Symmetrical.ai is a revolutionary idea that brings power back to the people over their finance. It makes financial information more transparent, easier to understand, both in terms of market forces as well as individual behaviour. It promises to create a true marketplace for financial products that rewards shopping around the best offer, instead of punishing it.
And, as every revolution, it started with a manifesto.
Tune in for the whole conversation in our Warsaw studio.
Marcin: When the whole world has already succumbed to financial institutions and it would seem that all the countries of the world are subordinate to the huge powerful American banks, two Poles are throwing gloves to those monsters of the financial Western world. In a moment you will get to know a Polish start-up who decided to use new technologies to destroy what they called information asymmetry.
What is it, how it is used and when will you finally be able to get a loan without an intermediary's margin? All this in a moment. HiCash Week . Marcin Dobrowolski. Join us.
In our studio, Piotr Smoleń and Daniel Wartłowski, the founders of Symmetrical.ai, a start-up, although I do not know if it can be called a start- up at this stage where you are. Can it?
Piotr: We are definitely a start- up. Just a few days after winning Venture Capital investors from around the world
Marcin: How much money did you get, more or less, can you say?
Piotr: This is less than six million zlotys; 1.35 million euros.
Marcin: It's pretty good and for how long will this money let you go on?
Piotr: We have enough for the first two years of operating, testing whether the technology we are developing works. However, this appetite, if it turns out that the technology works, the appetite for further financing for developing the company, is definitely larger.
Marcin: Sure. This is also such an important information that needs to be repeated to startupers very often, especially those who are starting to operate in this market, that the financing stages are something that has to be constantly taken into account on this path to development.
In the manifesto that you have announced, on the Internet, that everyone can read, you write about what is called information asymmetry and you say that the financial market, financial sector is built on this information asymmetry. What is the information asymmetry?
Marcin: As the main authors of the manifesto…
We wrote the manifesto together with Daniel, while the financial industry must be aware of a few things. The financial sector is one of the oldest branches in the world and has been operating in a similar fashion for several hundred years. Fundamentally, it has not changed during this time, while the products that the financial industry selsl are products that are very homogeneous. It is very difficult to distinguish, at the end of the day, every loan, factoring, insurance [from one another]. This is exchange of cash flows in time. These are very simple products. In fact, we can say that it is very difficult to distinguish one mortgage from another mortgage. One insurance from another, one factoring from another factoring. These are homogeneous products, these are potatoes. And now what financial institutions has been living off in the past few hundred years is how to repaint those potatoes into fruits and sell at the price of fruit.
In other words, it is very difficult, from the product side, to distinguish between the products. So we have to look for new ways of marketing, new ways of communicating with the client, new ways of presenting the offer to win a premium price for an offer.
Marcin: Yeah, and you need to realise that first derivatives were created almost 400 years ago on the occasion of a Tulip bubble and then more new instruments were to be created, and that's how it accumulated. But at some point, as we realised from the recent crisis, those who created all those tools often had no idea what is hidden underneath, under what they were selling. It really is incredibly difficult to understand.
Piotr: And now what is information asymmetry? In general, the financial services market is a gigantic asymmetry, not only informative, but also informational. It means that on the one hand we have powerful institutions that have a lot of knowledge, have professional analysts who analyse our data, concentrate capital, concentrate influence. These are powerful institutions. On the other hand, we have ordinary people – Smiths – who very often do not have financial education, have no legal knowledge, and there is a gigantic difference in power between these institutions and the end customer.
This is one thing. It is also very difficult in practice to compare any products between them. Asymmetry of information means that it is very difficult to say why this loan is cheaper or more expensive than the second loan.
Marcin: We really take what we are given, we go to the bank and we really look at ARP [Annual percentage Rate of Charge]. At most
Daniel: That's good if we look at the APR.
Marcin: Oh yes but you know after all those recent events, in the last few years, however, this information is highlighted, financial supervision stands, regulations force companies, banks and insurers to inform about the most important things.
Piotr: Yes, and what is very interesting is, if a client wants to get the best price for a loan, the effect is that the more institutions they ask for a loan the worse credit they get. Because the more they ask, the lower their credit score gets. So, systemically, we have a system created on the market that makes it worthwhile for no one to look for the best price. It's best to take a loan under from your current bank because there is a good chance that the more questions you ask, the worse offer you will get.
Marcin: They knows my account, how much money flows throw my account
Piotr: Here too, is a lot of inefficiency of the market. And what is very important, the banks are created to serve large customer bases. And in every bank, in every insurance company there are good customers, there are OK customers and poor customers. Good customers and OK customers subsidise bad customers. Example: I am a very good driver. I have never had an accident. The price I pay for insurance finances those crazy road pirates who drive very fast. Another example: I am a very good borrower
Marcin: No, but wait a second. If I’m a good driver and I have no accidents than my contribution goes down.
Piotr: With time, yes, but not proportional to the risk that is associated with me. I will give another example: I run every morning, do jogging, go to the gym, eat healthy food. My colleague eats five burgers a day. When we pay an insurance premium, it is very likely that we pay very similar money, while the likelihood that I will live longer is higher and the probability of becoming ill is lower. In contrast, I fund a person who has worse habits, because it is difficult to collect this data and share this data with a financial institution.
Marcin: there are certain assumptions about social solidarity, say, when it comes to such contributions. For example, we were raised in a world that tells us that one is better off than the other the other and you, who is better off should share with those who are worse off. But I understand that this information asymmetry in that case does exist. I understand that the worse clients are financed by better clients. I have a question to Daniel. What tools do you want to use that will allow these asymmetries to be eliminated?
Daniel: Before we get into the tools, an important thing you yourself noticed. At the time of the scoring it is easier to take a loan from the bank that you are in now, because the bank has this data. Our thesis is the following: data we have is our data. The data that this bank has should be assigned to the person and not to the financing institution. Your transaction history is your data. And not the bank's. This is the first rule we follow. In the present moment there is a regulatory window, which only opens the possibility of using other data sources: both GDPR and PSD2, i.e. the directive on protection of personal data and on access to banking information, enable the use of information that is collected in other institutions but belong to a given person. We applied for an entry in the list of the so-called AIS. To be certified in the matter of access to Financial Data of a given person and through the API integration with banks we will be able to simply obtain this data. This is the simplest way. This is also the most long-term one because banks are currently undergoing a technological transformation in order to make this data available on the market. We'll see how it works
Marcin: And you, as a young dynamic company, will jump right into this spot.
Daniel: We'll jump into this spot straight away. Whether we will be able to use it operationally? We’ll see. One thing is the scope of the date, the other is how there are acquired. And here is an interesting example from the salary finance sphere.
salary finance is employee-financing and it is also financing towards an employee that is in the form of “secured by a salary”. It has no enforcement title nothing like that, it’s just a contract that states that it is not the employee who repays their loan, but an instalments is automatically pay when the salary is transferred to the employee and the employee receives the get the remaining part. After separating this instalment. This is just a clean contract. What does this contract do? This contract dramatically influences the economic conditions of obtaining a loan. First of all, a lot of data comes directly from the employer to the financing institutions. What does it mean? It means that this data is verified, this data is factual, that someone saw this employee, that he earns, where he works is know. This is one element. The second element in this case, is the raising of a decision threshold, meaning that unless the employee cancels such an authorisation to collect the salary he does not decide whether he has to pay but it is done automatically.
And in this case, it impacts very positively the entire product life cycle. Some data is external, unrelated to a given client or from a given institution. At the same time, we try to link this data in a pragmatic way, from various sources, where they are easily accessible. And the last element, because your repayment data is also your data, in this case when data about your repayments we have directly from the employer because we know if someone paid or not it is such a very smart way for a good data source without advanced technological integration, Just another look at market and search for this source
Marcin: What will your business rely on? And what do you want to make money off?
Daniel: maybe I will start, buy Piotrek can probably say more. What does our business do? Our business is a new effective way to connect demand and supply.
Marcin: Effective? We'll see about that
Daniel: Well. Right. [It’s a way] to automatically combine demand and supply. Meaning. we, as symetrical., we issue an API, i.e. such interface for integration, to integrate with both the demand side whether it is employee financing or other sales contexts with which we integrate. And the API, i.e. the interface, to the funding institutions, to get plug into it directly into us. What does it mean? This means that we eliminate manual processes, that we eliminate a lot of outlays that are unnecessary or that technology can do for us. We are able to offer, via our technology „the right credit, in real time, when needed . So probably a real-time loan whenever the client needs something that is simply unattainable at the moment on the market.
Piotr: We fundamentally disagree with the division of into bad customers ok customers of good customers. I do not agree that such a division is something that should remain over time, we think that the problem is that these so-called bad clients do not receive feedback on what they do wrong. That is, such a client does not realise what decisions he should make to be treated better by the banks.
And maybe it is a good client, but banks do not trust this client due to lack of data. The additional value that our platform generates is, on the one hand, that we help to make this client credible, prove to the bank that he is not only a OK customer or a bad customer, but that he is a good customer. On the other hand, we show him what needs to change to get a better price for a loan or insurance in the future, to be a better customer. If I knew that if I ate five burgers a day, and when I would limit myself to two, I would pay less for a loan, and I will live longer, if someone tells me what decisions to make financially, to get better offers for a loan, or to be able to get at all credit [then] that would help
Marcin: It is understandable on a small scale, and I think that such advice is necessary for everyone to some extent. But then there are people in a credit spiral, people who do not get credit, they really have to go for a payday loan or something. Financial advice, for such people, would be extremely difficult but also costly on the part of the institution.
Piotr: Not really. As part of this employee financing, which we are implementing, we implement two functionalities that will draw users out of the debt spiral, and return them back to the banking segment. So the first thing is, what we offer is the possibility of withdrawing today money already earned. It very often happens that a lot of people do not have money between 20th and 30th. Then they go to loan companies and pay 100% + APR, quite very often. And gets funding. It cumulates and they go into a spiral. We want to break this vicious circle, allowing the employee flexible access to financing.
Marcin: And this is a revolutionary tool that I just missed in the process of understanding what your manifesto is.
Piotr: On the other hand, we would like such a user to automatically draw data on all their obligations, then, use the employer's relationship with Symmetrical, with our platform, and be able to get one loan from the bank, secured by the employer, which will pay in one go all loans in a spiral, it will distribute it over time and give them some breathing space in the future.
Marcin: This is magic. A beautiful life unfolds. I mean, an interesting project. Which is to say: clients, as I understand, are institutional, because employers, but individual clients too, so you will be basically a bank.
Daniel: Yes and no. Our business model works in that it associates demand with supply. So we are in no way…
Marcin: So financial intermediaries using traditional concepts in which I grew up. Unless you want to create something new.
Daniel: Ok, this is more of a funding marketplace. Is a marketplace an intermediary? For each individual transaction, it can be considered an intermediary. However, the stock market is something more. This is an entire information exchange infrastructure and that is what we are trying to create.
Piotr: To put it differently: we want to be the most effective financial intermediary in the world which replaces ineffective, expensive processes with an algorithm. So a bit like an uber became a taxi corporation connecting two sides. Just like airbnb for renting property. We want to be a similar marketplace for the financial services area.
Marcin: I have recently laughed that the term "we're an uber up for ..." and here, enter any name, should be banned.
Piotr: It's already obsolete. This is not fashionable anymore.
Marcin: Either we are a Tinder for ... it is also a provider in a way … of connecting people. Look, you look very young. Have you graduated from any university? Did you just decide to set up a bank on the Internet after high school?
Daniel: This element of the SAT exam is not so far away, because with Piotr we are friends from high school, from the same desk. So, we took those exams together and probably sitting not very far from one other. Yes, of course we graduated together. After high school, we went to SGH (Warsaw School of Economics).
Marcin: What were you doing then? After graduation?
Piotr: Our paths diverged. After graduating I worked for a year in a stock exchange private equity fund - Midas Ltd.. Then I created my own fintech - Turbine Analytics - we provided analytical software to financial institutions, mainly for Investment Funds but also banks and insurers. Last year I sold this business to a strategic player in a transaction financed by a private equity fund. This was the first exit in my life and a success. And immediately after the sale of this business I had a little more time to think, I graduated from Stanford, in the States, searching there for an inspiration.
Marcin: Ok, congratulations.
Piotr: I came back to Poland and work with Daniel on the new project.
Daniel: I went down a more corporate path. Immediately after graduation, I worked for some time at Ernst & Young in the M&A department. After that I went to the Boston Consulting Group. This is a strategic consulting company where I worked for 5 years. And the last one and a half years I've been working in a, probably the most successful startups in Poland, G2A.com. About which you may not hear much, but it is an incredibly dynamic and innovative company, where I was Chief Technology Officer with a team of about 230 engineers, so these were quite big challenges.
Marcin: Do not be fooled by the young looks of our guests in that case. I apologise for this question about the university.
Where is everything, in all that you do, the AI component that is in the name of your enterprise? Because Symmetrical.ai. this is the name, and as I understand this thread of artificial intelligence must be somewhere. Or did you just want venture capital funds to invest more in you? Because if it is AI, as we all know, blockchain ,gaming , there will be more money.
Piotr: AI is, of course, hyped. Another market hype, like blockchain and many other technologies. However, functioning of our platform in the future will be based on artificial intelligence. In other words, what we strive for is to tell market participants how to operate more efficiently on this market. So, on the one hand, we want to use artificial intelligence, so that the user knows what data about himself can be additionally plugged, and what effects to expect. So if I link LinkedIn to credit analysis, I should save half a percent on something. So we want to help users better manage their information.
Marcin: Is it possible to somehow pump LinkedIn in order to get more money or not?
Piotr: This is obviously a very difficult area, because on the one hand…
Marcin: Maybe this is an idea for another startup?
Daniel: The truth is that what data you publish, and what financial data financial institutions are able to process are two very different things.
Financing institutions are also learning this. So even if there is a recommendation, what you should have on LinkedIn, in order to have a higher scoring, it is very likely that, if this is the appropriate scale, financing institutions will pay attention to other elements. This is to provide a personalised offer rather than to provide an offer to some quasi-fake person who checks all the boxes .
Piotr: There is one more interesting issue. Credit scoring is not always intuitive. For example. If someone has a gambling tendency, should he have a better score or a lower one?
Marcin: I talked to a few financial advisers, so I guess he has a better core because he has to organise money all the time.
Piotr: Yes. Statistically, people with gambling tendencies are much better borrowers compared to the average.
Marcin: When I took a mortgage 8 years ago, I learned from an adviser that in one of the banks I can not enter a "journalist" as a profession. Because the algorithms automatically reject it. Maybe somebody who once wrote the algorithm got off to some scribe and just classified all of us against that bias.
Piotr: In finance we have something like the so-called positive financial bias. Many fintech startups rely on this. There are, for example, startups in the US that refinance debt consolidation. And you know what? The user, the customer who has a lot of loans and expressed the desire to consolidate these loans, is statistically a very good borrower, because someone who wants to go bankrupt will not look for optimisation. He will hide, hide debts, hide his fortune. And very often this "positive selection bias ", meaning searching for behaviours or signals, from a given user about the fact that he is a good client, is already sufficient to improve the credit scoring.
Marcin: Tell me how it is, or how to collect money for the company at the pre-seed stage. I suspect that it's hard. But what convinced men and ladies in powerful financial institutions that have large sums of money to invest in you? And they gave you six million zlotys. Have you registered your activity?
Both: A few months ago.
Piotr: It came out completely by accident. We wrote a manifesto with Daniel.
Marcin: The manifest will be published in the link under this video, so you can see what our guests write about.
Piotr: We were curious what other people think. It was an idea that came to our minds and we were talking about putting it on paper and see what people think about it. A few weeks after the publication of the Manifesto, venture capital funds from the United States, namely from Silicon Valley, from London, from Berlin, started to contact us, saying they would like to talk and asked if we want to build a business around this vision or technology.
Interestingly, it was not a document shared among many, it only went to people who were very specialised in fintech, understood the industry, who saw the problem. And really our conversations began from this. From the fact that several funds stated that they want to talk to us. The funds very often recommended us to next funds and subsequent investors. We visited Silicon Valley, visited London, Berlin, we had meetings with funds. We talked with 60-70 funds. Most of which, at the beginning, told us no. For various reasons. Until there was a breakthrough where one of the big funds said yes and it was easier since then, we got more and more offers. At the end of the day, we could choose between investors who we wanted to have in the company.
Marcin: Who is the biggest potential enemy of your enterprise? Banks? Insurers? Financial institutions? Supervision?
Daniel: I think, it's my opinion, that the biggest enemy, in the long run, can be distributors of financial products, traditional traders. Because from the point of view of banks, we provide additional value and eliminate some inefficiencies. From a regulator's point of view, we create a market that is more transparent, more ethical, more inclusive to people, and looking at many different locations, either we are responding to some regulations or we are ahead of them. Like, for example, informing about the reason for the rejection, transferring the client to another institution that can offer this product. From the point of view of capital providers, we offer higher return, from the point of view of borrowers - a lower cost. From the point of view of distributors - we do not give them a place to thrive, in the long term. Because no one will be able to live on a few to a dozen or so times lower margins than they offer currently present. So, probably from their point of view, it is very disturbing.
Marcin: A few, even a dozen or so times lower margins. But you live on a commission.
Daniel: It depends. In the initial stage, we assume the most "well-worn" model on the market, i.e. earning on the margin. For several reasons. First of all, the market is used to it, and we can not take market education in each of our areas because we simply can not do it. However, in the long term, we look at our business more as an infrastructure business, and there we will earn a subscription fee that will be charged to the financing institution for participating in the market. Just like big brokers on stock exchanges. On the other hand, the subscription fee is not related to the volume, i.e. it may encourage to offer an even lower cost to end-customers.
Piotr: In general, in the long term, we would like to eliminate margins for the resale of financial products to a minimum.
Daniel: In a perfect world, but this is not unreal, even to zero.
Marcin: Good luck with that, I do keep my fingers crossed. Most startups have such a plan that: first Poland, then the funds are presented with the vision of Central Europe, the World, the cosmos and conquering the universe, how is it with you? To what extent have taken those assumptions of your activity?
Piotr: From our perspective, this is a completely wrong assumption. Especially for business models that are very scalable, where the first one, two players in the world, who will gain market position and maintain this market position. We start our business on the British and Polish market at the same time, but the plan is to start expansion in subsequent European Union countries, and maybe the United States after 12 months. We’ll see how much traction we show and if we show that technology works to the extent to which we will be able to obtain financing for faster development. On the other hand, the problem, that we solve, it is that credit is a hyperlocal product. So in each country, in Poland, in England, in Germany, we have completely different data related to the credit risk assessment, different scoring models, legal regulations, and other financing institutions too. And what our platform will do, it will democratise.
Differently in the US
Piotr: In the US, it is different in every state. Our platform will democratise loans between countries, it will provide unified API to our partners. That is the product. For example, if Revolut or N26 would like to integrate with us, they could at one time launch an identical loan in each country where they operate, and where we would also be present, of course. We also want to democratise, unify and provide infrastructure that provides identical products to our partners between different countries. And here, of course, is the advantage of the first player who will have a lot of geography.
Marcin: Do you know what I'm afraid of? You have great assumption. Really, I keep my fingers crossed for you to succeed. I especially like this educational context. Possibilities of bringing people out of this hellish situations in which they found themselves. Well, this vision of a margin-free service, is a spectre that shines brightly down the road, but, I know cases of institutions that were created on the market which also said that they will only be an online bank, will not have branches, that margins will be very low, and then it all turned into a network of outlets and services. Well, I'm just waiting for you to be bought up by some bank, in the end. Do you assume such a possibility that in the end you will be bought by a large financial institution?
Piotr: Regarding who could potentially take over our business in the future ... in our opinion, ideal candidates would be Google, Facebook, Amazon, Microsoft,
Marcin: GAFA, as President Tusk said.
Piotr: So these are the entities that have enormous databases of clients, trust of clients and are entering the financial segment. I assume that each of these companies will become a bank in the future. All these institutions will need such infrastructure as ours to be able to operate effectively all over the world. From our perspective, if we were thinking about selling this business, because today we are not thinking about selling this business. We have our goal, our mission, something we want to change in the world. However, if anyone would buy, I would prefer to become part of Google or Amazon , and to have a global impact on reality.
Marcin: Interesting that you are not talking about WeChat.
Piotr: Maybe WeChat this segment, or AntFinancials
Marcin: Yes, these are also the companies that blink from afar. Gentlemen, I keep my fingers crossed, tell me about dates, what dates? When can we expect the first loan being granted?
Daniel: The first transaction has already gone on Monday, in a commercial environment, already fully operational. However, to one of our internal employees. So in a very limited way. In May we will have first commercial implementations. This is a very limited scale. We have to prepare ourselves for the diversity of clients and partners' needs, those are still just first beta tests, we will start to scale up in the third and fourth quarters more or less, and the fourth quarter assume transactions abroad.
Marcin: I keep my fingers crossed for everything to go smoothly, especially at this initial stage. And let this artificial intelligence learn, with time, as much as possible. Piotr Smoleń and Daniel Wartłowski, founders of Symmetrical.ai, were our guests. And I encourage all of you to see and read their manifesto, which is available in the link below this film. [And if you liked the film, also like, share and spread this good news of new technologies in financial institutions in the world. Thank you very much for the interview. Thanks see you.
Piotr, Daniel: Thanks