David Savage: Welcome to today's edition of In Conversation With, I'm lucky to be joined by Jesse Apple, the Compliance Director, EMEA, for Airwallex. How are you this morning?
Jessie Apple: Doing very well, thank you.
- Your accent betrays that you are the child of a number of different cultures, but you're here in London now?
- Yes.
- How long have you been in London with Airwallex?
- Airwallex I joined in January, so nine months. But I've been in London for 14 years.
- Quite a while.
- Yes.
- That's quite a while to retain your accent, which is quite strong, I would've absolutely immediately gone American. And you commented on the fact that I've lost my accent. So I kind of feel that that should be kind of praised that you've held onto that.
- Thank you, I'll take it. I moved here for one year in theory and here you go. Life happens.
- Look, before we get into anything else, Airwallex, before I met you weren't firm that I was familiar with. I imagine people watching might not be familiar with Airwallex. Who are you?
- Airwallex is a one stop shop for payments for small to medium sized businesses, as well as larger businesses. So if you think about all the payment back wiring that any business might need to make all their big dreams and aspirations come true, we provide that, whether it's paying contractors, paying suppliers, doing FX, literally everything. And one of the really cool offerings that we have is we'll take a startup who has big aspirations, big dreams, but none of the payment back wiring in place. So that whole ecosystem, they can come to us and effectively layer on top of all of that back wiring and be ready to go very quickly, very cheaply. So we make their international expansion, their strategies everything come true.
- But the evolution of Airwallex, or I suppose the origins of Airwallex aren't what you'd imagine when you listen to that description, right?
- True, yes. Our CEO, Jack and the other co-founders actually started a coffee shop.
- Right.
- Yes. And had a lot of trouble paying suppliers for various things, whether it was coffee beans or coffee lids. And in that cafe setup, they were struggling because the the price with the FX built in and everything else around it meant that it was hard to basically make their business a success. And they said, this is clearly a pain point for any business, even a small cafe in Australia that wants to run and have a small profit margin. So making things initially FX, but then everything from a payment perspective, easy, affordable, effective, efficient was the dream.
- How long have the business been around?
- Started in 2015.
- Mm-hmm.
- So we'll be at seven years in December.
- Out of interest, what you're describing there are people who have a purpose, they obviously have seen a problem that they're trying to fix, but they don't come from a similar background to yourself. You have had a career in large financial institutions and I suppose that might have been a potential clash of cultures coming into an organisation where it was started as a coffee shop, Airwallex didn't start as a coffee shop, but that was the origin.
- Yeah.
- How has that been and why did you join the organisation given it's slightly non-traditional roots?
- I've been in compliance for over a decade and I specifically, my expertise is financial crime compliance, which means understanding all different kinds of businesses and who their customers are, who their suppliers are, what their supply chain looks like and all the risks that they face. So when I started initially going into banking, I really found the purpose of fighting financial crime. Not only a worthwhile purpose, but super interesting, fraudsters, money launderers, terrorist financing is changing all the time. So actually it became a very creative endeavour. How are they changing? How do we need to adapt to mitigate those risks? And you know, initially in traditional banking and then wanting to move into a space where there was innovation and growth which is where I went to my first fintech. Now at Airwallex, first of all, I believe in the product, I think we have a really exciting offering. I believe in supporting startups and making all of their aspirations come true. And that's why I joined Airwallex. Basically, they reached out to me and said, Come and make us not only effective and efficient at fighting financial crime, but help us grow. And I've been really enjoying myself.
- I suppose in the startup community, security is often something that gets added in at a latter stage, a kind of a startup founder might not necessarily think about security initially and then they go, Oh, hang on, as we're growing, it's something that we need to bake in backwards. So they've got a product that's thinking about that from the off.
- Yeah.
- That's a big help to them.
- Yes.
- But how do you do it? What is it in what you are offering that actually helps keep them safe?
- The favourite part of my job is every day I'm talking to product people, understanding what the product is, how is it supposed to be used, and then where I come in is how could it be misused? And in that actual design of the product, we think about what do we want our customers to experience, what do we think our customers' problems are and how do we solve them? And similarly, how could a fraudster money launderer take advantage of that product and use it in a way we haven't intended for it to be used? So it's part of that actual creative iteration of the design itself. That's where I come in.
- So how at risk are startups of financial crime? I mean, during the pandemic there was that narrative that individuals were suddenly at risk. A lot of people who weren't necessarily digital natives were using the internet for activities that they hadn't used before and therefore there were a lot of soft targets effectively for financial criminals. But how is that playing out in the market that you're working in now?
- Anyone in the payment space has to deal with financial crime. Criminals always have an aim of making money, moving money, making it look clean so they can use it. The only exception to that would be terrorist financing where the aim is not necessarily to buy a yacht or a house or a fancy car, but to pay for a purpose. So anyone in the payment space has to deal with financial crime and it's about understanding your products and services, your customers, your markets. And on that basis, what risks are relevant to me as a firm? During the pandemic, people were obviously at home during lockdown, still needed access to financial services. Fintechs had already been doing non face-to-face onboarding, but the sector in general moved towards non-face-to-face onboarding, which is meaning you don't need to come in in person to become a customer to open a bank account. So with a lot of non-face-to-face onboarding and an increase in that because people needed a solution, you have impersonation risk going up. Impersonation risk is you're pretending to be someone that you're not. Now this could be fictitious details or it could be stolen information. It's actually very easy to do. If I get your mail, I can have your name, your address, lots of details about you, not to mention lots of things that are available on social media. So the risk increase specific to the pandemic in the last couple years has been that increase in impersonation risk. It's brought great value to people because a lot of unbanked people have been able to easily open a bank account, for example, through a smartphone. And it's given people access that otherwise maybe are more vulnerable in other ways, less easy for them to leave their home. But it has brought an increase in impersonation risk and that's one of the typologies that fintechs and traditional banks are working on smarter, better faster ways of either preventing it or detecting it quickly.
- I mean, you mention fintechs, but there are lots of startups who offer a free new model, but then they have a subscription model, they are asking for personal details. I suppose then they are just at risk as possibly the fintechs. Are the financial criminals looking at that market as an easy way in to be able to carry out their nefarious activities?
- Yes. Criminals are, first of all very smart and they learn quickly and they're always looking for the next thing because as soon as we've identified a certain typology, they know that we've identified it rather quickly 'cause we stop it, and so they move on, they come up with something new. So any site where you're sharing your information, your biometrics, especially, i.e. your face or you know your voice, anything like that along with your personal details can and often is mined by criminals and reused to impersonate you.
- So what's the advice? I mean, beyond, hey use Airwallex, if you are are talking to a startup CEO or founder and this is something that they're kind of going, Well, I haven't really considered this. Are there steps that they can take to try and help make sure that they're protecting the users who are signing up to their platform or the organisation itself from being attacked?
- Yes. The advice would be a few things. Firstly, ensuring that they pick a service provider that has the tech to be effective and efficient at preventing fraudsters trying to use their details or trying to take over their account. For instance, at Airwallex, we put technology first, we have machine learning models, we have artificial intelligence, we use lots of great controls in order to try and prevent it from happening in the first place. The other advice is just being really careful about where you put your details, who you share your details with. Because once it's out there, it's very inexpensive and criminals buy it, right, just like you'd buy a roster from a telephone book. So I think it's twofold being very careful with your details and also picking a company that you feel has the infrastructure to protect you.
- And look, I suppose as a compliance director, I'd ask what technology do you look at as being, hang on a minute, here's not a silver bullet because I suppose it's always gonna be a case of, you have a solution, criminals come up with another way around that, then you have to come up with something new. But what do you look at as being a positive step in the technology market that gives you hope that it's at least a war that's being slowly won on your side?
- Airwallex has lots of technology in place in order to prevent criminals getting onto the platform. That's the best way to do it. Because once they're on, yes, you can detect them downstream, but they're already there, you have to off board them, it's a lot more costly and complicated. So to answer your question, firstly we have machine learning tools to try and identify is someone who they say they are. Industry standard will look at biometrics, so you know, your face, audio, video because you can take basically a picture of someone and put it up right, and pretend like you're them. So the most effective tools that the industry is using is audio with video and visual, and machine learning is what everyone's doing, it's basically industry standard at this point. And what machine learning does is it looks at patterns of behaviour over time and learns from it in order to ideally prevent it from actually coming onto the platform. And you'll have for instance, decision trees which have 1000s of data points and all different types of permutations, which will ultimately give you an outcome of how likely is it that this applicant is a fraudster. And on that basis, you can make a decision, for example, if it's kind of in a amber zone, you can do a manual review, right, or enhanced due diligence review or you can block them all together. I think what becomes really interesting and a real responsibility when you're on the side of the decision makers and building the tools is understanding what are the tools doing and what are they maybe doing that I'm not aware of? So when we think about machine learning, we think that machine learning is making a unbiased decision but actually we're feeding it with our biases. So when we think about what combination of data points make someone a fraudster that we're gonna block from our platform, you have to make sure that you're comfortable with that. Are you blocking anyone you shouldn't be blocking? And the way that you do that is by looking at the outcome, is the outcome giving me what I expected to? And revisiting all the time, because for instance, you can make sure that you never use race, gender, age as a data point, but there could be other data points that are correlated that you didn't realise were correlated that are leading to an undesirable outcome. So we're using the latest and greatest machine learning artificial intelligence, but we have to be careful with it, there comes a responsibility too and it's not just a black box that you put out there that spits out the correct decision. You have to revisit it all the time.
- It sounds like a very involved job, as you said over nine months, it sounds like plenty of scope to grow. If someone is interested in Airwallex and what they might be able to do, especially if they're a startup and they're growing, what's the best way to find out more?
- We have a great website where you can sign up.
- Yeah.
- So that's , A-i-r-w-e-l-l-e-x?
- A-i-r-w-a-l-l-e-x.
- Yes.
- Yes. Dot com, dot org? Dot
- Dot com.
- Dot com. Cool. Well look, thank you very much for your time today.
- Thank you.
- Certainly appreciate it. If you've enjoyed today's episode of In Conversation With, take the time to have a look around the website, there are plenty more episodes.
