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The following is a transcript of the podcast episode
Ryan McEndarfer, Editor-in-chief at PaymentsJournal.com
Luckily I’ve had the opportunity before for you and I to have a couple of conversations about DataSeers, and I was wondering if you could give our audience a brief overview of your organization and its role within the payments industry?
Adwait Joshi, CEO, DataSeers
As the name suggests, we are data seers, which means we see through data. If you look at the payments industry today, it is generating large volumes of data. It’s creating a large variety of data because payments are very different when they come from different providers, different processors, and so on and so forth. And it’s also coming very fast, so that volume, velocity, and variety creates a toxic mix for banks and other companies in the payments ecosystem to handle. What we are doing is we are making that toxic mix palatable. We convert that toxic mix into information, something that people can use in a very efficient way. Fast, clean, and clear reporting and dashboards come out of it. Now you can use that information and not worry about the volume, velocity, and variety.
Ryan McEndarfer, Editor-in-chief at PaymentsJournal.com
Can you break down what is the value proposition that your organization is bringing to the industry?
Adwait Joshi, CEO, DataSeers
Absolutely. I always say that in order to have a great product you have to have three things in place. You have to have the right technology. You have to have the right team. And you have to have impeccable timing. Let’s talk about those three things that we are bringing to the table. We have an amazing piece of technology that sits underneath our engine, which is an HPCC Systems which was invented by LexisNexis specifically to handle large volume, variety, and velocity of data. About our team. We are payments people between our leadership, our board of directors, we know payments really well. We work with some of the payment innovators out there. So we know of things that are about to happen and what are happening. We are on the bleeding edge. That gives us an advantage of being the first in the industry to solve some of these problems while other people are just trying to figure out how are they going to wrap their heads around it.
And last but not the least, timing. We are living in a great revolution right now. All we see around us is payments, payments, payments and they’re being innovated all over the place. Cryptocurrencies, faster payments, real-time payments, peer-to-peer payments. Just in the past five years that landscape has completely changed. You’re able to pay whomever, wherever, whenever, and however. It’s going to continue to change over the next many years to come. And we feel that we happen to be at the right place at the right time to take this change, adopt it, and give value to our clients in terms of reconciliation, BSA AML compliance, out of line fraud, and analytical services.
Ryan McEndarfer, Editor-in-chief at PaymentsJournal.com
You mentioned LexisNexis, but I’m also curious as to who are some of the other organizations that you have worked with and how you’ve worked with those other organizations.
Adwait Joshi, CEO, DataSeers
In my experience as a consultant in the payment space for the past many years I have worked with numerous processors, prepaid, banks, networks, as well as program managers, and there is one story across the board: They can’t make sense of all the information that’s coming in. It either doesn’t add up or there are holes in it, and they can’t analyze it quickly and so on. That was the reason for starting this company. We are still working with the same players. We are still doing the exact same thing that I was doing about eight years ago. The difference is that eight years ago it was a consulting gig. Now it’s a product company.
Ryan McEndarfer, Editor-in-chief at PaymentsJournal.com
Back on October 10th on your site, you published a blog about a hackathon that you ran with LexisNexis. When I was reading through it, I thought there were some really important lessons that came out of it that I think that industry professionals should pay attention to. Would you mind talking about the hackathon and some of the lessons that were learned and what in particular payments industry professionals could take away from them?
Adwait Joshi, CEO, DataSeers
It was a great exercise for us. We went to Kennesaw State University. We gave them two problems to solve. There were about a hundred kids that participated. In 72 hours they had to come up with a solution. They may not be able to solve the problem, but they at least had to think in the right direction and make attempts to solve the problem. One of the very first things that these kids realized (and that was a lesson from me to them hidden in the hackathon) was you can’t just jump into machine learning without really having clean and labeled data, without really understanding what do you have. That was very first lesson these kids learned, that we have to take a step back, we have to analyze and look at: What do we have here? Does it make sense? Is it clean? Is it labeled? Can I actually use this into a machine learning algorithm because garbage, in garbage out, right? You have to make sure that the quality of data going into your algorithms is extremely clean. So that was the first learning that was demonstrated out of this.
The second thing we found was that some of these kids were thinking way out of the box, way out of league of what traditional people would think. They used algorithms that, honestly speaking, we did not even think of using while solving some of our problems. And that’s the beauty of hackathons: You get a completely different perspective. They don’t know the industry. They’re eager to use the tools, and they end up using something that you would never think of. It’s serendipity in a way. One of the things that we realized is we actually came away with a lot of new approaches and things that we could and should be implementing on our platforms. Last but not the least, this is the best way to find great talent because these kids are sharp. They are hardworking. They want to show off. The best thing is to recruit them at a grassroots effort and bring them on and help them build their careers out. So that’s one of the things that we do on a regular basis.
Ryan McEndarfer, Editor-in-chief at PaymentsJournal.com
I love the idea of hackathons, especially, as you pointed out, since the payments industry in particular is evolving at such a rapid pace. And fortunately, a lot of the younger participants that are coming up around machine learning and AI in programming in particular are learning the skill sets that a lot of the payments industry needs. They need that talent and, as you pointed out, a hackathon is a really great way to assess some of the talent that’s out there, to see how these individuals are using various algorithms and programming knowledge to think about these problems and come up with really unique and interesting approaches to solve them. As we look forward, within, say, the next five years, what are some of the things that excite you and also what are some of the things that kind of scare you about the payments industry?
Adwait Joshi, CEO, DataSeers
That’s a great question. I have always said that we are pretty much the king of the world here in the U.S., but when it comes to payments we are way behind some of the other countries that are constantly pushing different products out. I happened to be in Singapore earlier this year and I’m actively engaged in the Asian market to understand what’s happening. Take India as an example. We don’t have a credit file on individuals. We are a very much a cash economy. And if you look at what happened in the past few years, especially around financial inclusion, people started opening up bank accounts and people started getting a different type of a card and companies like Paytm have been able to raise money from Jack Ma as well as Warren Buffett. That tells you how important that sector is overseas. We in the U.S. are still in the credit space, but the prepaid space is quickly catching up. Faster payments is quickly catching up. Cryptocurrencies are going to continue. So that’s the exciting thing about this.
And the scary thing about it is that as this space gets more complex, there is going to be more fraud and compliance issues like money laundering, drug trafficking, human trafficking that is going to become harder and harder and harder to track. I always give a simple metric. If you just look in terms of amount of money, there is hundreds of billions of dollars of fines that have been enacted onto banks because they couldn’t figure out their money laundering patterns or they couldn’t comply with all the rules and regulations. There is tens of billions of dollars raised for companies who are fighting fraud and who are trying to come up with better ways to address this space. Who knows how much money, how much actual money has been laundered or lost or stolen because of fraud and noncompliance issues? There is no metric of that available of any sort. If you look at just that fact, we should say this is real problem and people are solving it. It should be going down now, but that’s not right. It’s actually going up. You see more and more instances of this. You’re seeing more and more problems, and the problems are getting bigger and bigger.
So you have to ask yourself: What are we doing wrong? There’s so much money being poured into this sector. Machine learning is there; we have AI and all of this. How is it not going down? Why is it increasing? And I mean increasing overall as the entire industry. You may be able to reduce it in a specific way or shape or form. There’s many companies out there that will claim that they’ve reduce fraud by 50% to 70%, and that’s true and they’re not lying. That’s true. But that’s a very specific use case. But in general, I think it’s increasing. The problems are going up, and that’s evident by the size of some of these fines. They have been going up. Most recently, earlier this year $600 million fine for US Bank was the example.
So what scares me is, What’s next? What’s going to happen? What are the new patterns going to look like? And what are we going to do as a company to keep up with that? For that, one of the exciting things that we are doing in order to know what is happening outside of the country, we have to be there. Asia is completely changing the payments landscape. Singapore, Hong Kong, India, Dubai–they have a humongous new approach toward faster payments, unique payments, and so forth. So we are actually entering the APAC market this new year. In 2019 we’ll be opening up our offices in Mumbai, which will serve as a hub to all the Asian countries. And we hope to be there to look at what’s happening in those countries. Problems exist in a much worse way over there because tracking information is very difficult. And so that’s something that we plan on embarking on and hope that we make our very small contribution to a better world for many years to come.
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