After Vice and Big Screen Fame, What’s Eddy Moretti Doing in Banking?
The economic backwater of southern Italy and its stricken banking industry is the last place you’d expect to find a hipster bro who transformed news media from his Brooklyn lair and just premiered a movie at the Sundance Film Festival.
But that’s exactly where Eddy Moretti is now trying to work his magic.
The 47-year-old, with his signature salt-and-pepper beard, designer glasses and pork pie hat, is investing in a start-up run by his cousin Paolo Spadafora in Calabria near Italy’s southernmost tip. Called Epiphany, the company makes software that it says will help banks survive new rules designed to give clients more control over their personal information.
This is an unexpected career twist for a man credited with establishing Vice Media’s reputation for edgy, millennial-targeted video journalism and whose brand-new production company just sold distribution rights to its first picture—“The Report,” starring Annette Bening and Adam Driver—to Amazon.com for a reported $14 million.
But Moretti, born in Toronto to Italian immigrants, said he couldn’t resist the challenge after he was struck by the talent of Spadafora and a group of coders in the small Calabrian town of Cosenza during a visit to his ancestral home in 2017. Spadafora, now Epiphany’s chief executive officer, spent his career creating bespoke software for European financial services bodies, including Russia’s central bank.
“Let’s make a company around you people,” Moretti recalls thinking. “I created Epiphany because I realized this is a great country with the highest standards in education and yet a very low cost of living, especially in Southern Italy, for a software company.”
The timing was auspicious. Only months later in January 2018, the European Union introduced rules that force banks to comply when their customers want personal financial information to be shared digitally with third parties—even if that party is, say, a rival lender offering better mortgage rates.
The so-called second payment services directive (PSD2) suddenly gave tech-savvy companies the chance to pounce on an industry that had long guarded its turf. It also evoked fear among small and medium-sized banks that growing competition would hurt their businesses, something Epiphany hopes to leverage.
In the media world, Moretti’s risk-taking paid off. While he was creative director at Vice Media, he gained acclaim for gonzo bravado journalism like the 2007 feature-length documentary “Heavy Metal in Baghdad,” where he and filmmaker Suroosh Avi went to the Iraqi capital in the midst of the insurgency to find out what happened to a local heavy metal band that Vice had profiled in 2003.
Shaking up a banking system that in many ways is unchanged since the time of Medicis in the 15th Century poses a different set of challenges. Italy is teeming with banks that serve local communities and towns and tend to have relationships with customers going back decades, if not longer.
Epiphany’s software, called Dedalo, acts as bridge to allow lenders to share client data while also retaining the power to monitor the requests to prevent fraud and money laundering. Epiphany partnered with International Business Machines Corp. to create it and has “contracts in process” with several lenders, including Banca Popolare di Sondrio and Banca Carige, and service providers.
“That’s the first wave,” said Moretti.
Moretti admits he didn’t know much about banking when he first spoke to Spadafora. So he ran the idea past his pal Dylan Ratigan, a former business journalist and television news anchor turned investor (full disclosure: Ratigan once worked at Bloomberg News). Ratigan not only told Moretti he liked the plan, he made a minority investment in the company.
“We’re not here thinking, ‘Oh, we can save all the Italian banks with this magic software,’” Ratigan said in an interview. “But what we’re saying is as the world changes, some number of those banks will survive and Epiphany will help them as much as possible.”
Italy is more heavily banked than most European nations, with over 350 lenders serving the country’s 62 million people, according to a report published last year by Italian merchant bank Mediobanca. The industry also has a reputation for opacity and high fees, said Carlo Alberto Carnevale Maffe, a professor of business strategy at Milan’s Bocconi University.
There was speculation that the increased cost of complying with PSD2, as well as the retail competition it would presumably spark, might lead smaller banks to consolidate, according to Tom Kinmonth, an Amsterdam-based strategist at ABN Amro NV.
So far, the worst fears of Italian banks about a wave of mergers and closures have proved unfounded, said Wolfram Mrowetz, head of Italian brokerage firm Alisei SIM.
“Every time a new banking rule is proposed it is expected to produce a ‘big bang’ effect but in reality changes are extremely slow in the Italian banking industry because it is the most conservative sector,” he said.
That may make Epiphany a harder sell than Moretti and Spadafora had anticipated, especially with tech start-ups like Ndgit and Saltedge targeting exactly the same tier of banks. But Moretti doesn’t seem concerned.
“We’re signing customers,” he said. “It’s fun.”
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