Dom is an entrepreneur and technologist who recently launched Up (up.com.au), a next-generation Australian digital bank delivering super powered banking. Up is a clever way to organise your money and simplify your life, giving you the freedom to do the things you love. Dom’s been involved in software, web and mobile development for over 20 years from start-ups to global enterprises in Australia, the UK, the USA and throughout Asia.
Tier One People CEO, Dexter Cousins spent the afternoon at UP Bank HQ in May 2019. The interview with Dom is the longest one we have ever published but filled with amazing insights and strategies. It is almost like a playbook for building a digital bank. Enjoy!
How Did Up Start?
The idea for Up was born out of frustration. We’re essentially a team of designers and engineers, so we approach problem solving with software solutions. I was also a software developer years ago and, as an entrepreneur, I generally try to solve everyday problems for me personally, for my family, for my mates, etc. Sometimes the solutions turn into businesses. The story of Up goes back about 5 years. Actually, probably even before that. My business partner, Grant Thomas and I run a software company called Ferocia. About 8 years ago we were looking for our next business opportunity and were thinking about raising some capital. We met a few people, and one day we got talking to the CEO of Bendigo Bank at the time. He asked if we could apply our technology expertise to banking, and we thought “why not?”.
They were looking for a new mobile banking platform, so we did a proof of concept which went really well, and then we ended up building the mobile and desktop banking platform that Bendigo customers use today. That’s how the relationship with Bendigo got started.
The platform was actually a huge success. We won multiple awards, pretty much #1 or #2 mobile banking platform in Australia every year for the last 4 years. But nobody knew it was built by Ferocia, people just assumed Bendigo built the platform themselves. The success of the Bendigo mobile banking platform led to work with one of the four major Australian banks.
Why Go With Bendigo For UP? Why Not A Big 4 Bank?
We worked on a project in Asia with a Big 4 Bank, to build a digital bank across 10 countries. From the time we first met them, to the time we finished up on the project we spent about two and a half years and it never got into a customers’ hands.
We worked with people from San Francisco, Hong Kong and Singapore, and spent a lot of time traveling. Then a new CEO arrived at the bank, and the strategy changed so their Asian business was dialled back, and the digital banking project was scrapped. I remember it was a Friday when we found out, because we had an important meeting with the banks head of International Business the following Monday, but the whole thing was shut down and the meeting never happened.
It’s a shame because Ferocia had dedicated about two and a half years of time, people, and energy into it. It could have been one of the earliest digital banks in the world, which would have been awesome.
What happened next was a reshuffle of the executives we worked with on the Asian digital bank. Some of them moved to the other Big Four banks. One of them, who was originally the sponsor of the project, called us up and asked if we wanted to work with them on a new digital bank for Australia.
So, Ferocia spent about 18 months working on that project in Sydney. Again, the product never got into customer’s hands, which was pretty disappointing. They decided to fund their internal core systems upgrade instead.
By this stage we’d spent about four years or so building digital banking technology and had developed a deep understanding of the banking sector, particularly in Australia, along the way but we never got to see any of our products in customers hands. As you can imagine, being a team of over achievers, we were deeply frustrated.
Building A Digital Bank Isn’t Easy.
It seems to me like Australians generally have an aptitude for innovation, coupled with a deep-seeded frustration with banking. I think that’s why the first digital bank in the world, Simple, was started by an Aussie (Joshua Reich). Back in those days, another Aussie Brett King was also working on a digital bank called Moven (also in the US).
We were pretty inspired by what Josh had built, and a little disappointed Simple sold out to BBVA (a large Spanish bank). We actually met with Shamir (one of the Simple co-founders) and Brett King in Boston around mid-2014 and chatted with them about their experiences. At the time I remember thinking we should just build our own digital bank here in Australia.
Eventually we said, “Stuff it. Let’s do it.” There was just a few small problems like raising $100+ million, getting a core banking system up-and-running, and having a banking license! Not impossible, but pretty unlikely. Back in 2016, the Restricted Authorised Deposit-taking Institution banking licenses (RADIs) did not yet exist.
So we decided to go down a different path, and try to find the right relationship with an existing bank. Originally we’d thought that one of the majors might be interested, but we were pretty jaded by our previous experiences working with them. Bendigo bank was an easier conversation, since we had worked with them for more than 5 years and developed a lot of trust between us.
We learnt pretty quickly that you can’t just borrow a banking license! We spent about 12 months putting the legal structures and contracts in place, and in October 2017 Up went into production, as Australia’s first cloud hosted retail bank, on the Google Cloud Platform.
We ran Up for a year, initially trialling the platform with Ferocia staff, then we added Bendigo staff. Next, we extended the trial to family and friends, and then a small beta testing group. We ran a private invitation-only beta, and then a public beta with about 2,500 people in total. During that year we worked closely with Bendigo (and other stakeholders) to address regulation, compliance, risk, security, cloud hosting, etc before the official public launch of Up in October 2018.
How Successful Has Up Been Since Launching?
By February 2019 Up announced we had over 50,000 accounts and over 30,000 customers (some people open multiple accounts). At the time we were growing at between 500-1000 new customers per day.
We had anticipated decent traction, being the first to market and having the power of Bendigo behind Up, but the growth was still pretty amazing. It sort of went up from there…by May, just 8 months from public launch, we announced over 100,000 customers and were signing up over 1,000 customers per day.
It has been a pretty amazing ride so far. Up was top 10 in the App Store and Google Play store for finance apps in Australia for around 6 months. In early 2019 we did some benchmarking against other Australia’s banks, using publicly available information, and the data indicated Up was Australia’s second fastest growing bank at the time, behind CBA.
Which is pretty amazing, and meant we had overtaken the likes of ANZ, NAB, Westpac, ING, and Macquarie in terms of new customer acquisitions. This is around the time of year when ING announced record numbers in customer acquisitions, something like a 47% increase over the prior year.
So, you could say it’s going ok. Very well in fact!
What Is Your Secret To Such Rapid Growth?
That’s the secret sauce everyone is looking for. How do you get rapid growth and brand recognition, without spending a truck load on marketing, advertising, and promotion?
The broad growth strategy for new market entrants in banking has been proven with other digital banks around the world. Word of mouth, a strong referral network, and happy customers are the key channels for growth. Excellence in everything we do should not be underestimated.
Up delivers an awesome customer experience (both digital and physical), has great banking products in marketing that are competitively priced, we’re moving very fast with excellent technology and security, we provide almost instant in-app customer support with excellent customer service, and we have great branding and marketing. It’s the combination of all these things that makes Up a success. Not just one thing.
The Up Playbook – Growth Hacking For Digital Banks.
There’s been minimal paid digital promotion on Facebook, Twitter, Instagram, Snapchat, Google and so on. Social media is a very successful channel for us. It’s not so much that we are just spending money on advertising to potential customers.
That simply doesn’t work, especially for banks. We use social to communicate with customers, and then when they see a recommendation from one of their friends, or some advertising we’re running, it hits home. In our experience, that combination is much better than advertising alone.
Twitter is a fantastic tool to communicate with our customers. Not just me, but also our Head of Product, Head of Technology, Head of Design and the rest of the team are active on Twitter and other social media platforms.
But we certainly use it to respond to our customers and engage with them almost instantly every day. Having direct conversations with customers is amazing. It’s an education in itself, and worth more than any survey or focus group could ever hope to deliver. A tight feedback loop with customers is critical for any successful technology company.
With Facebook, we did spend some money, and we were able to acquire customers. You wouldn’t think a bank could acquire customers through Facebook, Snapchat, or Instagram. Well. Up does. It’s amazing that someone can get a message from their friend or see an Up ad on Facebook, then download the Up app and be set up in less than 3 minutes.
Sure, it sounds surreal, but it’s happening every day, hundreds and hundreds of times. We ran some pretty basic digital promotions, and combined with the high level of engagement and excellent design it kind of created a viral effect.
It‘s also been fascinating to watch people engage differently on each social media channel. On Facebook, for example, tens of thousands of people write about Up to their mates. They simply tag their friends in a post, and it’s like an endorsement that goes viral. With social media, we’ve been able to acquire a thousand customers a day, through a single social channel without doing anything much, simply because of the strength of the Up brand.
People love it. How many people in the world wear t-shirts, hats, badges, stickers, and merchandise for their bank? You don’t really see that too often in banking. But we get Up customers asking us every single day for merch through Instagram, Twitter, and Facebook.
How To Nail Experiential Marketing.
Experiential promotion and marketing has worked really well for us too. We’ll do industry events of course, like the Fintech Summit and Intersekt, where we might do a panel or a keynote or whatever. But we’ve actually had the most success with specific niche events.
For example, we’ve participated in university events, the Australian Graphic Design Association industry awards, and Pause (business and design) Festival in Melbourne. Probably our most successful event was PAX, which is a computer gaming event where they have 100,000 or so people attend over 3 days. We missed Sibos, because we were too busy doing PAX!
We decided rather than attend another industry event like Money 2020 or Sibos we would try a gaming event. PAX is actually the world’s biggest gaming conference. People dress up as their favourite video game character and play video games.
You wouldn’t think a bank would be there, but we were signing new accounts on the spot, giving away t-shirts, hats, and other merchandise. One of the things at PAX that really drove new customer sign-ups was challenging people to a game of Mario Kart!
The Up dev team built software to track each Mario Kart game and display the results on a real-time leader board. We love it, and obviously so do the people attending PAX. They could compete against the Up development team, and also each other. It was a big hit. We even had the Mario Kart world champion come and take part in the challenge. Two of our developers actually snuck in a couple of wins, but he beat them overall of course.
It was a fantastic event just to be part of, and winning new customers for Up was a bonus. Within a few days some of the those 100,000 passionate gamers not only knew about Up, they had played a game of Mario Kart with a co-founder, or our Head of Design, our Head of Technology, or one of the other developers from our team who built Up and Kartalytics. They became advocates, and recommended Up to their friends.
In my view, everyone at PAX who met us now thinks of Up as a totally different digital bank that lives in their world, in their community, not just a brand sponsoring an event.
We met one guy at PAX who used Up’s round-up feature to save up for his PAX ticket. It’s such a beautiful story. Here was someone passionate about gaming, using Up to realise their dream of attending the world’s biggest gaming event, and then meeting the Up team at PAX and challenging us to a game of Mario Kart while he was there.
It was kind of surreal, and we were so proud to have helped him, even in this small way.
Tell Me More About The Team At Up.
When we launched Up we had just 29 people working full-time at Ferocia.
It’s always been a goal of ours to remain small and agile. Up is designed and developed by Ferocia, which is a nimble team of like-minded people headquartered in South Melbourne. We’re more like a family than a team. We set out to be the first in the world to launch a fully licensed and functional digital bank with less than 30 people. It’s amazing what the team has achieved, and of course we’ve had a great deal of help from our mates at Bendigo. We simply couldn’t have done it without them.
Compared to other overseas digital banks (like Monzo, Revolut, N26, Starling, and Simple for example), we’ve managed to remain quite small, while these companies all have hundreds of staff. Up was built on the hypothesis we could leverage technology and automation to deliver a digital bank with less than 30 people.
Of course, we can’t remain less than 30 people forever, but if we could, that would be awesome. Right now it’s about 10 months since Up’s public launch and we have added 6 people to our customer support crew and a few more engineers, so we’re now 37 people at Ferocia. Not too shabby. Especially considering we’re still building Australia’s fifth largest banking platform, and Australia’s first and largest mobile-only digital bank at the same time!
How Do You Describe The Culture Of Up?
People really are the secret to the success of Up. The culture, the family that we’ve created, the way that we bounce off each other, the way we work together, the way we collaborate and help each other, it’s the reason for the success of Up. And that extends to the relationship with Bendigo. They’ve been amazing. Just think about it for a minute. Bendigo is the fifth largest bank in Australia and they had the bravery to back Ferocia, to partner with us to deliver Up.
It’s a pretty incredible move for a major Australian bank to collaborate with a fintech and actually make it work. Nearly 2 years later, since we started the Up journey together, we’re still the only neobank that’s actually launched in Australia with licensed banking products and we now have over 100,000 customers. Turns out the collaboration was a great way to kick things off for Up, and a much better way to get to market quickly, compared to getting our own banking license.
How Do You Attract The Right Talent?
I think success in terms of our people can be distilled down to culture and recruitment. The way we hire people and the calibre of people we hire is key. We place a huge emphasis on skills within the team. Everybody is multi-talented. No-one is just doing a single specific role (like is often the case in larger teams).
We look for people with an inherent ability to learn on the job, and we aim to have several people who can perform each role. So when people are sick, or on leave, or when we lose a staff member, we can still deliver. This is mostly an engineering outcome (since we are mostly engineers) but it needs to apply equally across marketing, risk, security, compliance, technology, operations, cloud hosting, etc. for the team to remain small and succeed.
Every outcome we need to deliver for our customers should be able to be met by not just one or two or three people, but by as many people in the team as possible. I’m not saying that’s easy to achieve, but it’s certainly a hallmark of high performance teams.
Most of the team currently has one degree of separation. Generally speaking, most everyone that works here has worked with at least one team member before. We’ve got 10 people who’ve worked at Ferocia for more than five years, and five people who’ve worked with us at Ferocia and in other companies beforehand for more than 10 years.
Then there’s also the people we’ve worked with in the past who keep in touch. One person recently came back to work with us. He left our team almost 10 years ago to join Square in San Francisco. He’s been working there since then, and worked his way up to be Director of Payments Engineering . He recently moved back to Australia and came back on-board with our team (now at Ferocia obviously), which is awesome.
I’d like to think this speaks to the culture we’ve developed at Ferocia (and for Up more broadly), and says a lot about the calibre of the engineering team for someone like him to want to come back to Melbourne and work with us all again.
You Won “Best Bank Collaboration” At This Year’s Finnies. What Do You Think Is The Best Approach To Building A Digital Bank?
Up is delivered through a collaboration between our technology company (Ferocia) and a licensed Australian bank (Bendigo and Adelaide Bank). Working with an existing bank to develop new financial products is not generally an easy process, but it has worked a few times before.
For example, when we looked at other digital banks like Simple in the US, they launched quickly through a partnership with BankCorp. But when BBVA bought Simple they spent the next couple of years transitioning core banking systems and didn’t really appear (from the outside) to be able to innovate or create new product.
Monzo also partnered with Wirecard when they first started, then when they received their own banking license they built their own core banking system. This seems like a smart move (again from the outside looking in). Certainly they were able to exert more control over system reliability, capability and upgrades by bringing the core system in-house. This is quite a different strategy than buying or licensing a core banking system. Building one in-house affords many advantages, and also many challenges.
What would you do differently next time around?
We believe Up has a strategic and competitive advantage by not having to build our own core banking system in the first instance, and certainly we were able to get to market quicker than anyone else in Australia has been able to, due to the collaboration between Bendigo and Ferocia.
That said, if we had our time again, we’d still partner with Bendigo for access to the licensed financial products, but we might want to build our own core banking system too. And that’s purely because of the amount of effort involved in building product in a legacy core banking system. In our view, a core banking system should essentially be a database of debits and credits. If you treat it in that way, innovation is possible outside of the core system, and the core system can be used solely as a regulatory ledger.
We also move a lot faster than anyone (other than us) thought was possible. We currently average more than 5 customer deployments (software updates) per day. That’s incredible for any technology company, and even more so for a bank. Nonetheless, I think we would still seriously consider building a core banking system if we had to start all over again.
Is Your Model Similar To That Of Apple And Goldman Sachs?
People have commented that the Apple Card app has similar functionality to Up. I find it quite flattering that the greatest technology and innovation company ever is following in our footsteps! I say that a little tongue in cheek. We obviously work closely with Apple here in Australia and have done a lot of first-mover stuff with them here, including instant in-app issuance of Apple Pay, proximity set up for Apple Watch, push notifications with merchant identification, Siri voice control, and more.
I would say the model Apple has chosen, in partnering with Goldman Sachs, is similar to the Up model where Ferocia (a tech company) partnered with Bendigo (a bank) to deliver Up. Apple is certainly a technology company delivering a superior customer experience, and from what I can tell they seem pretty happy leaving the utility banking stuff to Goldmans.
It’s all about the customer experience and excellence in the delivery of customer service, and we all know that Apple leads the world in doing just that. Even if the interest rate is not attractive (which it’s not), it doesn’t really matter, it’s going to be the easiest card in the world to use and that’s what matters.
Neobanks all over the world are selling financial services in pretty much the same way every bank has done for over 100 years. Create a financial product, price it, then sell it to consumers through “channels” (digital or otherwise). What consumers really want, in our view, are products to power their lives. They don’t want to be sold more banking products, that’s the last thing anyone wants.
Let’s say you want to buy a car, for example. Do customers care if there’s a savings product, an insurance product, a loan product, and a transaction account all powering that service? Or do they care about the experience? Apple will totally nail the customer experience.
The interest rate on the Apple Card may be high, but customers might not even pay interest, if the service helps them pay off the debt within the interest free period. Anyone in banking who thinks that Apple Card won’t make an impact because it’s “just a credit card geared to millennials” is perhaps naive and missing the point.
The experience Apple delivers is the real threat to the way people bank, which in essence is banking reimagined. That will most certainly have an impact on the banking sector and consumer expectations from banks, particularly the quality of their digital experience.
Do You Class Up As A Bank Or A Technology Firm?
From day one Up has positioned itself as delivering technology-led banking versus banking-led technology. I don’t know whether there will be other banks around the world positioning themselves as a technology company. But that’s what Ferocia is. It’s what we do, and it’s what we’re good at.
For example, prior to launch we set ourselves the goal of five software updates (deployments) for customers per day. In November last year we hit our peak of 10 times per day and we’re currently averaging 6 times per day.
Our entire cloud-hosted banking platform can be deployed in 45 seconds. A full regression test of every single device, every single operating system, every single-use case in the entire application is completed within 26 minutes.
We can do that twice in an hour, which is around 50 times every day. Of the 50 possible customer deployments we can do in a day, we currently get five or more of them out to customers who then get an iterative, improving Up app every single day. I’m not certain of many other tech companies in any industry in the world that can talk about that level of iteration and innovation.
Some of our other technology innovations and security are second to none. We pride ourselves on outage-less deploys so our customers experience less down-time, we have a completely different security model to most other banks we know where we encrypt every transmission end-to-end and have done away with the need for a traditional username and password. Up simply works, is secure and uses on-device capabilities such as biometrics and the secure enclave to ensure customer data is protected.
Transparency Is Key To Customer Experience.
We communicate openly and transparently with our customers about what we’re building and when we’ll deliver it. In fact, the Up roadmap is available publicly. We call it the “Tree of Up” and it helps our customers to self-serve when it comes to asking us when we’ll deliver new features, and it also holds us accountable for delivery.
Being customer-centric and design-led are also hallmarks of the great technology companies disrupting other industries (such as Skype in telecoms, Netflix in entertainment, Uber in taxis, Amazon in retail, and AirBnB in hotels, for example). We don’t see any reason why banking would be any different.
A technology-led approach has significant advantages over traditional banking-led incumbents and ex-bankers now running neobanks. The thinking and approach to solving problems and delivering excellence in digital products and services to customers is completely different. Being technology-led is a way of thinking, and it means a whole deal more than simply excellence in engineering, that is just one component (albeit an essential one).
What Plans Are There For Up Over The Next 12 Months?
Right now Up has focused on spending and savings products. We wanted to get to market relatively quickly and deliver the highest quality products in Australia. We’ve pretty much done that, and now we are looking at some product breadth and additional partnership announcements coming soon. The most popular requests from customers are mostly “table stakes” type of features (things like BPay and joint accounts).
You can see all these kinds of features on our public roadmap.
Because Up operates under a full banking license it’s possible for us to continually expand and improve Up’s product breadth over time. Eventually we’d also like for Up to offer other financial products customers want and use (like credit cards, mortgages, insurance, superannuation, share trading, and more). But the way we offer those type of services is likely to be different, more innovative and better than what is currently available.
The products announced by the likes of major international players like Transferwise, Square, Apple, and others, are similar in nature to the digital products we’ve had in development at Up for some time now. But we’d expect to launch products in Australia before they do.
We’ve experienced rapid growth in terms of customer numbers, deposits and transaction volumes, but at the same time we’ve also been developing our product roadmap. We get hundreds of inquiries from customers every day with product ideas through social media, and through our in-app support channel (Talk to Us). Many of these feature requests find their way onto the Tree of Up.
Speaking of the Tree of Up, we think it’s quite unique, certainly in banking, and even in technology circles more broadly. Pretty much the next 6 to 12 months of Up’s product development is publicly available. Customers can click on the different branches and see what we’re currently working on. The roadmap is our best way of communicating to customers who we are, what it is we do, and why.
We believe doing is the best way we can delight our customers, rather than talking about what we’re gonna do. Consistent delivery demonstrates our commitment to our customers, and it hasn’t gone unnoticed. Simply because we’re delivering improvements every single day, customers are always tweeting, posting. instagramming, and otherwise sharing new Up features – which is awesome and helps to maintain momentum and expand awareness. In effect, engagement is part of our product.
We also have a bunch of new innovations we like to keep rolling out. As an example, we recently launched our unique “Pull-to-Save” feature. Some people have said it’s like the gamification of saving for a whole new generation of Australians, which has been nailed by that one feature. Which is an amazing compliment. Internally, there were originally some reservations about launching the “Pull-to-Save” feature.
How would customers react? Should we be focussed on delivering traditional products, like BPay and joint accounts, credit cards, and home loans? Fair question. But for the team at Up, being able to change the decision-making and savings habits of an entire generation is a loftier goal.