James Syron joined the financial services industry after seeing the gaps in traditional credit assessment firsthand.
As DirectID’s Partner Manager, James is committed to preventing others from making the harmful credit decisions he did in his youth. And that’s why he’s so passionate about open banking and its impact on financial education and inclusion.
He sat down with North America host Kathy Stares to dive into the brave new world of open banking – what it means for consumers, SMEs, and lenders themselves. How has the use of alternative data grown in recent years? Who’s willing to share it? What impact does it have on risk assessment? We’ll answer these questions and more on today’s episode of The Disruptor Sessions.
James Syron is a seasoned credit risk professional. He has led product functions for both Experian and Transunion. During his tenure, he has played a pivotal role in the creation and application of data solutions and was an early pioneer in using bank transaction data to improve the efficacy of credit risk decisions across the credit life.
James is not only recognized for his professional accomplishments but also for his dedication to fostering collaboration within the industry. His thought leadership and participation in industry events and conferences have made him a respected voice in the credit risk community.
His contributions have helped shape how credit risk data is utilized, and his dedication to driving positive change continues to shape the credit and financial landscape.
Kathy Stares is the Executive Vice President of North America at Provenir, a global leader in AI-powered risk decisioning software. As a member of Provenir’s executive team, she is introducing creative account management approaches to support the company’s aggressive growth strategy.
Kathy brings more than 20 years of experience in fintech and has a deep knowledge and curiosity about risk decisioning innovation. She’s passionate about helping organizations leverage data and technology to build world-class experiences for their customers.
Prior to joining Provenir, Kathy was Chief Customer Officer at enStream, Canada’s provider of mobile verification services. Kathy received a Bachelor of Arts degree from the University of Toronto and attained the Women of Influence certificate. Kathy also volunteers for the Menttium organization.
DierctID’s James Syron and Provenir’s Kathy Stares Discuss Using Data For Good.
00;00;09;26 – 00;00;37;08
Intro VO
You’re listening to The Disruptor Sessions: The Visionary’s Guide to Fintech, a podcast from Provenir. Every episode we sit down with global thought leaders and innovators to explore the future of fintech, from the technology powering change to the visionaries driving disruption. Now your host, Kathy Stares.
00;00;37;11 – 00;00;54;04
Kathy Stares
Welcome to The Disruptor Sessions, where we feature one-on-one interviews with thought leaders and innovators from the financial services industry. Today, I’m joined byJ James Syron from DirectID. We’ll be discussing the impact of open banking data on the financial services industry. Welcome, James.
00;00;54;06 – 00;00;55;12
James Syron
Hey, Kathy.
00;00;55;15 – 00;01;11;06
Kathy Stares
Before we move to the topic at hand, my personal belief is that leadership drives disruption by challenging the status quo through innovation. James, was there a defining moment or experience that led you to be the leader you are today? And what is it that drives you as a leader?
00;01;11;09 – 00;01;36;18
James Syron
It’s a great and very kind of broad question. Thinking back, I can remember when I was 18 and at college and actually getting my my first mobile phone – and this was this was 30 years back. So the the bills were about the same size of what the handsets were back then. And I had a part time job, but there was no kind of sustainable way really for me to afford the payments.
00;01;36;18 – 00;01;57;08
James Syron
And as you’d expect, I fell behind. Dad went mad. And at the time I didn’t realize the consequences really of defaulting or missing payment. I didn’t know the bureaus existed. In fact, I was quite shocked at their purpose. And this is a time when you had bad credit, it also affected everybody else in the household.
00;01;57;08 – 00;02;25;13
James Syron
So, no surprising, my dad was upset. I eventually got back on track and I got fascinated about how the financial services ecosystem and how credit worked. And I started working in collections for a full time job. And I got the opportunity then to to start at a bureau. But it was a it was a starter of ambition, a huge ambition to kind of challenge the behemoths of Experian and Equifax were hugely prevalent in the UK.
00;02;25;15 – 00;02;51;09
James Syron
And when you join a relatively small business that had the ambition to become and did the second largest bureau in the UK, you get the experience, the privilege to work in many different kind of areas. And I learned a lot about the kind of monthly cadence that finance data was released into the wild and the the rules around its application, but also kind of number of great mentors that kind of inspired and led my career.
00;02;51;12 – 00;03;14;07
James Syron
And I got to saw the kind of the benefit the credit data plays, you know, in our everyday lives. And I don’t think we should ever really underestimate that. It helps people get a new phone, a new car or a new house, better deals. It just kind of transforms people’s lives and can stop making really bad decisions. So I think that’s that’s something that that drives me.
00;03;14;10 – 00;03;38;08
James Syron
And I saw the gaps back then. You know, a saw what an important role that bureaus played in the credit markets and facilitating that you know, kind of life choices for consumers. But I also got to see the gaps and I thought that things could be better. And I think it was working for a bureau, leading product teams for for about ten years, maybe saying, yeah, there is a better way to do things.
00;03;38;08 – 00;04;04;03
James Syron
The world is moving much faster now, right, than what it did before, and things need to keep pace. And that’s kind of led me where where I am today at DirectID. We’re one of the early pioneers of open banking in the UK and the U.S. and many other different countries. And what I like about it here is that a lot of our kind of senior team all cut their teeth working for bureaus, all grew up working for bureaus and they’re credit risk specialists.
00;04;04;05 – 00;04;16;24
James Syron
And we’ve all got that same kind of passion, really, of of using data for good to help it to drive inclusivity, but also to help lenders make the right decisions about their customers and to help transform their lives.
00;04;16;27 – 00;04;25;19
Kathy Stares
That’s fantastic. If I understand correctly, you took a negative experience and parlayed it into the beginning of a career. I think that’s just disruption right in itself.
00;04;25;22 – 00;04;41;27
James Syron
Yeah. Yeah. It was certainly painful at the time. I think the whole industry can do a lot more around education when people turn 18 to stop them making those decisions. But you’re right, you know, I learned a lot from it and it did end having a positive change.
00;04;41;29 – 00;04;52;20
Kathy Stares
It did indeed. So what’s your view then, if you could define disruption and how disruption affects industries, how would you define it?
00;04;52;23 – 00;05;34;15
James Syron
It’s a great question. Disruption to me means something that stops a market in its tracks. You know, it stops it functioning in a certain way. And probably one of the easiest examples, kind of describe disruptive innovations that we’ve all seen depending upon your age – the one I remember most probably, is digital cameras and films, and going to get these things developed after you’ve been on holiday, waiting a week to pick them up again. And now, you know a digital phone is only just a hand stretch away and to take a picture and I think that rocked the market. And there’s loads of examples – I think Uber – calling a cab. Again made much easier by digital technology.
00;05;34;18 – 00;05;57;07
James Syron
And then most recently has gotta be AI and chatbots, large language models that I think we’re only just starting to see the disruptive impact that they can have. You know, all these things kind of cause significant changes for consumers and market behaviors, and I think we’re going to see much more of them as as technology develops.
00;05;57;10 – 00;06;19;25
Kathy Stares
You’ve highlighted some fantastic examples there, and I – I’m definitely aligned with the statement that it stops people in its tracks or rather the industry in its tracks. And what I really find is that it changes the way how we interact with the industry. And I think you’ve highlighted that there. So let’s get into it. Thanks for that very much, James.
00;06;19;28 – 00;06;35;15
Kathy Stares
The topic today, as I mentioned, is maximizing the impact of open banking. I think we’ve seen a shift in how alternative data is used within the financial services in the last few years, with open banking data being one of the key sources that is changing that landscape.
00;06;35;17 – 00;06;51;04
Kathy Stares
Open banking has been said to accelerate disruption in the financial services industry by fostering competition, collaboration, innovation and the development of a diverse set of personalized financial products – the rise of third party payment providers being an example.
00;06;51;06 – 00;07;01;13
Kathy Stares
Data shows that the segment has a 40% growth in the number of users leveraging the data. How do you view open banking’s impact in financial services?
00;07;01;15 – 00;07;25;05
James Syron
So open banking is such a broad term and it can take so many different kind of guises. And if you don’t close to it, it can be a bit confusing around what it actually means or what value it can deliver to you and how it impacts the consumer. And so I think payments is one which has got a great propensity or has displayed signs of disrupting that particular use case.
00;07;25;09 – 00;08;07;05
James Syron
I think other kind of other use cases – in particular things like embedded finance and also the buy now pay laters, organizations of this world. A lot of this is being facilitated by open banking, whether that is making payments, whether that’s viewing the transaction data to make decisions, or using it within account management process. So I think they have particular disruptive forces. When I think around what we do – what DirectID does – in terms of kind of improving credit decisions, I think I think it’s less around disruption. I think it’s more around harmonization really against the current kind of ecosystem.
00;08;07;07 – 00;08;37;23
James Syron
I think because it’s so integrated and reliant on certain pace and cadence and decisioning rules, it’s difficult to say it’s something that’s disrupt. I mean, the financial ecosystem has got this monthly heartbeat. The credit data is fed it for some time, and that data is distributed and it is used along the kind of customer journey. Put that alongside the regulatory scrutiny that’s put on our interests to deliver good outcomes to customers – it’s difficult to disrupt.
00;08;37;26 – 00;09;07;24
James Syron
So I think lenders are understandably cautious when we talk around using bank transaction data in something that already works. It already works for them, despite probably lenders acknowledging that there’s there’s good benefit, there’s good value in there, there’s good reason to use it. And so for me, it’s about harmonization and it’s about helping lenders understand how to best combine it and consume a much faster, richer data stream on their customers.
00;09;07;27 – 00;09;42;02
James Syron
And I think that’s is one of the main reasons why I think the partnership between Provenir and DirectID is so important, is that together we can tempo and deliver the data in a manner that lenders can easily adopt. You know, we’ve got off the shelf variables on income validation and disposable income., but the partnership with Provenir means that we can deliver kind of custom aggregated variables, originating from a very deep and rich bank transaction dataset. And, you know, right through to kind of credit risk rules that can be used in isolation or blended into existing scorecards.
00;09;42;09 – 00;09;51;13
James Syron
And for me it’s that capability to test and learn and that how do you build it into that very complex ecosystem which is really important.
00;09;51;15 – 00;10;16;14
Kathy Stares
I completely agree. And you sort of touched on the topic of along the customer journey. And I think often when we look at open banking, we look at maybe the acquisition side of the customer journey and its benefits to acquisition. I think that sometimes overall as an industry, we may miss the importance of the use of alternative data across the customer journey and at different touchpoints.
00;10;16;17 – 00;10;27;26
Kathy Stares
What’s your view on how open banking data can really support the customer, not only in acquisition but through through the journey? You started touching on that and I’d like to explore that piece a little bit.
00;10;27;28 – 00;10;54;09
James Syron
Yeah, I think this is the goal yet to be found. You’re right – with the application today is largely around customer acquisition, but there’s huge benefit in into customer management, whether that be to satisfy kind of regulatory requirements that put on lenders in terms of delivering good outcomes, or the optimization really of that customer’s experience review as an organization.
00;10;54;11 – 00;11;24;03
James Syron
Kind of customer retaining outcomes, I think. You know, they really are moving into a time where markets are becoming very competitive, lenders are becoming very competitive. There’s lots of options now and the way to deliver a good outcome, which, you know, you talk to a neighbor about and would always recommend based on the experience you’ve had with them, the data that you’ve got, that the bank transaction data provides, enables you to be really customer-centric and to stand out from that competition.
00;11;24;05 – 00;11;45;13
Kathy Stares
I totally agree. And I think that kind of getting your foot in the door, if you will, on the acquisitions really drives the ability to go across the entire lifecycle. I’ve read that it can be upwards of 25% and that it can be 20% improvement in customer engagement, which I think is that one of the metrics around the customer journey is really engagement.
00;11;45;13 – 00;12;00;24
Kathy Stares
And I think loyalty, frankly, in how customers are served in today’s market. We’ve touched on a good chunk of the benefits and I think we’ve gone through a few benefits. What are the challenges that face you today with open banking data?
00;12;00;27 – 00;12;32;26
James Syron
I think the challengees for our customers, the lenders that we work with, is a concern around conversion and whether whether put in the step in asking consumers or SMEs to share their bank transaction data will have a detrimental impact on conversion. And what we’ve seen is actually quite the opposite. Whether that’s, you know, that the data has been used within the hyper personalization of the journey to the pre populate some of the steps to shorten it down or just to be able to offer more inclusive products.
00;12;32;28 – 00;12;54;25
James Syron
And actually we find that it drives conversion rather than reducing. It is not seen as friction, bearing in mind how convenient it is now to to share that data. I think we’re largely used to authenticating a transaction for our own banking apps or you know, entry credentials, if that’s not available to be able to go a few steps.
00;12;54;26 – 00;13;18;17
James Syron
I think we’ve moving forward. So I read somewhere that in the US it’s 25% now of US residents have shared their bank transaction data for a decision. And similarly in the UK, you know, we’re up to 8, 9 million open banking transactions. So I feel like we’re reaching a critical mass and that that kind of concern, that challenge is going away.
00;13;18;19 – 00;13;47;14
James Syron
For the lender, I think it comes down to, you know, how do you integrate that really fast, rich dataset into a decision? We’re all used to kind of scorecards, we’re used to a monthly cadence of data. How do you take something and integrate something into that decisioning flow, which is predictive? And I think that’s where we’re starting to see the use now of of scores – whether that’s used on their own or to be blended in with scorecards.
00;13;47;16 – 00;14;07;14
Kathy Stares
Yeah, I totally align with that. The other point I think that to highlight and I think you covered it there is it’s really the injection of this new and fresh data into a traditional process. I mean I don’t think the bureaus are ever going to go away, right? So it’s about enhancing that decision piece so it’s more predictive and allows for a better risk assessment.
00;14;07;14 – 00;14;41;28
Kathy Stares
And I think the other piece that we didn’t touch on is it also allows a reach into the underserved population. So you’ve got a whole segment of society today that traditionally cannot interact with financial instruments. And I think the injection of data and the ability to draw on alternative data sources really reaches that underserved population. So I think we started out talking about what challenges are, but I’d remiss if we didn’t highlight that as an opportunity that’s been brought into the industry.
00;14;42;01 – 00;15;02;13
Kathy Stares
Totally. I think the stats- was it 26 million US, 11% of the population, and similarly here in the UK, 5 million. I mean that’s crazy, right? You know, these people who want to get on the ladder, want to do something with, you know, in terms of whether it’s a new phone, new house, new car, just not being able to be visible.
00;15;02;13 – 00;15;17;04
James Syron
And that’s the question that that drives me. And I kind of – there’s not much I can do good in life. I’m not a doctor, you know? But these are things which I do see transforms people’s life. And it’s nice to think that somehow, very small part is helping with that.
00;15;17;07 – 00;15;26;17
Kathy Stares
There’s been a focus on open banking data and how it should be regulated. What are your thoughts on the 1033 regulation?
00;15;26;19 – 00;15;57;22
James Syron
Yes. So the 1033 regulation in the U.S., I think is really going to solidify open banking fervor and drive more adoption from from consumers and SMEs, particularly build up that education side of it. And I think it’s right that consumers, SMEs, data subjects, have the right to request what information an organization holds on them, and I think it moves organizations like DirectID to be more of a real time data bureau.
00;15;57;24 – 00;16;25;23
James Syron
And I think that’s going to create even more use cases and application of the data. And for me, it’s an opportunity to shape open banking and to improve the current ecosystem. And I’m really looking forward to continuing that, you know, help lenders enhance their credit decisions with bank transaction data. Reason why excites me is it makes me remember the the journey I went on when I was was younger, working at a bureau and seeing things shape.
00;16;25;23 – 00;16;42;09
James Syron
And I, I kind of feel that that evolution is there again and it’s it’s an opportunity for, for lenders to kind of change that data set, to enhance that data set they’re making decisions on for for all those advantages we talked around and particularly to drive inclusivity.
00;16;42;11 – 00;17;00;26
Kathy Stares
A little bit of a shift. We’ve been talking about the ability and there are significant numbers that you just threw out there, so reaching a huge part of the population. We’ve come off a downturn in the economy. What’s your view on how open banking data can help financial institutions when we find ourselves in this type of economy?
00;17;00;28 – 00;17;30;02
James Syron
It’s difficult to really kind of understand where the economy is. Certainly every day I read conflicting stories of whether it’s growth or, you know, jobs or whether the kind of more Fed hikes on the way. It’s difficult to know where you are. And my personal hypothesis is that you kind of bank transactions, that data open banking is probably best used in those periods of ambiguity where we’ve faced a lot of kind of uncertainty.
00;17;30;02 – 00;18;02;06
James Syron
And it’s difficult right now to know what’s what’s around the corner. And in particular, I guess an example of that, if you look at the pandemic and you look at kind of credit scorecards, I mean, these these scorecards were created, you know, on a baseline and it’s probably a baseline which had been relied upon for years. But as the pandemic impacted different demographics by different economic and different social impacts, the kind of creditworthiness and behaviors of borrowers were affected.
00;18;02;09 – 00;18;31;07
James Syron
So these traditional credit models, which were, you know, predictive in the past and relied on historical data and assumptions, became really less reliable over time and accurate, actually predicting the likelihood of defaults. So for me, bank transaction data offers that really kind of customer-centric view. It provides insight on what can that customer afford to pay rather than how they’ve performed in the past. And those two things are very different.
00;18;31;10 – 00;19;03;07
Kathy Stares
They absolutely are. And interestingly, we’ve talked a little bit sort of a thread throughout the podcast is the ability to have the data for models that predict and how being able to predict with the appropriate data definitely has an impact on the overall risk assessment as well as the opportunities available across the customer journey. So keeping that predictive lens on… as we look to the future, what are you most excited about and where do you think we’re headed as an industry?
00;19;03;09 – 00;19;36;28
James Syron
So we’ve seen credit risk models now based on bank transaction data, which are as predictive as a bureau credit score, which, bearing in mind my background, kind of knocked me off my chair. I kind of knew the power was there, but it was great to see that hypothesis actually proved. So I mean, when you think about that for a minute, that means, you know, back to those kind of credit invisibles, are those inclusive decisions that you want to make where your traditional scorecard probably would have been a decline?
00;19;37;01 – 00;20;00;09
James Syron
That means now that you could go to a bank transaction scorecard and write business at the same risk as what you were comfortable with, with your bureau scorecard. So I believe it brings in that subset of invisibles into a place where a decision can be made whether to lend or not. And I think that’s particularly exciting in terms of investment of bank transaction data.
00;20;00;11 – 00;20;28;19
James Syron
Within customer management, I like to think that as banks, as any other kind of retailer out there, like like supermarkets, you look at us consumers and want our best intentions, best outcomes. And.. for a lender to contact me if I was showing signs of distress or I’d suffered income shock, so missed a wage going into my account on the day that it was expected, it would be nice for a lender to contact me, give me a payment holiday, just treat me differently.
00;20;28;19 – 00;20;57;01
James Syron
But having that that view of me as a customer and the view of where I am with my financial accounts and to treat me appropriately. And I think that’s exciting of, of where that could go to, particularly around – doesn’t just have to be around customer management. It doesn’t always have to have a downside for a lender to have a view of who else I’m interacting with, for them to push over kind of relevant products and services to me that might be a benefit. That I think also is very kind of exciting.
00;20;57;03 – 00;21;27;16
Kathy Stares
Yeah, and I think I align with the customer-centric and, you know, the conversation around customers driving where their data is used and that sort of in the example that you use. I think looking out my view is that the democratization of data and the inclusive use of of data sources such as open banking are just going to continue to drive that creation of personalized products that reach out to the underserved market.
00;21;27;19 – 00;21;53;13
Kathy Stares
The education piece that you highlighted at the beginning is something where you can get into cash flow management with products. So I think the innovation pool is vast. I think we’re going to continue to see that. I think we’re going to continue we’re going to start seeing how AI and data marry together to drive innovation. So I think there’s a lot that we have to look forward to in the industry and with the use of open banking data.
00;21;53;16 – 00;22;01;17
Kathy Stares
So there it’s it’s been lovely chatting with you, James, on the topic of maximizing the use of open banking data in the financial services industry.
00;22;01;19 – 00;22;06;00
James Syron
Thank you, Kathy. It’s been great to appear on the podcast and to talk around DirectID.
Adrian Pillay
Thanks to all our listeners who tuned in to our podcast, The Disruptors Sessions: The Visionary’s Guide to Fintech. You can find more information about Carbon at www.getcarbon.co. We hope you’ve enjoyed today’s episode. And if you want to hear more, explore all our episodes on your preferred podcast platform or listen on our website at provenir.com. We look forward to you tuning in again to our next episode of the series, and until then, take care.
