Enjoying the podcast? Don’t miss out on future episodes! Please hit that subscribe button on Apple, Spotify, or your favorite podcast platform to stay updated with our latest content. Thank you for your support!
When you think about it, most, if not all, fintech innovation comes via the analysis and application of data. And financial services is more data-dependent now than at any time in its history. But this creates a challenge for brand new startups. How do you get access to data when all you have is an idea? Enter Fintech Sandbox.
My next guest on the Fintech One-on-One podcast is Sarah Biller, the co-founder of Fintech Sandbox. This industry non-profit provides free access to financial services data that can be critical for startups as they develop their initial products. As the need for large datasets accelerates an organization like Fintech Sandbox provides ever more critical for the growth of the startup ecosystem.
In this podcast you will learn:
- The driving force in starting Fintech Sandbox.
- How they persuaded their first data providers to provide free access to data.
- Some of the companies providing data for them today.
- How they go about finding new data sources.
- What their Data Access Residency program is and who it is for.
- How the types of companies they see have evolved over the last decade.
- The impact of AI on the demand for data from their new cohorts.
- Some of the companies that have been through their program.
- How open banking is going to impact fintech once the new rules are implemented.
- What is happening at Boston Fintech Week (Oct 14-18) this year.
- Why it is important for Fintech Sandbox to be a non-profit.
- How they are funded.
- How Sarah is thinking about the next 10 years of Fintech Sandbox.
Read a transcription of our conversation below.
FINTECH ONE-ON-ONE PODCAST NO. 504: SARAH BILLER
Peter Renton
Welcome to the Fintech One-on-One Podcast. This is Peter Renton, Co-Founder of Fintech Nexus and now the CEO of the fintech consulting company Renton & Co. I’ve been doing this show since 2013, which makes this the longest-running one-on-one interview show in all of Fintech. Thank you so much for joining me on this journey. Now, let’s get on with the show.
Today on the show, I am delighted to welcome Sarah Biller. She is the Co-Founder of Fintech Sandbox. Now, if you haven’t heard of Fintech Sandbox, you really should know about them. They are a really unique organization based in Boston, and they are focused on providing data access for startups. When you’re creating a startup, you need data to test your algorithms to develop useful products. You need data, and Fintech Sandbox probably has the biggest data repository in all of fintech. They enable startups, typically pre-revenue startups, to come in and be part of their program. Obviously, they don’t accept everybody; you’ve got to apply. In this interview, we cover all the different components of that program. We talk about how they’ve been able to develop the different data sources that they have and why it’s important. Sarah gives her perspective on open banking, and that’s obviously all about data, and that was a really interesting piece. She talks about Boston Fintech Week, which is a flagship event for the Northeast and something that Fintech Sandbox has been a part of and really started a few years back. It was a fascinating discussion. Hope you enjoy the show.
Welcome to the podcast, Sarah.
Sarah Biller
Peter, thanks for having me.
Peter Renton
My pleasure. So I like to get these things started by giving the listeners a little bit of background about yourself. Now, I know you’ve been doing the Fintech Sandbox for a while. It was ten years, I think I read recently that you crossed this year, but why don’t you go back before that? Tell us some of the highlights of what you’ve done in your career to date.
Sarah Biller
Yeah, Peter, I wish we had the whole time, but I know we don’t. I’ll be very succinct, but you know, like most entrepreneurs, most problem solvers today, it’s been a long and winding road. I started the early stages of my career as an investor in the telecom space, migrated there to be on the founding team of a couple of life sciences companies, one in data and informatics in a pre-clinical drug discovery area. And then the second, where we had acquired a piece of intellectual property where we synthesized that naturally occurring element into a compound. And today, it’s a drug. So it took me a little while to find my true love, which is fintech. I found it here in Boston, where I am today, really working at the intersection of a large asset manager and in the back and middle office of how asset management was run and was there during the credit crisis, which led me to understand that we had an opportunity to actually lever data and oftentimes non-traditional data sets, much like we were doing in pre-clinical drug discovery, to understand risk, to understand optionality. And so I left and started a company where we worked on predictive analytics for institutional bond investors, called CMX. And that’s where we picked up the story of data and the origins of Fintech Sandbox. But that’s my background. It’s been varied and fun.
Peter Renton
Interesting. So then, what was the driving force or the impetus to start Fintech Sandbox? What were you looking to do?
Sarah Biller
Yeah. I mean, I’ll go ahead and do this. I always want to make sure I do this correct call out. Fintech Sandbox was actually founded by a number of founders in the Boston area and really, our North Star was David Jegen at F-Prime Capital, a very astute fintech investor still yet today. And I think our shared observation as we each broke away from our institutions very early on, contemplating in the wake of the credit crisis, how technology could be applied to bridge some of the evident gaps we saw during that period. And the missing link was data. I personally was having a very tough time accessing data that I needed to actually look through the lens of a very crude NLP structure that we had built to understand the impact or the residual impact on credit risk, as I mentioned, for institutional investment grade bonds and then high yield bonds. Knowing that I was having challenges as we gathered together, there was a small group of us in Boston. We like to say we only had to buy one case of beer when we got together. Today there are almost 5,000 acknowledged fintech entrepreneurs in the Boston area, but at that time, there were just a handful of us. Our shared challenge was data. So we came together to think about how you could smooth the procurement process. How could you manage against the high cost? And how could we get it in our hands quicker? And with the robustness we needed to ensure that we didn’t stall out in what was leading up to a very promising cycle of innovation for financial services.
Peter Renton
So, how do you get started doing this? Because you’re starting this organization and you want to get access to data. How do you go about getting that access?
Sarah Biller
Yeah, that’s kind of the wild question about this whole exercise. As you can imagine, and it’s still true today, which is why Fintech Sandbox remains relevant a decade later. Most organizations like ours, really, its mission might’ve faded during that time period. But if you think about the procurement process in financial services – I also was at State Street in an innovation role, and I was surrounded by Bloomberg terminals, and we had one sales guy, right? So it’s easier. And it’s more effective for a sales professional in the financial markets data industry to sell once many seats, many terminals. And that was just not the case when you’re a startup. I just needed someone to flip my switch on for one access point. And so you get started by asking yourself, how can we demonstrate potential commercial opportunity on the other side for our data partners? If we’re just one, what do you do? And so we looked at Fintech Sandbox through the lens. didn’t know what to call it then, but that we could all come together and offer a vision for a future state where data providers were helping us access this data for free for a limited time, which is why the not-for-profit status became so important, we weren’t going to take anything away commercially. But that they would see the benefit of new use cases for their data, data sets, new entry points into the market, and eventually larger and larger customers. And oftentimes, in the case of Fintech Sandbox, the companies that come through our data access residency program are acquired by the data providers. And so this is another important stream of innovation happening underneath if you will, the larger influence of fintech innovation. So that’s how you start it, is you actually go and you help them achieve their own strategic objectives.
Peter Renton
Could you name some names? Who are some of the companies providing data for you today?
Sarah Billers
We have the best partners, as you might imagine. We have NASDAQ, CME Group, S & P Global, Benzinga. We have FactSet. So the traditional market data providers are now partners with us, and they’re dear, and they’re supportive. We also, as you might imagine, as fintech as a category has ceased to only serve the financial services industry, right? It’s no longer just a vertical. We see fintech embedding itself actually horizontally in other adjacent industries. We’ve had to come up with new data partners. The Associated Press, Dow Jones, the Weather Channel. So you see data partners really expanding to really reflect the way that the fintech industry is going.
Peter Renton
You might have a cohort of companies come in, and they might say, “Well, I really need this type of data.” And you go, “Well, actually we don’t have that type of data.” So, is that how you keep growing the different sources? Is it on a demand basis, or do you think this is a cool data set, let’s bring it in?
Sarah Biller
You know, Peter, it’s very astute of you. We are definitely pulled through by the innovators. We have a professional data executive in residence who has spent a lifetime, 20 years of his career, in the data industry, who will help go out and socialize the idea and develop these partnerships. But yes, if we see a startup come in, and we don’t have the data they need, although we have lots of data availability, we’ll go with them to find it. And that’s increasingly happening more and more.
Peter Renton
Would you explain the data access residency, what that is, and in the process, talk about what kinds of companies are going through that residency?
Sarah Biller
Yeah, Peter, thank you. So the data access residency program is the way that we describe our admissions process and ongoing support of fintech entrepreneurs seeking data through the Fintech Sandbox. We have actually a fairly structured interview process for the startups who come to us. We want to ensure that the startups that are seeking the data can maximize the opportunity to use what is an incredible accelerant to their success. We estimate that across the time they spend with us, which begins with a six-month period, they save about $600,000 in access to data. I would tell you, as an entrepreneur, that pales in comparison to the time that you have saved getting your hands on that data to do your POCs. But you go through an interview process, and we partner you with the data providers whose data sets are most relevant to you and you have six months of unlimited access to those data sets. We ask that our entrepreneurs be pretty much pre-revenue because if you have revenue, the belief is you can pay for the data. We want to make sure that we’ve also minimized the cost burden. And you actually have at that point access to the data providers. We have infrastructure partners as well. We work closely with AWS and others to again, just make sure that we’re the cornerstone institution that avoids the use of the stall points that we continue to advance the industry’s innovation. And we do it without commerce in mind, in our case, without commercial gain. And that’s what the data residency access program is. Access to data, no cost to the entrepreneur. We don’t take equity.
Peter Renton
Is this all done virtually these days, or is there an in-person component to this program?
Sarah Biller
We actually, I joke with the team, but this is true. We now serve fintech entrepreneurs on every continent, but Antarctica. So Peter, you and I have a chance to launch a new market. You’ll go with me. So by just virtue of our global nature, we do work virtually. We do have in-person and virtual demo days that allow the entrepreneurs to come together with our industry partners, with our data providers, with our very large community in support. And then you and I were joking earlier, also, Fintech Sandbox is the organizing partner behind Boston Fintech Week. And so there’s a mix, virtual and in-person, that allows us to, again, be very close partners to the entrepreneurs.
Peter Renton
I do want to talk about Boston Fintech Week, but before we get there, I’d love to get your sense of the types of companies that are coming through today versus when you started five years ago. What are the differences you’re seeing across different market niches and the sophistication of the founders? What can you tell us about how the companies you’re seeing are evolving?
Sarah Biller
Yeah, I think the first observation I would have is that a decade ago we were squarely suited to serve companies that were in the public equity and public debt spaces. That’s portfolio analytics, risk analytics, any sort of institutional or retail investing. As time has progressed, we have seen our ability to both attract and serve entrepreneurs in payments in lending, which is so critically important in the credit markets to have access to dynamic data sets. In the banking sector, how can we support the next generation of community and regional banking applications? And then as you kind of branch out, you think about PropTech. We have a number of real estate tech companies that are serving into the new categories like healthcare payments. And so we’ve seen that sort of, if you will, horizontal attraction of companies in the horizontal, but also fintech as it relates. In this initial cycle, if you weren’t building for the capital markets, you were generally building for the user experience and the interface, right? You were in the front office. So, we saw early on fintech entrepreneurs who were building again for the experience using our data sets. But now we’re seeing startups in the back and middle office as well. We see a lot of compliance, a lot of RegTech. So I think we’re kind of hitting, if you will, both the horizontal and the vertical of innovation in financial services.
Peter Renton
Interesting, interesting. So, can you share some of the names of companies the listeners might recognize that have been through your program?
Sarah Biller
If I could say one more thing, Peter, this won’t surprise you. And it’s almost every new startup that we’re accepting into the data access residency program, has AI-enabled
capability if not developing their own AI models. It’s profoundly changed. But I think some of the companies that I mentioned right off the bat, our capital markets influence in our earliest stages, Kensho, what went through the Fintech Sandbox, we know them so well because the Kensho moment on CNBC where they were providing real-time commentary using natural language processing — by the way, largest acquisition at its time of an AI-powered company — as they exited out of the data residency program they were acquired by S&P Global. Another favorite company of mine, just because I’m so passionate about inclusion and the ability for everyone to access credit, Petal came through our program. And right after that, they launched Prism, which is their own data company. And now we partner with Prism. So you have these really well-known companies themselves understanding the power in which data, when shared, amplifies their ability both to impact their customer base and the overall industry. Those are two good examples.
Peter Renton
Right, right. So I want to go back to the AI thing you just mentioned there, because I feel like, you know, AI demands massive amounts of data, right? So, are you finding that the volume of data that your cohorts now require is going up exponentially? What can you say about how AI is changing what you guys are doing?
Sarah Biller
Yeah, well, I think I would say just for all of your listeners, again, it goes without saying, but we have to underscore: AI and its application in financial services today is table stakes. And that itself opens up the aperture of risk as well as the increase in cost and demand for data. We are seeing an increase in the drawdown of data, the need for different types of data sets, just as the models themselves, the foundational models that are being applied across all industries and astutely in financial services are bringing in and crawling for new data. I think we have just hit like the earliest stages of what it means to be an innovator in fintech and have access to those larger data sets. And so our vision across the next decade, our next 10 years, it really makes us think more about where do we go for data? Where do we provide the infrastructure in which these models can be run? How can you put the data parameters on them? So a long-winded way to tell you that yes, data is ever more important and we’re getting larger draws of data in.
Peter Renton
So when I think about financial data and the hot topics beyond AI that are in fintech today, I think about open banking. We’re recording this in mid-to-late September. By the time we publish this, maybe we will have the rules from the CFPB on section 1033. You’ve been following open banking as well. What is your perspective on how more open access to data for a more level playing field is going to impact fintech in the long run?
Sarah Biller
Yeah, I think Peter, we see leadership already coming out on open banking in countries like Australia, a much smaller country, much different regulatory regime but still have figured out how to get their arms around open banking, the data exhaust that’s necessary to actually empower consumers to be part of their data, and the risk mitigants. I’m also a director in a community bank. And these are the challenges that we ask ourselves as we begin to recognize the compliance lift that’s required. I mentioned to you earlier I’m deeply passionate about and leading an initiative around digital identity. You open up a lot of risk for fraud, and otherwise, when you begin to share data like the CFPB has initially outlined in 1033. And so I think for fintech innovators everywhere, it is an aspirational moment in the United States, but it comes with our need to proceed in a way that allows us to manage the risk. The aperture of risk is quite large. And also be mindful that we don’t take steps backward because that data becomes available to us. The irony of all ironies, right? More data, in this case, may prove to create some unnecessary risks. And so we’re watching it closely in each of the initiatives that I’m involved in. And, of course, at Fintech Sandbox, we believe very powerfully in the power of data.
Peter Renton
Okay. So I want to talk about Boston Fintech Week now, because this is something that you started. It’s coming up shortly as we’re recording this. Tell us a little bit about what you’ve got in store this year.
Sarah Biller
Yeah, Peter, thank you for the opportunity to talk about it.
Peter Renton
Of course. I love events.
Sarah Biller
Of course, you know what it’s like to be on the back end of these things.
Peter Renton
Yes.
Sarah Biller
You know, it’s our seventh year, and we began Boston Fintech Week really by accident. We are not pros. And those who come to Boston Fintech Week year after year are reminded that what we have with intentionality set up is a community-driven event. It’s very collegial. Last year, people came from 27 states and from around the world to Boston, about 2,500 people. And this year, what we’ve really centered on through each of our community-organized events and then the main stage events, which will happen at the Federal Reserve Bank of Boston, is that the pace of change in fintech has accelerated. We oftentimes don’t believe that it could get any faster.
Peter Renton
Right, no, it’s going to.
Sarah Biller
It’s going to, and it is. And so, what does that really mean for the future? What does it mean if you are in insurance and you are dynamically pricing risk and with your customer base. We ask ourselves that same question about the capital markets and what it means when you have AI powering decisions as opposed to humans in the middle. We are talking about why there’s such optimism for the future as it relates to digital stores of value. We’ll touch on crypto. We even have the regulators coming and talking about their vision about how they themselves will be partners or envision themselves as being partners at this moment as opposed to pushing the pause button. So, our theme is Fintech at Full Throttle. I want to do a little Formula One car with Fintech Sandbox. Nobody took me up on it, but this is the year that we have to reset the way that we think about this cycle of innovation. And the undercurrent of that, the basis, of course, is that data matters more than ever. And so we’re excited. Peter, we’d love to have you join us. We need you.
Peter Renton
Happy to do that at some point for sure. So then, I imagine a lot of your alumni come to Boston Fintech Week to reconnect with you and others, right?
Sarah Biller
Peter, they do. And I should note, again, in the spirit of the way that we’ve built Boston Fintech Week, we do invite our startups to come for free. I mean, it’s a community-driven event. Not just our alumni, but we invite all startups to come and really be in this environment. We have a very heavy focus on networking and interaction, discussion, and debate. We seek out speakers in particular who are not on the traditional conference circuit. A good example is last year, we had the Assistant Secretary-General from NATO come and talk about the criticality of financial services as they looked at Eastern Europe and what it would mean to have a first line of defense and encourage innovation. So you’re going to see some non-traditional speakers take the stage at Boston Fintech Week this year, just like that, to challenge us to be better, to pull us into the future, to really think about the opportunity that exists.
Peter Renton
Can you also touch on your innovation forum? What is that exactly?
Sarah Biller
For the innovation forum, we bring everyone back together. We do spread people out over the city of Boston. We want them to be in the offices of the organizations that are investing in fintech, who are incorporating into their ideas. So we start Boston Fintech Week where people are, in the financial district, but they’re going to the offices of Mass Mutual, where they might go to Babson, the number one university just named in the United States for entrepreneurship for some conversation. And then what we’ll do in the middle of the week is bring that whole group together for the Innovation Forum. And that’s where we’ll bring our keynote speakers on stage for rapid discussions. And that’s where you’ll see some of the most thoughtful next generation thinking coming out. We have individuals from Circle. We have individuals from Fidelity. But then, of course, the leading startups, and that’s what you’ll see at that those two days of the Innovation Forum is a very condensed, rapid pace discussion that goes through each of the categories that we care about in fintech innovation.
Peter Renton
You’re a nonprofit, as you said, I don’t think you started as a nonprofit, right? But you became a nonprofit. It’s not an easy thing to become a nonprofit; what was behind that?
Sarah Biller
We launched without the corporate organizational approval to be a not-for-profit, but we always knew that’s what we intended. That was the way that we were going to build Fintech Sandbox. And so you’re right, we spent two and a half years getting the not-for-profit status that always worked, in this case, to the benefit of the entrepreneur community. And it’s very hard to explain to someone in financial services why you don’t want to make money. That’s a real question here. And we still get questions like that. Why are you not hedging the opportunity? We see some of the best startups in the world, and I mean that humbly, come through the data access residency program. The most aware entrepreneurs, those who are driven to use data to push forward. And when you see those early, it is right for our industry partners who donate to our work and who sponsor us to say, why aren’t you making money off of this? But the not-for-profit angle lets us remain true to our vision of being a partner.
Peter Renton
Yeah. And you’re not taking equity, so you have a pure helping mission.
Sarah Biller
You do. And you’d make different decisions. I invest in my day job. And so you’d make different decisions on who you’d accept.
Peter Renton
Right.
Sarah Biller
It can’t work that way. There are too many brilliant opportunities and entrepreneurs for us to not figure out how to advance them in a way. If data is their stumbling block.
Peter Renton
Yeah, okay. Are you funded solely through corporate donations? Is that the primary source?
Sarah Biller
We have tremendous industry partners who, like our data providers, see themselves as having a view into the future, being able to see around corners. Through their support of Fintech Sandbox, we work very hard to make sure, frankly, that our entrepreneurs get in front of these industry partners and vice versa. Our industry partners ask to see the entrepreneurs because they know there’s support there. But yes, that’s how we are funded.
Peter Renton
So, last question, you did touch on it, but I’d like you to tease it out a little bit more. You said you just crossed ten years, and things seem to be going strong for Fintech Sandbox. How do you feel like the next ten years are going to unfold? And is there any grand plan for where you want to be in 20 years?
Sarah Biller
We just completed some thinking around our strategic planning for the future for the next ten years because it won’t surprise you, Peter; when you’ve been at it a decade, you do have to take a step back and be like, are we still relevant? When we started a decade ago, I can tell you in the first person the criticality of the role of Fintech Sandbox in being an institution that delivered something that was not readily available to the entrepreneur community. Today, I can go online and pull down data sets. I can pull down technology and open source that took my team 18 months and $6 million to build. Do you know what I mean? Like we’re in a completely different operating environment, but upon reflection, David and I came back and said we are extraordinarily relevant today because of the demand on data, because of the criticality of where the industry is heading. And as we rapidly digitize at all levels, innovation is again dependent on the ability to have measurable ways to demonstrate efficacy in its products. One of my favorite startups that we work with at Fintech Sandbox actually helps art collectors. It helps them assess, value, and make better decisions as they look at art, not just through passion but through the investment lens. You know, it behooves us to figure out how, in the next decade, that we hit all angles of society with fintech, whether it’s enabling more access to education, it’s enabling fintech to play a role in the way that renewable energy is invested in, is priced. And so I think we see that in this world that’s quite dynamic and sometimes aggravating and confusing, that Fintech Sandbox has a whole new life ahead of it in the world of data.
Peter Renton
Right. Well, that’s a good place to leave it. Sarah, best of luck to you. It is important work you’re doing, great work that you’ve done over the last decade. And thanks so much for coming on the show today.
Sarah Biller
Peter, thank you for all your thoughtfulness. Appreciate you.
Peter Renton
Well, I hope you enjoyed the show. Thank you so much for listening. Please go ahead and give the show a review on the podcast platform of your choice, and go tell your friends and colleagues about it. Anyway, on that note, I will sign off. I very much appreciate you listening, and I’ll catch you next time. Bye.