.)
I think the first one is intense user empathy. User empathy means understanding the pain points of the small business owner and our customers, and some of those things could be directly related to their bank account. Some of it is knowing how they open up a bank account or what features do they care about? Some of those things could have nothing to do with us — like pricing their products, setting business hours, and incorporating their business.
Understanding those user pain points and solving them when we can, based on how we deliver products and financial services is key, but we also try to go beyond that. We want to know what software products we can provide to help them bridge that gap between what they know and what they are still sorting out. It’s not enough to provide the utility of a checking account and a debit card. We also have to really understand why our users use these bank accounts and these business cards in the first place, which is to succeed in their small business endeavors.
The second one is moving with urgency and purpose. We need to move as fast as possible in building additional features, solving areas or pain points, sometimes fixing software bugs that come up in order for our business customers to not just enjoy their services with Nearside, but ultimately, to alleviate any concerns or worries that they have. I probably don’t think about my electricity company when it works. Most people will probably not think about us when their debit cards work as they should or as our customers want them to. So our job is to move with urgency and purpose in order for us to really deliver a product at a high standard that allows our customers to trust that they are in good hands.
The third one is one of our values here at Nearside — that lending is not a permanent solution. What you need to have for a successful career or product in your industry is to understand that we’re all building ecosystems. So, today it’s a checking account. Tomorrow, it’s a business loan. But what we’re really building is an ecosystem of products. Each of them is a powerful tool, but individually they are still just tools. Here, we believe that lending is not a permanent solution because the goal of every small business is to take a loan and turn it into a financially independent business or to take venture capital and turn it into an enduring company.
It’s that cognizance, that realization that loans by themselves do not make a successful business — this is an important key for how we conduct our work. We know that lending does not, by itself, make a successful startup or enduring company, and we are honest about this with our clientele and always trying to get them from the lending step to the saving, planning, and so on.
The fourth thing that I think will serve folks well in the FinTech industry is the belief that they can edit any part of the company. And this might be unique in tech startups, particularly, but it’s this idea of agency. It’s the belief that any part of the company can be edited or changed. At Nearside, it’s actually one of our operating principles to edit the company, even at our size.
I still push everyone to expand their horizons, to think about what parts of the company are working and which parts could be edited out or adjusted. We talk about — ”If you had a magic wand, what would you change immediately? And then what are the steps to go and do that?” And I think knowing you can always tweak, change and improve is a big part of finding success in FinTech. It’s understanding that we’re never really blocked. We just need to understand what the problem is, what we have at our disposal, and what the next steps look like.
And the last thing that I think would make someone successful in tech would be to recognize that it takes a village, which is also one of our values here at Nearside. And what I mean by that is that when you think about our customers, small businesses, they depend on their own villages. Their own communities for driving success could be their family members, their friends, or even other businesses in the same industry. If I have a pizza shop in San Francisco and you have a pizza shop in Texas, we probably will never compete with each other. So we’re actually incentivized to share information about our pizza businesses in order to succeed so that both of us can succeed.
In order to start up something as complex as a neobank, it actually requires everyone — engineers, product managers, designers, compliance, operations, credit, legal finance — all of these people are integral to the product and the company. There are no singular heroes in FinTech. There are no singular heroes in banking. It’s a composite of multiple people who all have something unique to offer. It’s that realization that a gestalt of multiple backgrounds and personalities is what makes us successful.
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. :-)
Oh, that’s a good one. To me, growing the pie is the most apt one here. I think a lot of people make these sort of zero-sum games with each other where it’s like — I’m trying to make a sale so that I can get money from you. But when you think about it, people buy goods and services to improve some element of their lives as well. If you sell pizza, and I want to buy a pizza slice from you, you can think about it in terms of charging the maximum amount of money to increase your profit, while the pizza only costs a dollar to make.
But what I’m thinking is that I am hungry and I am willing to shortcut my own time for some premium. So there is a way for both of us to enjoy that transaction, and wealth has been created because you created this pizza slice, and I have paid you for it. That said, to me, growing the pie is simply acknowledging the fact that there aren’t many zero-sum games in business. Not every transaction or every relationship has to be looked at from an adversarial perspective. Most people are in it together to just try and live a better life. You sell pizza slices because you want to build an independent business and improve not just your life, but your family’s lives, your community’s lives and your employees’ lives.
And I am looking for lunch; I’m trying to basically shortcut my own time and effort and I’m willing to pay a premium for it. And so there’s a way for both buyer and seller to be happy. No one thinks of pizza customers as marks or targets; it’s very clearly not a zero-sum transaction. And so, in the spirit of that, I truly believe that in FinTech or in any industry, there is a way to solve most of our problems with respect to building an enduring business, and doing it from the lens of growing the pie and growing the total amount of wealth both for our customers and, ultimately, for ourselves.
If we focus from that lens of helping our customers succeed and then succeeding only when they do, then we’ve actually created more wealth in the world for everyone. What I like about that statement is that it’s almost like this shift in how you view the world from a zero-sum adversarial, gotta-win-every-game mindset to focusing on how you can help everyone around you.
How can our readers further follow your work online?
You can visit our website Nearside.com to learn more about our products. Take a look at our Twitter, Instagram, Facebook, and LinkedIn: @getnearside
Thank you so much for the time you spent doing this interview. This was very inspirational, and we wish you continued success.