TIO Networks founder and CEO Hamed Shahbazi sat down in our Finetics™ Studio, live from the exhibition floor at Money 20/20, to explore developments in the financial services industry with PaymentEye's Sarah Gill.
Sarah Gill, Reporter: So I'm now joined in the Finetics Studio by Hamed Shahbazi. He is the CEO and Chairman at TIO Networks. I think it's no secret that low- and middle-income consumers have been poorly served by financial services until now. I mean, how key do you see that situation today being?
Hamed Shahbazi: I think it's quite acute. I mean, I think you're seeing a lot of consumer pain out there. I mean, not too long ago, just in the last few days, there's a major outage with a major prepaid card provider. The New York Times did a--
Sarah Gill, Reporter: (Inaudible).
Hamed Shahbazi: Yes, made a major story on it, and unfortunately, I think it's going to change. Stuff like that is highlighting that change is still needed. But I think there are other markets that have done a far better job leveraging existing technology. You know, the guys in PASA and Safari.com in Kenya. I was in South Africa a few years ago, and what I saw, what they've been doing down there with WIZZIT, for example, which is, you know, kind of a similar program. So, I mean, the African providers have been totally leading edge in terms of empowering the LMI.
But yes, I think, obviously, the US market is more complex. There's definitely competing interests and, you know, you don't always get the banks and the carriers and the processors all working, you know, collaboratively, and you know, but I think, I do think it will come together. I think, I think people that, that create a compelling enough vision for the customer and, and find a way to involve all the stakeholders and make them win. I mean, I mean, those opportunities are out there, and I think we're going to increasingly see them.
Sarah Gill, Reporter: What technology specifically are you most excited about being able to sort of help financial institutions themselves on those issues?
Hamed Shahbazi: Yes, I mean, I think that it's all the stuff that you see, obviously. It's proliferation of mobile, which is huge, obviously. I mean, putting a super-computer in everyone's hand, and now, you know, we're, we've obviously tipped the scales in that most people do have‑‑and there's a lot of literature out there that, that demonstrates that the under-banked actually have a higher degree of penetration in smartphones than sort of the higher-income, you know, folks. So, you know, but I think there's still a financial literacy aspect. I think it's, they're still connecting the dots and making these experiences seamless.
You know, what Apple's taught us is experience is everything. And I think, and I think that there's still some, some room for the service providers to create those very compelling, simple, and powerful experiences. And I think the major disrupters that you'll see, you know, you know, pole-vault in the marketplace are going to be those ones that just make it so darn simple and easy.
So I think that's what's, what's amazing about what AMPASA, for example, has done, is--
Sarah Gill, Reporter: Yes, I think there's a perception maybe that, you know, financial inclusion and, like, banking under-banked is maybe something that happens in the developing world.
Hamed Shahbazi: Oh, yes, no, good point, yes. I mean, we have a significant group of people. I mean, I mean, you're right. More than one out of every American, not just--
Sarah Gill, Reporter: Yes.
Hamed Shahbazi: In certain parts of the country--you know, nationally, right? I mean, 28% of all households, based on the Fed's own data, which, let's face it, is probably higher than that, because they're only really looking at the formality, formal aspects of the marketplace. You know, that's a--my understanding is it's $1 trillion of GDP, and so this 28% group of under-banked folks are spending over $100 billion in fees.
Sarah Gill, Reporter: Yes, it's huge.
Hamed Shahbazi: So it's just monstrous. And I actually think that there's a lot of white space in the marketplace to provide more cost-effective ways for people to, to pay bills, you know, you know, acquire these financial tools, acquire credit products, which obviously, there's‑‑that's where the vast majority of these, of that spend is. And so that's--I think, I think there's a, there's kind of a positive future there as more and more service providers realize that, "Hey, I can make the customer win, reduce prices, and, and create a fantastic business for ourselves."
Sarah Gill, Reporter: Yes. Finally, what's the most important thing you've learned, building TIO Networks?
Hamed Shahbazi: You know, I've learned that, you know, I think it's a couple of things. One is failing fast is very important. You know, being--
Sarah Gill, Reporter: And being able to admit it, I assume.
Hamed Shahbazi: Yes, yes. You know, I think, I think the fear of failure, whichever entrepreneur, I think, at some point in, in time, has, drives entrepreneurs in very different ways. Sometimes it really pushes them to, to make a business plan work that may not be ideal, whereas I think what I've learned over time is that, is that a pivot is very helpful in transforming businesses. I mean, which businesses do you know that started out, you know, with a business plan to do XYZ and, and were ultimately, were successful in doing that exact same business plan? I mean, Apple, you know, PayPal, Facebook--I mean, a lot of these businesses were something else when they started, and they sort of, you know, pivoted their way there.
So, yes, I feel like failing fast is really important. And I think also, just especially in this industry, doing a quality job. Going back to that outage, like, you know, you, you really have to recognize the mission-critical nature of these transactions, and you really, you know, the criticality of that stuff is not lost on us every day.
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