Technologist's take on how to bring about next-gen working capital

12 minutes

Technology and the interoperability of technology sits at the heart of any transformation exercise. So, getting a technologist's view on how lenders can bring about next-generation working capital is a conversation that needs to happen.

Off the back of our Working Capital Predictions 2023 report, Lauren Muir, our Head of Marketing, sat down with Matt Carpenter, our CTO, to discuss the technologist's role in driving the predictions and hopes for the Working Capital industry.

Together they explored: 

  1. What stood out most to Matt and how this compares to the conversations he’s been having with banks
  2. Advice for lenders looking to implement machine learning, automation, and deeper data analytics
  3. Tips for managing the tug of war between tech and the P&L
  4. Becoming very close friends with a mix of technology vendors
  5. The one thing tech teams need to focus on in 2023

And the best news? This video is only 12-minutes long.


Lauren Muir: Hello and welcome to the Working Capital Predictions 2023 discussion series. My name is Lauren Muir. I'm the Head of Marketing here at Trade Ledger, and the daughter of two serial entrepreneurs. I was also lucky enough to be in on all the interviews with our amazing contributors from across the industry.

And with me today at the discussion table is our very own Chief Technology Officer, and recovering accountant, Matthew Carpenter. Hello, Matt.

Matt Carpenter: Hello, Lauren. Thank you for joining me here today.

Lauren Muir: So, today I'm going to pick Matt's CTO brain about what he thought of the Predictions 2023 report and, hopefully, bring to life some of the bits that would be most interesting to his fellow technologists.

So, let's begin. Matt, you've read the report. What's the one thing that stood out to you the most?

Matt Carpenter: The consistent theme is that everyone feels that the industry is behind in some way and needs to catch up. And that the time to catch up is now. This was especially the case around automation and efficiency, they were recurring themes, in all the respondents.

Lauren Muir: Yeah, I agree completely. There was definitely the sense of momentum and that now is the time to act. Especially, when you compare this report to the ones from the last couple of years. Instead of contributors just talking broadly about what needs to change in the industry; I got the feeling that there was action happening. The people were talking about what they're doing now to bring about this change. And you're right, I also felt that when it came to the topic of automation and efficiencies, the bar has been raised significantly, which is great for for the industry and the businesses that need our support.

Do you find that this rings true with the conversations you've been having with lenders and other tech partners?

Matt Carpenter: I think it does. And I totally agree, I think there was almost an undercurrent of a little bit of frustration and taking so long for these things to be addressed more broadly in the industry.

People have wanted to, I think, use some of this technology for quite some time. And, I think, there's a sense of optimism that now they can.

But, specifically, I think it's around the potential of applying technology better is where that optimism really is. Whether that be a more holistic digital experience, reducing dependencies on manual processes. There was a lot of talk about the potential of machine learning to reduce the time to customer seeing an outcome or getting cash in the bank. I think, the overarching theme is time is now and technology is going to play a big role in the next step in the industry. 

Lauren Muir: Well, that's great news. That it's not just within the Predictions report, it's in the meeting rooms, too. Let's speak directly to your fellow technologist. Can you go a bit techie on us about one thing in the report?

Matt Carpenter: The one thing that stands out for me from a technology perspective is, there is a lot of talk about machine learning, automation, deeper analytics, being a real opportunity to differentiate and transform Industries or organisations. if I had to talk to that tech, I would simply say - start now. Such things are not easy to learn. They're not easy to master. You need to build capability around each of those things deliberately. And there is a lot of talk about not using tech for the sake of using tech in our respondents. They couldn't be more correct. 

But, there's also this one thing, always been, in financial services, it has to be done safely. Mitigate the risk. Manage the risks. And again, I say to that - start now. Build the muscle of using these powerful technologies today as you certainly going to need them tomorrow. But to be able to do that, in Financial Services context, you need to build that capability. Build that confidence and build that trust. 

So, start now - that would be my advice. Start experimenting, start learning that technology today.

Lauren Muir: That makes a lot of sense with the pace of change within the industry, especially, over the last couple of years. In the report, one of the key messages was around the importance of partnerships. Would you say that this is applicable to banks when it comes to building the muscle and within their tech teams?

Matt Carpenter: Absolutely, Lauren. Partnerships will be a key consideration to making any or all of this happen. No one technology provider, not one independent Financial Service organisation will be able to keep pace with the rate of change alone. For this to be a success, it needs to be an industry effort based on a vibrant ecosystem of partnerships and collaboration. 

Lauren Muir: And I'm taking a step outside of the tech team, there's often talk about this tug of war between tech and the PL owner. Are there any tips for finding common ground about building a cohesive partnership between the two departments?

Matt Carpenter: I think, there is. I'll own up, you alluded to it at the start. I am a former Chartered Accountant, and the numbers and the profit and loss will drive a lot of decisions in business. But when it comes to that tug of war that is always existed between technology and product, or technology and the business, as some like to call it. I just lean back on my time at Amazon and emphasize the importance of putting the customer first.

Customer obsession should steer any decision, getting buying for a change, or a new product, or a new feature, or how you're going to evolve to meet the needs of your customer. There needs to be a clear benefit and clear value for the customer at every turn.

Lauren Muir: Brilliant answer. As the report points out, technology and data have existed for a while now. And the industry has been slow to react. Maybe if we all become obsessed with the customer, the businesses that are the backbone of our economy, we'll finally see the change that we need. So, I'm just gonna go back to something you mentioned earlier about the tech capabilities around, machine learning and things like that. 

If you had to pick one thing that lenders need to prioritise, to get excited about in 2023, what would that be?

Matt Carpenter: I think, the Predictions report touched on things that we can all get excited about: machine learning and automation. But, in order to get that right, to really have a solid bedrock, I say - APIs. APIs are the communication lines over the Internet. The API economy is real, there's plenty of great articles and stories about the importance of the API economy. I encourage anyone to go have a look at, but, the reality is there are players out there that are defining the standards of this not-so-new frontier. 

If we take Stripe, for example, and what a great example they are! Stripe has led the world, in payments. They have defined how you do payments by APIs in the 21st century. Are you then have the Thought Machines of the world. Again, APIs are at the heart of what they do. Their whole product is the definition of how you do core banking via APIs.

And the reality is, there is an army of developers and businesses that are determined to grow their businesses by integrating with the best practices of the day. And those with widely understood APIs and at the forefront of how they integrate with their world will shape the future of any industry, especially ours.

Lauren Muir: I know that internally we are absolutely API-mad, which is understandable when you begin to talk about the risk and the growth opportunities and API driven ecosystem allows for. And, of course, what this ultimately means for those businesses that need finances to thrive. 

Can you quickly give us an example of how APIs benefit the loan journey for a business?

Matt Carpenter: Certainly. So, Financial Services is a rich tapestry of complex systems and interconnectivity. And within this digital ecosystem, it's vital to have that integration to create sustained customer value. Data is the lifeblood of minimising and mitigating risk, which is at the heart of any Financial Services business, especially when they're lending. An API-first mindset means that data can be as close as possible to the decision, to reduce the risk for the bank or the lender, but also speed up the customer outcomes considerably.

Lauren Muir: With your experience in terms of buying, partnering, and investing in technology, like APIs, are they any tips that you would share with other technologists for getting their buy-in to move towards this new industry, this new ecosystem?

Matt Carpenter: Yeah, I go back to my accounting roots on that one, and simply say, that there has to be a business reason, a business case, to buy or invest in anything, including technology. It's a cliche, but it keeps happening. Don't buy tech for the sake of the tech. It's resonated with me from a number of our respondents in the Predictions replies. They are still clearly seeing this happening out in the industry. I think, a sound investment makes business sense, whether technology or not. And that mindset needs to be applied to all tech buyers, as well as any other investment.

Lauren Muir: Thank you, Matt. This has been really really insightful and interesting, as a non-technologist. Before I let you go, I do have one last question. If you have a magic wand, what one thing would you change about the industry overnight?

Matt Carpenter: A magic wand to change one thing about the industry. I think if I did have such a magic wand, I would like to change the industry's habit of continuously making internal processes or internal organisational problems a problem for the customer. So many of the steps, so many of the hoops customers are made to jump through. It's because of no other reason than poor communication, or complications inside the organisation they are dealing with. 

And, I think, if we can get a customer obsessed mindset across the industry to say - we need to put customers first , particularly the small and medium enterprises that live and die by the flow of working capital.If we can put them first and think with them as a customer-first mindset, that would be just absolutely wonderful. I'd love to wave a magic wand and do that.

Lauren Muir: I can absolutely echo that. As I alluded to earlier, and if you read the intro to the Predictions report, my parents are serial entrepreneurs. Sitting at the dinner table, we spoke about cash flow. That's just how it went. But I also remember my parents complaining about the fact that they essentially needed a degree in finance and banking to understand what the bank was telling them. So, communication and just simplifying the process is so important. 

Matt Carpenter: Beyond important. And I truly hope the industry can turn a bit of a corner, so to say, in that regard. I'd love to see that competition results in a little more fairness for the mum and pap operations, so to say, on the little Gardener street, that would be great.

Lauren Muir: I think if you just take all the contributions from the report, that's happening. And it's exciting. I'm looking forward to seeing what the predictions will be like at the beginning of 2024.

And that's it. Thank you so much for your time, Matt.

Matt Carpenter: Thank you so much for having me.

Lauren Muir: Great, thank you.

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