Dexter Cousins speaks with Marie Steinthaler, VP Asia with Truelayer about Australia’s 1st July launch of CDR and open banking.
Marie can you tell us more about TrueLayer?
TrueLayer is a platform that provides global access to open banking. And what I mean by that is essentially a way for our clients to securely access their end users bank data, and payment capability through one normalised platform. And we do that by going out and finding the best banking API’s out there. We then normalise across many different countries, use cases, API protocols, you name it, and then package it up in a platform that our clients can build on top of and innovate on top of by using their customers banking data or payment rails.
For those that don’t know what open banking is, Could you give a brief overview for an everyday customer?
I would define open banking as a manifestation of the belief that the data that you create when you bank is yours. So the information that you create, every time you pay for something, you send a payment, you use your banking services, that is your data, and you should be able to use that data to your benefit. Whether that be better pricing, better access to products, verify certain things about your person that may otherwise be hard to verify. And to just make it very easy for you to be in control of how that data gets shared and how it gets used.
The empowerment of the customer is very much at the heart of open banking. Beyond that, at an industry level, it’s about making the collaboration between financial institutions and fintechs more open and more focused around the customer. That’s at the heart of it. And TrueLayer was born to enable such a collaboration.
You recently partnered with Revolut. How’s that going?
Yeah, going great. And we love working with Revolut and other internationally minded high growth, tech forward businesses. I like to call them an execution machine. They’re so good at putting new products out there and listening to their customers. They make it very easy for customers to adopt new things like open banking. And we’re excited about some of the new things they’re working on as well.
You are about to launch in Australia? What is it about Australia that’s attractive to TrueLayer?
We are building a global platform. So while we started in the UK and expanded to Europe, when we looked at the rest of the world, it was really a case of looking for markets where a few things are in place. One is a growing and well supported FinTech ecosystem. The second is regulators who are conducive and supportive of open banking, and want it to happen quickly. The third is our existing customers and if they want to expand to a region.
Australia scores well for TrueLayer on all three criteria. And, as I’m sure you know, FinTech Australia, and organisations like that are testament to the growing ecosystem in the market. There’s also a huge amount of room for disruption. When you when you look at how profitable Australia is, as a market for financial services, as the saying goes your margin is my opportunity.
Australia has had some very well documented trust issues with banks and a royal commission. What have you learned from open banking in the UK that you think Australia can action to really help push ahead?
One narrative I’ve heard in a lot of conversations with potential clients or people in the Australian ecosystem is sometimes a bit of impatience or disappointment with the speed of the development in Australia.
If the CDR API is launched in July, it’s still going to be faster than PSD2 was launched in the UK and in Europe. Fundamentally, I think for such a complex industry spanning project, Australia is doing a decent job at speed.
Obviously, that’s no reason to slow down and I think we all want it to happen. ASAP.
I would focus on thinking about use cases and not being afraid to give use cases a try. The big questions and the most important aspect of CDR is Will people actually use this? Are they going to be willing to share their data?
When CDR launches I expect to see a rolling start. I don’t expect a switch to flick on July 1st and CDR will be all functional and ready. But the success of CDR does require some early adopters, innovators and thought leaders to take the plunge and use the infrastructure. It’s the only way to improve, because it’s not going to get better if no one uses it.
That is a risk. Luckily in the UK, we work with companies who were willing to take that leap with us. I’m pretty optimistic that there will be companies in Australia who want to do this, don’t want to give anyone an excuse to shut CDR down. It’s up to all of us as an industry to say let’s make this useful. And let’s make it happen.
Revolut partnered exclusively with Tier One People to conduct the search and appointment of Matt Baxby as Australia Country CEO. Matt brings the perfect blend of Banking expertise and entrepreneurship, having worked under Sir Richard Branson at Virgin. We’ve known Matt since 2010 when he relaunched the Virgin Money Australia business, helping him build out the team back then.
When we first began talking to Revolut in May 2019, the business had 4 million accounts and 700 employees. Today the business has 10 million accounts and 2000 employees, almost trebling in size during the search and onboarding process!
We would like to thank the team at Revolut for being an absolute dream to partner with. The Tier One People team were remotely embedded within the Revolut recruitment team based in Singapore throughout the whole process.
The transparency, collaboration and open communication channels made what could have easily been a highly complex search process run very smoothly.
The team at Tier One People wish Matt and Revolut every success and look forward to continuing the partnership.
Exclusive Interview. Dexter Cousins chats to David M Brear CEO of 11:FS, the globally renowned Fintech and digital banking consultancy. Find out David’s secrets on leadership, attracting the very best talent and how to bootstrap a global business.
11:FS is much more than a Podcast. Can you explain the business model?
David: We’ve been up to a few things other than just hanging out with microphones and doing podcasts.
Over the last three and a bit years, we’ve built Mettle, a SME challenger bank with NatWest in the UK. In Hong Kong we’ve worked with WeLab and Standard Chartered and in Singapore we’ve worked with our good friends Grab. We’ve also worked with a number of different companies in South Africa and we are midway through building out a consumer bank in the US.
From an 11:FS perspective, we live by the mantra that digital financial services are only 1% finished. Our mission is to change the fabric of financial services. And we do that in many different ways.
On one side we have a consulting services business working with people around the planet, whether it’s regulators or banks or tech players or whoever wants to build out new green field propositions. We help to define strategy and move the ideas forward.
On the other side, it’s about building products that actually solve problems we’ve had ourselves, whether it’s things like Pulse, a global benchmarking tool, or the blockers we’ve come up against for delivering truly digital services at speed and scale.
That directly led us to establish 11:FS Foundry, which is a digitally native approach to core banking with a full stack architecture.
What prompted you to start 11:FS?
David: Four years back we struck on a thesis that we are so early in the cycle of change. The promise of everything the Internet brings to an industry that fundamentally hasn’t changed for 300 years was nowhere near being realised.
Digital is really about using the power of data to create an ultra personalised experience with much better services and products.
Unfortunately the way in which big banking organisations have implemented digital is more about taking people and paper out of the process. That’s digitisation, not digital.
The justification of every bank’s digital transformation had been cost driven. It has only been in the last few years where banks have realised they need to revolutionise their approach and provide better services and products.
The change has predominantly been led through major changes globally, in the regulatory space and through competition. New players have come into the space, whether that be Fintech startups or Big Tech companies like Apple, and they are showing the banks that people just want better services.
We are just at the beginning of fundamental shifts in banking and financial services.
How Did You Get the Business off the ground?
David: We’ve taken no money. From month three of founding the organisation we were profitable. This pre revenue nonsense is definitely not for me. I don’t think you can call it a business unless it makes profit and makes revenue. Call me old fashioned on that one. But for me, it’s all about creating something of value for people. And if you do that then you should be able to monetise it.
There have been key moments where we have been very lucky and times when we have been ballsy. Episode One of Fintech Insider is an example. We had no listeners and no idea how we were editing the show, but managed to get a sponsor because they believed in what we were doing.
The first client of 11:FS Pulse was brought in as a partner before the product even existed. DNB invested in Foundry when it was no more than 11 slides.
We’ve been lucky to find people who believe in what we are doing, are probably as crazy as us and share the same vision, which is awesome. But ultimately our success comes down to creating things that are of great value to our clients.
You have an incredible line up of talent in the business, how have you attracted them to 11:FS?
David: I’m 39 years old now. Entrepreneurs my age can attract the right talent more effectively than people who are starting out a lot younger. You build up a network of people over your career where you think I don’t know when, but we’re gonna work together again.
I met Jason Bates (11:FS cofounder) back when he was at Starling, I was still at Gartner. I knew with Jason we’d work together at some point. Similar to Ryan Wareham, our COO. We worked really well together when I was at Lloyds Banking.
You get a feel for people in terms of their unique strengths. If there is a pre existing relationship you already have an understanding of each other. From there you build a founding team.
Beyond that, I honestly think success is fundamentally about momentum. One success leads to another success, which over time creates a magnetic pull where you attract the right people.
Have you found the Fintech Insider podcast is a good tool for talent attraction and bringing in new business?
David: Yeah, 100%. It’s crazy, we get hundreds of emails from people interested in working with us either as employees, partners or clients. At the beginning of the company you’re five people sitting around a table trying to figure out how you can compete with Accenture and McKinsey.
We couldn’t outspend them from a marketing perspective. So, we decided to out play them with brutal authenticity and a level of distribution that would create a fundamentally different way of engaging with our customer base.
Even now we could not reach the amount of people that we do with the level of content marketing that we put out using our competitors marketing approach. We have focused so much on brand narrative, it’s not about the products or services we offer. Our brand narrative is fundamentally about what we believe in and our values.
When you align with people on your belief system or your aspiration about what the industry could be, then you find a higher level of connectivity that you can never achieve by sending out a bullshit brochure.
What kind of team and culture are you building?
David: 11:FS is my first CEO role. I have worked for some really good CEOs and one or two really bad ones in the past. But I’ve probably learned more from the really bad CEOs, especially on what not to do when it comes building a winning culture!
The 11:FS culture is based on servant leadership. We are not a hierarchical company and believe bad and good ideas can come from anywhere. Whether it’s bad ideas coming from the very top or good ideas coming from anybody across the organisation.
Trust is a huge thing from my perspective as a leader. If you have 360 degree trust of your people in the business then there is a positive intent running through the whole company.
When it comes to leadership I don’t consider myself a businessman. I’m more of a sports guy. So, I always look to bring the same mentality of a very successful sports team into the 11:FS team culture.
I think there’s an honesty to sports that is often very much missing within the business world. Transparency and accountability are key to a sports team.
If somebody’s playing badly on the team, they know and you know really quickly. There is nowhere to hide, but as a sports team you’ll do everything you can to increase the productivity of the team and increase the impact you can make from an individual perspective.
With sports teams it is as much about psychology as it is physiology. And I think that is missing in the business world.
How do you motivate the team?
Good leaders really understand that it’s not really about them. It’s about what they can do to get the best out of everybody else around them.
Whether it’s creating a sense of urgency, whether it’s creating a vision and reinforcing it until the goal is reached, whether it’s giving people a level of motivation to run through walls they wouldn’t have tried to do before.
In big organisations leadership stops being about getting the best out of the people and focuses on managing the board or managing a group of shareholders.
And that’s where I think you start to see a significant drop in the productivity of people within an organisation. And unfortunately, it’s where you start to see an almost unrecoverable position from a cultural perspective.
Anthony Nantes is CEO of Wisr an ASX listed company and Australia’s first Neo-lender. Tier One People Founder, Dexter Cousins caught up with Anthony to discuss Neo Lending, Fintech 2.0 and how to build a high performing team.
What is a Neo Lender?
AN: If you Google what is a Neo-lender, Google will give the answer as Wisr. Neo-lending is a brand new category that we’ve built, it’s really about completely reinventing what a consumer lending company can be.
Unlike the more traditional lenders and banks who are geared to have customers borrow money from them and once the transaction is done, the relationship ends. We’re building a purpose-led company that genuinely focuses on a customer’s financial wellness.
If someone borrows $30,000 to go and renovate their home with Wisr we go on that journey with the customer. We’re not going to charge monthly fees. We’re not going to charge early repayment fees. In fact, we’re going to provide tools, apps, products, and services to actually help customers pay their loan down faster.
Wisr will potentially make less margin than the traditional model by helping our customers pay their loans off quicker. But we think by doing that we’re actually going to build a much, much bigger business as a result.
You recently announced a partnership with NAB where they have invested $200,000,000. Why are NAB investing in a potential competitor?
AN: There’s a few reasons. First and foremost NAB are really attracted to the purpose-led nature of what Wisr is doing.
Everyone talks about the big four banks as if they’re one thing. But all of the Big 4 banks are competing against each other for the number one position in the market. And if you are not number one then you have to start thinking outside of the box.
I think NAB are looking at Wisr and saying, how else can we get to scale and provide customers with more value?
At Wisr we are focused on the things we can become the best in Australia or even the best in the world at.
Capital market management and treasury isn’t realistically something that Wisr can be the best at. But Australia’s Big 4 Banks are some of the best in the world at that.
Where Wisr does have the edge is at the very front end with customers, providing them an amazing and beautiful experience and helping consumers completely rethink how borrowing money can be.
That’s a very different experience and if we couple that with the capital management of NAB than we have a very powerful proposition for our customers.
You presented at Intersekt recently – Can you explain what Fintech 2.0 is and how it ties into the Wisr vision?
AN: The focus of that particular talk was looking at building social purpose-led companies and why it’s so important. And there’s a whole range of reasons why it’s good for society. But being purpose-driven is also good from a commercial perspective. Those companies who are purpose-led tend to outperform 2x or 3x over companies which don’t have a social purpose culture.
Not only do shareholders see better returns, we see greater engagement right across all stakeholders. And the improvements in performance are mainly driven by the fact that employees have a really clear sense of purpose. They become strong advocates for the company, finding fulfilment and meaning in their work.
Being a social purpose-led business then turns customers into real brand champions as they also connect to the company’s purpose and what you’re delivering for them.
Being purpose-led is a really important part of what we’re building at Wisr. And globally we’re seeing a movement as companies become more purpose-led. Larry Fink wrote a famous letter last year explaining why he only invests into purpose-led companies. He is the second most influential investor in the world behind Warren Buffet.
In Fintech, we’re supposed to be creating the future and building the companies of the future. But there seems to be a deafening silence from the Fintech community around social purpose. And I think this is where we will see the next big change.
The first wave of fintechs were cleaning up the low hanging fruit, but not really disrupting and not really changing anything. Just doing it faster, better with a slightly better UX maybe. The Fintech who will make it through this next wave are the ones who are social purpose-led and will genuinely change the customer’s experience of finance. And that’s what we’re aiming to do at Wisr.
Wisr seem to be scaling at a rapid rate. How are you hiring the right people as you’re scaling?
AN: It’s always a hard question to find the answer to. If I go back 18 months it was a lot harder to attract the right talent. But now lots of people want to work at Wisr. Everybody wants and actually deserves meaning in their work. To be doing something that has a genuine purpose behind it is rare to find.
It’s very hard to get a job here. We intentionally make it hard to get a job here because we really focus on hiring high performing talent.
What do we think high-performance means? For us it’s two things. It’s making your colleagues great. So, being an amazing colleague yourself, but also helping your colleagues to be amazing. Secondly, we absolutely must hire people who take responsibility. Unfortunately it’s difficult to find people who genuinely want to take responsibility. Those who do, we find are self motivated, they measure themselves, they set goals, they welcome feedback because feedback helps them become better. They’re not defensive when people point out things that could’ve been done better.
So, we take our time to hire first and foremost the right characteristics.Throughout our hiring process, we are looking for these qualities in potential hires. We set challenges for potential candidates and observe how they react and respond. It gives us a greater insight into how someone might perform in the working environment at Wisr.
The vibe in the office at Wisr, it seems like incredible fun. How do you keep the sense of fun going along with a high-performance culture?
AN: Why I believe Wisr is such a great place to work is we encourage everyone to have ideas. Some of our greatest innovations often happen over a beer on a Friday or over a coffee one morning. Someone will have a cool idea and five days later the thing appears somehow, someone’s executed on it.
The custom Wisr Chuck Taylors every employee gets at their 6 month mark is a fun example. Someone suggested the idea and two weeks later 40 boxes of Chucks turn up.
Our custom pale ale and lager. That was a conversation over a beer one night and three weeks later I look in the fridge and there’s Wisr branded beers. And so we have this amazing culture of people taking on responsibility and just doing the cool stuff in every aspect of the business. It’s not just the product team who gets to innovate, it’s every single person in the business.
By having fun and not feeling constrained by processes and control, our people can be creative and come up with innovative products for customers. And there’s lots of people in Wisr who’ve got no finance experience whatsoever. They bring a fresh perspective and don’t come with preconceived notions on how things should be done.
Wisr is a great place for people with super high potential, who have been denied the opportunity to show some of that potential before. We provide an environment which gives people the freedom and encouragement to go and achieve outstanding things.
Robert, how did you get to build Australia’s first smartbank?
I am a banker by background, I spent 15 years with one of Australia’s Big 4 banks and was given the opportunity to run banks in the Pacific and Japan. I came back to Australia to run a mid- sized mutual bank, and immediately before starting 86 400, worked for Cuscal (100% shareholder of 86 400).
Cuscal has an impressive track record of enabling competition through innovation and technology. They are an early adopter and one of the key founders of the new payments platform. While the big four banks are going very slow rolling out NPP, Cuscal quietly launched more than 40 financial institutions on day one, and did the same with Apple Pay.
Cuscal could see the trends overseas in terms of digital banks and spent a couple years researching international markets. We looked at bringing some of those models to Australia and decided to build a digital bank ourselves. I was involved in the original business case and then moved into the CEO role once Cuscal decided to move ahead with 86 400.
What has the journey been like so far?
But there is no other job I’d want, anywhere else in the world than the one I have right now. Building a full bank from scratch is incredibly challenging and exciting. We’ve gone through the process of getting a full banking license and now we are live. It has been an incredible journey so far and an amazing two years.
Working with our Chairman, Anthony Thomson is an unbeatable learning experience and I am supported by an amazing group of people. We’ve gone from 8 people on day one to now just over 90 people.
You spent two years building the bank. Now that you are live does it feel like a different business?
The reality is that the build will never be finished. The big difference between 86 400 and incumbent bank is the build. We have daily live releases and new updates to the App every four or five days at the moment. So the product is never going to be finished, we are constantly building.
But it is very exciting to be live with the product and finally putting it into customers hands. We think 86 400 is a really strong day one offering to customers, but we intend to improve. We have made it our mission to help Australian’s take control of their finances.
Australian’s seem spoilt for choice with new NeoBanks. What distinguishes 86 400 from other NeoBanks?
I think that’s perhaps the wrong question to ask. The big four banks currently own 85% of the market so we are entirely focused on providing a product that offers a better experience, service and value than the big four banks.
That is the market we want to go after. We see the Big Four as the competition not NeoBanks.
8 million Australian’s currently bank using their smartphone. Of that 8 million 86 400 is focused on the 25 to 45 year age group (4.6 million) but our youngest customer is 16 and our oldest is 88!
We are giving customers something entirely different, smart banking.
What is a smartbank?
Before launching 86 400 an enormous amount of research was conducted over two years to unearth and understand the real problem in banking. People naturally point to the Royal Commission and highlight trust as the problem. Trust is massively important but the real problem we see is this;
Money and our finances are becoming very difficult to manage.
More than 65% of Australians have a relationship with multiple banks. Today we have more money coming in and out of our bank accounts than ever before, which we never see, subscriptions, direct debits and we tap our card or phone more than ever.
It is like money has become invisible. People feel like they are not in control of their spending, making them increasingly anxious about money.
Our core company value is to help Australian’s take control of their money. So the 86 400 team have designed and built a smartbank that helps Australians take control of their money.
A smartbank is a very different premise and value proposition to the large incumbent banks. 100% cloud based technology, purpose built for people who use their smartphone for everything, banking, payments, applying for a loan etc.
One of 86 400’s unique features is the ability to link up to 150 other different banks to the App and view your credit card, transaction accounts, savings accounts, personal loans etc. You can see all your finances in one place. It gives customers immediate value when they join 86 400.
That’s what we think will help us compete against the big four banks.
We are extremely happy with the early feedback. There are two measures we are focused on right now and the initial response is very encouraging;
Are customers happy with the product?
And are customers happy to tell other people about the product?
Will Open Banking give 86 400 a competitive edge?
We believe that customers should own their data and if a company does hold data it should be used to the customers advantage, not just to sell more products.
Banking has always been focused on the past. A bank statement records what you have already spent, it is too late to do anything about it once you get the statement. Even with today’s banking apps customers see their statement now, but they are still looking backwards.
Once a customer links all of their bank accounts with 86 400, smart algorithms predict what bills are coming up in each separate account. That’s a massive difference to what we see anyone else is offering in the market and the feature is resonating extremely well with our early customers.
It takes 120 seconds to open an account. You sign up and get immediate value. This is just a small example of what customers can expect from us when open banking really gets going.
86 400 is one of only two banks to be chosen for the Open Banking pilot program. We are very excited and consider it a huge privilege to play such an important role influencing the future of Australia’s banking industry for the betterment of customers.
But we are not naive, there is a long road ahead and there will be challenges along the way. Not everyone has bought into the benefits of open banking and we are already seeing some resistance as Cuscal witnessed when rolling out NPP.
How is the team structured?
In total there over 90 staff. Roughly 50% of the team are tech people. Developers, Engineers, Designers, UX and Data Scientists. As a fully licensed bank we have risk, finance and credit functions. The homeloans business is about to go live to the public so we have a full team in that business unit.
The entire team is a mix of highly experienced bankers and highly experienced tech people. We only employ people who are digital natives and passionate about technology. We don’t expect a 30 year banking veteran to become a developer, but you have to be comfortable using technology and be passionate about what technology can do to revolutionise the banking industry.
What qualities do you look for in people?
Our core company value is to help Australian’s take control of their money. And that principle determines not only the product we are building but the culture we are creating too. Thousands of people reach out to me and the team asking about career opportunities with 86 400.
The first thing we look for are people who can actually do the work themselves. There isn’t the luxury of hiring people whose unique skill is to run a team or focus solely on strategy. We need leaders who can be strategic and actually do the work required to deliver. I appreciate we are looking for a very unique person and skillset.
86 400 operates an Agile environment with a fortnightly showcase where our people stand up and share what they have delivered in the last two weeks. That can be frightening to some people coming straight from a big bank environment. But it’s highly exhilarating for the people we seek to employ, because they get to build stuff without the blockers you get in large organisations.
How have you hired and retained the right talent?
We have a dedicated HR team which is a big help. It’s a very exciting time to be in the industry. Our people are genuinely passionate about changing banking for the good of customers. 86 400 is small, we have a very flat structure so there is much greater ability to influence outcomes for those who are prepared to roll up their sleeves and Get Things Done.
We are a technology business first. But right now we don’t have the room for bean bags and a table tennis table. We don’t see the need for an innovation hub because if the innovation isn’t happening around the boardroom, then 86 400 has a BIG problem.
It is reassuring for me as CEO to see the team stay here because they feel the work they are doing is important and has meaning. And not stay here because we have beer pumps and table tennis. The whole team shows enormous pride in the work they are doing.
Success is celebrated as a team. When the first home loan was finalised, when we got our license, when we went live with the core banking system, when the first card transaction with an ATM happened. All of these milestones have been celebrated as a team.
There will be lots more to celebrate over the next few months. The homeloans product goes live to the public soon. The biggest celebration for me is the feedback we get from customers every day. It’s so rewarding to know that 86 400 is truly delivering on our core principle of helping Australian’s take control of their money.
Of the 50 possible deployments we can do in a day, we can push five of them out to customers who get an iterative, improving application every single day. The most deployments we have done in a day is ten. At the moment, we’re sitting at an average of six.
Dom Pym – Up Bank
Dom Pym is Co-Founder of Up Bank, a collaboration between Ferocia and Bendigo and Adelaide bank. Dom speaks to Dexter Cousins about their journey to becoming Australia’s first ever mobile phone only bank.
How did UP Bank start?
The idea for UP was born out of frustration. As an entrepreneur I have a tendency to solve problems, problems for me personally, my family, my mates. And turn it into a business.
The story of UP goes back five years. My business partner and I were looking for the next business opportunity and raising capital. We met with lots of people and got talking to the CEO of Bendigo Bank who were out to tender for a new mobile banking system. Ferocia were there to raise capital and ended up building the platform for Bendigo. That’s how the relationship with Bendigo started.
The platform was a huge success and won multiple awards, but nobody knew who Ferocia, people just assumed Bendigo built the platform.
The success of the Bendigo platform led to work with one of the major Australian Banks. A project in Asia, to build a digital bank across 10 countries. We spent two and a half years building this thing and it never got into a customers’ hands. We worked with people in San Francisco, Hong Kong and Singapore, and spent a lot of time traveling. Then a new CEO arrived. The strategy changes and the Asia project is scrapped. On Friday, we were talking about the success of the project. The following Monday, the whole thing was off a right. Ferocia had dedicated two and a half years of resources, people and energy into it.
The executives we worked with on the project moved to another Big Four bank. They called and asked us to work with them on a new digital bank they had planned for Australia. Ferocia spent 18 months on that project. Again, the product never got into customers hands. By this stage we had spent four years building digital platforms and never got to see anything in the market. As you can imagine we were deeply frustrated.
The first digital bank in the world was started by an Aussie, Joshua Reich with Simple. We also noticed what Brett King was doing with Moven. And we were inspired to build a truly digital bank here in Australia. We thought ‘stuff it. Let’s build our own bank.’
There was just the small problem of raising 100 million and getting a core banking system. Not impossible but very unlikely. So we decided to go down a different path, partner with a bank. In 2016, there were no RADIs. So, we decided to look for partners and it was an easy conversation to have with Bendigo. The partnership already worked and there was a lot of trust between us.
But, you can’t just borrow another banks license. We spent about 18 months putting the legal structures and contracts in place. Finally in October 2017, UP went into production, Australia’s first cloud hosted bank, with Google Cloud Platform.
We ran UP for a year, initially with our own staff, then Bendigo staff. Next, we extended to friends, family and a small beta testing group, about 1500 people in total. We resolved any issues around regulation, compliance, risk, security, cloud hosting before the official launch of UP Bank in October 2018.
How successful has UP been since launching?
By February 2019 UP Bank had 50,000 open accounts and 30,000 unique customers (some people open multiple accounts). We are growing at between 500-1000 new customers per day. We had anticipated decent traction being first to market and having the power of Bendigo behind UP.
In January, we conducted benchmarking against Australia’s banks. The data indicated UP Bank as Australia’s third fastest growing bank, behind CBA and ANZ, but we had overtaken the likes of Macquarie, ING, NAB. ING announced record numbers in customer acquisition last year, something like a 47% increase.
What marketing strategies have you utilised to get such rapid growth?
That is the secret sauce recipe everyone is looking for. How do you get rapid growth and brand recognition, without spending a truck load on marketing, advertising, and promotion?
The strategy is proven with other digital banks around the world. Word of mouth, a strong referral network and happy customers are the key channels for growth.
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 spending on advertising to customers. We use social to communicate with customers.
Twitter is a fantastic tool to communicate with our customers. Not just me, our Head of Product, Head of Technology, Head of Design and the rest of the team are active on twitter. Twitter is an amazing tool for growth and we haven’t spent a cent on advertising on the platform. Facebook, we did spend money on, and we were able to acquire customers.
You wouldn’t think that a bank could acquire customers through Facebook, Snapchat, Instagram. We ran basic digital promotion campaigns, that created a viral effect. It was fascinating to watch people engage differently on each social media channel.
On Facebook, tens of thousands of people write about UP to their mates. They tag their friends in a post, it is like an endorsement that goes viral. With social media, we can acquire a thousand customers a day, through a single social channel without doing anything because of the strength of the brand. People love it. How many people in the world wear T-shirts, hats, badges, stickers and merchandise for their bank?
Experiential promotion and marketing works really well for us too. We’ll do industry events, like the Fintech Summit where we might do a panel or a key note or whatever.
But we have had most success sponsoring community events. We have sponsored university events, the Australian Design Industry Awards, the Pause Conference in Melbourne. Probably our most successful event was PAX, which is a computer gaming event where they have 100,000 people attend. We missed Sibos because we were busy at PAX!
We decided rather than attend an industry event like Sibos, Money 2020 etc we would try a gaming event. PAX is 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, merchandise. What really drove new customer sign ups was challenging them to a game of Mario Kart.
Our development team built software to track each game in real time with a leader board. People at the event would then compete against each other, it was a big hit. We even had the Mario Kart world champion come and take part in the challenge, two of the UP team members actually beat him.
It was a fantastic event to win new customers. Within a few days 100,000 passionate gamers not only knew about UP Bank, they had played a game of Mario Kart with the Founder, the Head of Technology, a Developer. Everyone at the event thought of UP as a totally different digital bank that lived in their world, in their community.
The UP website now has the word banking crossed out. We have replaced it with living. Banking is just a utility, It is something that should be in the background supporting life. We met one guy at PAX who used the round up function on our app to save for his ticket to the event. It is such a beautiful story, as here was someone passionate about gaming, using our software to realise their dream of attending the worlds biggest gaming event.
How big is the team at UP Bank?
Today, 29 people. It’s always been a goal to remain small and agile. UP is a nimble team of like-minded people, we are more like a family than a team. We set out to be the first in the world to launch a fully operating digital bank with less than 30 people. It is amazing what the team has achieved.
Monzo, Revolut, N26, Simple, these companies have hundreds of staff. UP was built on the hypothesis of using technology and automation to keep a digital bank below 30 people. I am not sure if we can remain below 30 people forever, but if we could, that would be awesome.
“People are the secret sauce to the success of UP.”
Dom Pym, Up Bank
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, is the reason for the success of UP. And that extends to the relationship with Bendigo.
Success can be distilled down to recruitment, the way we hire people and the caliber of people we hire.We place a huge emphasis on skills within the team. Everybody is multi-talented, no-one is doing a single specific role. Our people have an inherent ability of our people to learn on the job.
So when people are sick or when people are on leave or when we lose a staff member, we can still deliver across marketing, risk, security, compliance, technology, operations, cloud hosting. Every outcome we need to deliver for our customers can be met by not just one or two or three people, but by everyone in the team.
Most of the team has one degree of separation. Everyone that works here has worked with at least one team member before. We’ve got 10 people who have worked here for more than five years, five people who have worked with me for 10 years. Then there are those whom we’ve worked with in the past who keep in touch. One person came back to work with us recently. They left 10 years ago, joining Square in San Francisco. He had been working as Head of Technology development, moved back to Australia and came back on board.
Having built a digital bank, what do you think is the best approach. Is there anything you would do differently next time around?
UP is a collaboration between a technology company (Ferocia) and a bank (Bendigo and Adelaide) Working with an existing bank to develop new financial products is not an easy process. When we looked at other digital banks like Simple in the US, they launched quickly through a partnership with BankCorp.
But when BBA bought Simple they spent the next two years also transitioning core banking systems and didn’t really innovate or create new product. Monzo partnered with Wirecard, then when they received a banking license, decided to build their own core banking system. We believe UP Bank has a strategic and competitive advantage by not having to build a core banking system. But if we had our time again, we might want to…
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 is essentially a database of debits and credits. If you treat it in that way, innovation is possible outside of the core system using it solely as a regulatory ledger.
We hear people in banking say, you can’t build a digital bank on top of legacy systems. Well you can because we’ve done it. But, I would still seriously consider building a core banking system if I had to start all over again.
So is your model Similar to that of Apple and Goldman Sachs?
People have commented that the Apple Card app has similar functionality to UP. So, I find it quite flattering that the greatest tech innovation company ever is following in our footsteps.
I say this a little tongue in cheek. However, we work closely with Apple here in Australia and done a lot of first mover stuff with them. Apple Pay integration, Apple Watch integration, push notifications with merchant identification.
The model Apple has chosen, partnering with Goldman Sachs, is similar to the UP model. Apple is focused on the customer experience, a technology company delivering a superior customer experience. I will go on record and say Apple have the ability to acquire more customers than any bank in history.
It’s all about the customer experience and the delivery of the service, Apple has nothing to do with banking. That is all done by Goldman Sachs. Even if the interest rate is not attractive, it doesn’t matter, it is going to be the easiest card in the world to use and that’s what matters.
Neo Banks all over the world are selling financial services in the same way it has been done over the last 100 years. Create a financial product, price it, then sell it to consumers. What consumers want, in our view are products to power their lives. Let’s say you want to buy a car. Do customers care if there is a savings product, insurance product, loan product, transaction account all powering the service? Or do they care about the experience? Apple will totally nail the customer experience.
The interest rate 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 is just a credit card geared to millenials is perhaps naive and missing the real threat.
Would you class UP as a bank or a Tech firm?
From day one UP has positioned itself as technology-led banking versus banking led technology. I don’t know whether there will be other banks around the world, position themselves as a technology company. We set the goal of five deployments per day. Our entire 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 50 times every day.
Of the 50 possible deployments we can do in a day, we can push five of them out to customers who get an iterative, improving application every single day. The most deployments we have done in a day is ten. At the moment, we’re sitting at an average of six.
I’m not certain of other tech companies in any industry in the world that can talk about that level of iteration and innovation.
What plans do you have for UP Bank over the next 12 months?
The card product announced by Apple is very similar to the card product we have in development. But we will launch before Apple does in Australia. Eventually we will offer credit cards, mortgages, share trading products because we’re operating under a banking license.
We have experienced rapid growth in terms of customer numbers, but at the same time we have been developing a product roadmap. We get hundreds of inquiries from customers every day through social media, through the support channel with product ideas. The team came up with the idea to release a public roadmap communicating to customers what is coming next and when it is coming.
We call it the Tree of UP, we think is quite unique, certainly in banking, and even in technology. The next 12 months of product development is publicly available. You can click on the different branches and see what we’re currently working on. The roadmap is our way of communicating to customers who we are, what it is we do and why. Because we’re delivering improvements every single day customers are tweeting, instagramming and sharing these new features. We believe delivery is the best way to delight customers.
We recently launched a pull to save function. Some people have said The Gamification of saving for a whole new generation of Australians has been nailed by that one feature. It’s an amazing compliment.
Internally, there were reservations about launching the ‘pull to save’ feature. How would customers react? Should we be focussed on delivering traditional products, joint accounts, credit cards, home loans?
Fair question. But for the team at UP, being able to change the decision making and saving habits of an entire generation is a more lofty goal.