Barefoot Innovation Podcast

This is the second time I've sat down with Karen Mills for a conversation on Barefoot Innovation. Karen is a Senior Fellow at both the Harvard Business School and Harvard Kennedy School (where I got to know her), and previously was the head of the US Small Business Administration. She is also probably the foremost expert, and most eloquent voice, anywhere, on using technology to strengthen small business. We got together, on a very rainy day on the Harvard campus, shortly after Karen published her newest book, Fintech, Small Business, and the American Dream. It's the most definitive and thought-provoking work I have seen on today's historic opportunity to develop a vastly better financial world for small businesses. Karen believes, as do I, that we are at a transformative moment.

In our conversation, Rob and Kathryn tell their story, on how they've built a company that has extended $6 billion in credit to 165,000 people in the United States. They explain how they started with e-commerce companies and now service all small businesses. They describe their gradual realization that their loans can help these businesses manage cash flow -- a critical need. And they share their thinking on the regulatory challenges ahead for the space, including the risk that new regulation will stifle innovation.

My guest is the one-and-only Chris Skinner. Chris, the CEO of the Finanser, began writing a daily blog in 2007. Every single day since then, for twelve solid years, he has written a blog post. It's said that journalism is the first draft of history. Chris has written that daily first draft of the history of fintech, almost from the start. He's the bard, or minstrel, or troubadour of fintech, telling its story as it has unfolded in real-time, day by day, with all its twists and turns and surprises. He's been the one seeing the patterns and understanding what's happening and what is likely to come next. He's based in London, which means that for me (I'm usually in Washington DC) that his daily missive comes with my morning cup of coffee. I read it and, most likely, I tweet it. I have a great deal of company in this: Chris has nearly 50 million followers on Twitter. Chris and I recorded this conversation last spring during the Innovate Finance Global Summit in London (one of my favorite conferences in the world). We found a reasonably quiet corner of the bustling speakers' lounge in one of the old Guildhall buildings and talked about the future of banking.

My new nonprofit, the Alliance for Innovative Regulation, or AIR (about which you'll soon hear much more), collaborated with the UK's Financial Conduct Authority to run the first-ever US regulatory "Tech Sprint." A tech sprint is a hackathon. It puts subject matter experts together with software developers, lets them form themselves into teams, and has them work side by side -- sometimes day and night -- trying to solve concrete regulatory challenges. By the end of the sprint, typically a few days later, you don't merely have a report or a memo or a working group. You have computer code. A start on a practical, working solution.

I'm calling today's show "agile regulation." I know that sounds like an oxymoron, but today, agile regulation is actually on its way. Financial regulators all over the world are realizing that they will have to update their tools, digitize their information and, above all, speed up, to keep pace with the exponential rate of technology change in the industry they regulate. In the United States, the leading voice in this new vision has been our guest today -- the Chairman of the Commodity Futures Trading Commission, Christopher Giancarlo. This is the second time we have had Chairman Giancarlo with us, and we are posting this one right before he leaves office.

We know that the money launderers are winning. We know that law enforcement is losing. By now, you've probably heard the UN's statistics on this, that we catch less than 1% of these crimes, which add up to an estimated $1.6 trillion a year. At the heart of this problem is asymmetrical technology. The bad guys have sophisticated, networked, rapidly improving technologies, and the good guys are stuck in the past.

There are some challenges in fintech and regtech that transcend the others -- problems that have to be solved in order to "unstick" numerous other kinds of exciting innovation. Of these core enabling solutions, none is more important than digital identity. A few months ago I sat down with one of the people leading the work in this field. David Shrier is founder and CEO of Distilled Identity, an AI biometric software company that helps financial institutions and governments build better identity profiles. David is also affiliated with Oxford University and the MIT Media Lab.

Our conversations on Barefoot Innovation always grapple with the regulatory challenges arising as technology transforms finance. Most of our guests have good ideas about this, but very few are in a position to make things happen. Today's guest is different. He is Craig Phillips, who is the Counselor to the US Secretary of the Treasury, Steven Mnunchin. The Counselor role spans everything from fiscal operations to America's debt management, but for our audience he is best-known for leading the office that issued last year's landmark Treasury report on fintech.

Bill Gates famously said, "We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don't let yourself be lulled into inaction." That gets quoted often these days, because it so well captures the times we live in. In that vein, it was a special pleasure to be invited recently to a roundtable aimed at envisioning the financial system of 2030. The event was the second in a series hosted by Prince Michael of Liechtenstein, a three day conversation with incredibly thoughtful people drawn from banks, fintech companies, cryptocurrency, global NGOs, technologists, and regulators, from all over the world. It was organized by Dr. Thomas Puschmann, Director of the Swiss FinTech Innovation Lab at the University of Zurich.

If you're ready for a breath of fresh air, today's show is for you. It's fun, it's fascinating, and it's filled to the brim with ideas that many of us haven't heard before. NBKC bank is a community bank that thinks and acts like a start-up company. My guests are its CEO, Brian Unruh, and Zach Pettet, who is the bank's Fintech Strategist and who heads its Fountain City Fintech affiliate, which is the first "partnership accelerator" run by a community bank.