Interview: Leandro Augusto de Oliveira, Nethone

Welcome to the new interview series launched by Creative Intelligence where we try to understand and gain insight into how businesses today actually manage transformation and the transition in achieving that. 

My name is Nathan Relevy and am I the MD and Founder of Creative Intelligence and I have been in tech, systems, processes and transformation for over 20 years.  

Today we are speaking with Leandro Augusto de Oliveira of Nethone. If you wish to discuss their services, you may contact Patrick Drexler - Head of Business Development at Nethone - https://www.dhirubhai.net/in/patrick-d-025b471b

If you’d like your business to be featured please connect with me and direct message me on LinkedIn here: https://www.dhirubhai.net/in/nathan-relevy-36555419/

Nathan: Many thanks for agreeing to be interviewed. We're running an interview series and the purpose of this interview is to understand how your organization manages transformation, both internally and also how you benefit clients as well, in terms of helping them transform their businesses. So could I ask you just to briefly describe your business and what you do?

Leandro: I work for Nethone and we operate as a Software-as-a-Service company in the fraud prevention space. Any financial transaction that happens online is open to fraud and what we do today is assess user data through machine learning models to really understand what is the level of risks that each one of the transactions represent for the merchants. We basically operate in three verticals, eCommerce, travel, and financial services. The reason why we consider travel as a different one is because the type of fraud we identify within the travel industry, such as airlines and online travel agencies, is likely different than what we can see in regular eCommerce such as buying luxury goods. So we split them based on the complexity of the fraud types that we identify in different industries.

Nathan: What challenges do you face in transforming first of all your own business and managing that transformation?

Leandro: Today, the transformation is really interesting for us, the digital transformation concept, because we are constantly changing the way we do business. First, because we are a SaaS company, which means that we need to be aligned with the platforms and infrastructure that our clients have. Each and every day our clients are demanding a more customized solution than just anything off the shelf. We need to act quickly to provide the required level of customization.

Leandro: This starts simply with the JavaScript SDK formats that we currently offer to access data from the clients in the technical infrastructure, up to improving the machine learning modules in a much more customized form, understanding what are the customer experiences that are actually helping us to identify fraudsters, which is something very different than the way it was before. This is how we actually leverage our solution, by combining customer experience together with fraud prevention, which is something unique I would say from our technology. So internally, not only this connection between us and the client needs to be transformed every single day, but also the levels of customization, not only with the service as a whole but also with the way we treat the client in the end is very important.

Nathan: So with that in mind, what transformation opportunities do you see ahead with perhaps kind of in the medium term as well? Where do you see that this can be extended?

Leandro: I guess the first thing that we should consider is that the whole payment industry online is changing, and this is where a lot of our future lies on. We can't ignore the fact that the majority of our customers today are just used to having credit card as the only option, and therefore they have an entire system that is assessing transactions risk mostly by the credit cards, when we use something different and to the whole evolution of payments, we are actually promoting a completely different scenario and our solutions must be much more adjustable to different payment forms and this is how I think, in the end, is really the way to go for the future.

Leandro: What also changes for us is the dynamics of the job. What we see today is that there is a large demand for much more automated solutions and less human resources which are eventually allocated to some other parts of the firm, that real human beings are necessary, but a lot of it needs to be automated in a way that you don't want people to work when they should not. So the level of optimization that we need to have within fraud prevention has also increased quite much and this is where I believe we also have a lot of growth for the future and this is also the success we have in the best area. It's just progressing in the same direction.

Nathan: To what degree are you looking at and catering for the occurrence of cryptocurrencies? How do you see that changing some of the marketplace?

Leandro: So the specific introduction of crypto on a commercial level, there's plenty of variables that we should have to blame here. The first one is identifying how much of crypto actually is going to be the new kind of euros or dollars or pounds as a currency, as a whole, what we call a massive currency and this is right now something that is limited. Why? It is because the timing that we take to complete a transaction in dollars or pounds or euros to date, it is one-seventh of what it takes for us to complete a whole transaction while using, for example, crypto. So when that happens, we understand that there is an amount of volume that is limited throughout the day. You cannot actually transact more than a certain amount of money, equivalent of money when you use a crypto a day at that limitation you add to the technology which is putting you to have a longer period of time to actually complete a transaction using bitcoins for example, it's really not allowing that to be a massive currency. So even though we understand that there is a lot in the development of fraud prevention for Bitcoin and for the whole crypto market, we do believe that there's a lot to go with the technology itself in development for that to really convert into a massive currency form or big for payment. It's really complicated for us to really assess how that is going to happen or how fast or how slow this change within the payment industry is going to absorb the cryptos, but in the end what we can say is that fraud is still going to be there, so the fact that even if crypto becomes a new payment form really doesn't change what we do as a business.

Leandro: What changes is the way we assess that, so there is a whole level of complications that we need to take into account. We need to increase the level of fingerprints that we evaluate on a daily basis or on a regular form of fraud prevention that we really push that into a more complex environment of assessment but still possible. One of the good things about our technology is that we are payment agnostic, which means that whatever form of payment, we're going to be able to assess because we rely a lot on the personal interaction, which we call the passive biometrics or the behavioural analysis of it. So there's plenty of ways we can really do the job, but again, as you said, understanding the transformations of the industry as a whole, will need to make us adjust the final tuning in each one of these parts.

Nathan: So to what extent is your approach to transformation continuous or fixed? So I would imagine when introducing this to organizations, there may be sort of an element of your service that is, if you like one-off as opposed to aspects of your service, which are obviously continuously being enhanced, changed, and updated. So how'd you manage that split?

Leandro: So in our industry specifically, it's very dynamic because fraud is a very dynamic industry. You can imagine that a fraudster today, for example, is a person always sitting at a computer right now as we are, and the only thing that he's trying to do for eight hours a day, 10 hours a day, is to break everything that I am doing on this side. So the whole thing about being static or being dynamic, which is part of the whole perception of your question, really follows into that like for me the static part of the standardized format of what we do is really very minimum because it really relies on the technology for us to start. The reason why we're using machine learning, for example, is that this is the technology that today accommodates all the dynamic behaviours that we need to have in order to fight fraud in a much more proactive than a reactive way.

Leandro: The industry over the last few years have been mostly reactive. You just learn from your mistakes and that's when you come back to your systems and update them. What we are trying to do today is really to be one step ahead on the fraudsters, understanding what are the tools and technologies that they are in use today so we can really block any signals that we can have from that system. So it follows much more a dynamic approach and constantly changing and updating and calibrating our machine learning models so we can really be more proactive and actually that is how we are doing better to the customers based on the segregation and the speed of giving faster responses and more accurate response to that.

Nathan: How have your clients reacted to the transformation? For example, do they react with excitement, or do they act with anxious anticipation? Why and how do you address that?

Leandro: In our case, it is very, very specific because the whole payment industry has been very standardized over the last, let's see, 15 years since we started with the role of online eCommerce, which was about something like 2004. So we're talking about 16, the last 16 years. The big players started there, when eCommerce became massive, they were there and they have to be working with that same approach over the last 16 years. So when we come with machine learning and artificial intelligence, it has really shocked them in the beginning. First, because the majority of the managers today are a little bit sceptical of actually how much control they are going to have over the technology. I guess that's the point number one and point number two would be how they are going to put their teams to operate in such a dynamic environment and such a fancy environment.

Leandro: In the end, people are forgetting that machine learning and artificial intelligence is not about great robots to substitute human beings. On the contrary, our models and artificial intelligence to date gives the best response time to the moment that you trained them well with the human beings who have been working in this space for 16 years. So, it's a matter of showing to them that it's not an either/or. We have a chance to combine the whole human experience together with the fast responses from the machine, but we understand that the majority of the conflicts with the current managers start when we try to shift into our solutions, for example, that's most of their questions I would hear. And again, when you hire a solution, which is our case, you want to have control of it and you are now hiring artificial intelligence, which somehow has their own level of control.

Leandro: I understand that, and this is also something that most of our merchants are asking, how do I manage a solution that is thinking by itself. So this is the other concept that we also have to play with because in the end, as I said, the machine is going to think the way that we teach them, (the machine) to think. So there's a lot of involvement with the merchants, with leadership of the merchants, today to get the machines to think the way they want machines to think.

Leandro: In the end, we need extremely experienced leaders and managers on the client side who actually know what they want because when we do not know what they want, that may be the solutions that we provide. And this is something that is really complicated in the end because what we need to make sure is that the client understands that they built that entire machine on their own. Of course with our help, with our technologies, but it's something that is doing what they wanted the machine to do. And I guess this is where the tricky part is sometimes at the beginning of the process, not clear.

Nathan: And my final question is do you think it will take time to embed the technology and the service or do you think the transition from the way people currently manage things to using this new technology can happen fairly rapidly?

Leandro: I am a strong believer that this is going to be really quick and for one single reason. There is a massive demand for growth for any company, any player in the market today. So it doesn't matter if you are a small shop in Elephant & Castle [UK location] or if you are the biggest eCommerce player in the UK such as Amazon or any other big company. The thing is that any response to date needs to be fast and the chance of growth is based on how fast you can actually respond to your customers.

Nathan: We can see for example here in the UK eCommerce, our need of delivering within 24 hours because the largest player in the market can deliver in 24 hours and if you can’t, you're going to lose to them automatically. There's no gambling, there's no way you can actually grow. So considering this limitation, any merchant today, either big or small, is really going to be in need of faster responses. So the growth is really mandatory for them, so we should expect a very, very fast response to all of them in the end because it's the only way they can actually survive.

Nathan: Okay. Thank you very much. That concludes all of my questions. Is there anything else that you'd like to add that you think might be relevant?

Leandro: I guess one of the things that I like the most about my industry is really combining things in the whole value chain for merchants. I think every single person today as a manager or as a leader, or someone else applying digital transformation in their environments should consider that there is no way you're going to be a customer-centric company if all your solutions within your value chain are not customer-centric. And this is something really important, something that will be really connected to the dependency of customer experience and there is no way you can actually improve the final point if you don't actually apply that throughout the value chain. So I guess that's the only thing that I could share based on my experience I think.

Nathan: Okay. Thank you very much again. Take care.

Leandro: Thank you. Have a good afternoon.

Thanks for reading. If you know a business transforming, we’d love to interview them, please tag them in if so. If you’d like your business to be featured please direct message me on LinkedIn here: https://www.dhirubhai.net/in/nathan-relevy-36555419/