Full transcript: Claire Cockerton on London Real
0:42 To the people of the London technology startup scene. I am Brian Rose. I also host London Real. It’s the same studio, but we have not just tech people. We get rock stars in here, politicians, authors, whistleblowers, filmmakers.
0:54 You name it. We actually just had the actor John Cusack tweet out our trailer for this week’s video, which is a CIA officer turned political activist. So I just wanted to thank John for that, and I love your movies. John, Better Off Dead is my favorite. Have you seen that movie?
1:10 It’s a real old one, so it was a fraternity classic where I am. But anyways, that’s at londonreal.tv, so check that out. But today we’re here to talk tech. Colin Pyle my usual co-host is off in Toronto, so it is, today we have Andrew Tarver, who is the founder of Bold Rocket, which provides expertise, guidance, funding and delivery structure to startups from your new offices right around here on Great Eastern Street. If you can’t find it, it’s the one with the Bold Rocket in the window.
1:37 Rocket. It’s got a big orange rocket in the window. Um, Andrew, you were formerly the CEO of the financial services company Capco. Before that you worked for UBS, Accenture. You have some finance background.
1:48 You were on the show about 6 weeks ago and I hear now you can’t even walk down the street without people asking your name, and you’re famous now right? Yeah, what fame does, you do? Do you have any advice to Claire before we kick off here? I mean how was your first time here? Was it, you know, a lot of fun?
2:06 Huge amounts of fun. Well, cool. I’m back. Yeah, you’re back, right? For the co.
2:10 So anyways, thanks for being here. Um, on with the show, our guest today is Claire Cockerton, who is the co-founder and CEO of Innovate Finance, a City of London-backed movement for a more balanced, resilient and accessible financial services sector. Hear, hear, for that. Um, before that, you were a deputy head of Level 39 technology accelerator in Canary Wharf. I love that space.
2:30 I’ve been out there. I mentioned I met Eric a year ago there. I know James Dawson from Openfin. Um, I think I’ve had the coffee from the iPad, so, uh, that’s awesome out there. Before this, you worked for Richard Branson for the Guardian.
2:42 You have an MBA from Imperial College here in London, but you’re from Canada. Claire, welcome to Silicon Real. Thank you so much. It’s such a pleasure to be here. How was that introduction?
2:51 Pretty good, huh? That was great. Yeah, I’m getting known for those. You know, before we get started. I just want to say we are having a banner month here at Silicon Real for women in tech.
3:00 You are the third woman in 3 weeks in tech, and I just wanted to throw that out there. Last week we had Sandy Carter of IBM. She’s like, literally her role is social business evangelist at IBM, and she had a lot of cool things to talk about, how a really big and old company, I reminded her, looks at social, and how companies are dealing with, you know, crowdsourcing, social, mobile, and stuff, so that was cool, and before that we had Dion Pearlman at Microsoft Ventures.
3:24 So, uh, that’s kind of Microsoft’s incubator, so it was cool to have her. But let’s talk about Innovate Finance. You had George Osborne, the Chancellor of the Exchequer, at Level 39 last month to introduce you. He’s a good speaker, isn’t he? I was like, listening to him, and I was like, that’s why he’s a politician, because just he flowed, doesn’t he?
3:43 He really, and he gave you guys a great intro, talked about what he wanted to do for you know, for fintech. Um, you guys launched Innovate Finance. We also had members of your organization on this show like Lendinvest. We had Nutmeg this week with Nick Hungerford, great show. Dill, Digital Shadows, for Wise, but I’m going to ask you point blank a question you probably get asked a lot.
4:03 What is Innovate Finance? If you had to just define it for us? Innovate Finance is a new members-based organization devoted to technology-led financial services firms and accelerating their growth here in the UK. It’s, um, backed by City of London and Canary Wharf Group. They’ve provided us with seed funding, but it’s an independent organization with enterprise at its heart, and really it’s, uh, designed to foster the transformation of the financial services sector here in the UK, uh, supporting both large corporations and their innovation ambitions, as well as the pre-revenue startups who are emerging, um, in fintech here in the UK, and we want to drive greater investment, drive more talent, drive more business opportunities into the sector, and we want to create a favorable environment, uh, here in the UK, um, for fintech.
5:00 How long has this been in the making? Is this kind of a year’s process, ’cause these names you’re dropping like the City of London, these are very big organizations to get on board with something like this? It’s been over a year in the making. Uh, last year, uh, Eric and I were approached at, um, at Level 39 and in our, in the sister company, Pivotal Innovations, and we wrote a report about the fintech sector here in the UK, and we talked about the challenges and opportunities that our entrepreneurs were facing and trying to address, and, uh, we brought together 40 or 50 entrepreneurs in a series of round tables with, uh, our champions at Number 10 to talk about what the industry might need in its next phase of development, and it was determined that we needed a new convening voice, a new unifying platform, a new brand, a new industry organization that was going to foster this transformation, uh, this technology-led transformation in the UK, and so we brought together this founding 50 group of members, who designed the brand, the mission, um, the organizational ambitions, uh, and together we launched on August 6th with the founding 50 members.
6:23 Now, I mentioned some of the companies that have been on here that are big successes, like Nutmeg and Dill. They’ve just raised some really big series B rounds, and they’re doing well I mean, do you think that you can help them to do even better? Was fintech not moving where you wanted it to go in London? Is that why you exist, and what were the major problems? Well, I think, um, the financial services sector has experienced huge trauma, um, both from a public perception point of view.
6:52 I think consumers are in a position to try new business models and try new services providers, and I think, uh, because of the, the crisis, um, which has caused a number of, uh, constraints on big incumbent firms, um, these new emerging fintech firms were enabled to proliferate here in the UK, and so you’ll see these new business models, these peer-to-peer lending platforms, crowdfunding platforms. You’ll see us experiment with, uh, some of the members experiment with, uh, cryptocurrency companies and exchanges. And, um, we’ve been seeing this transformation happen over the last couple years, and it was, um, this organization was a way in which we brought together these emerging firms, uh, together with investors, with policy makers, uh, and with the regulator to determine what it is we need to do to revolutionize the sector further.
7:57 And is there, like, a specific if you take some of these companies that have kind of signed on to be part of the group, are you looking for something specific in those companies? Do you want them to kind of bring something to the table when it comes to like an innovative piece, or would you accept a really young company that just needs help? You know, like you’ve talked about like selling to banks, it’s such a long, like, lead time, and there’s so many barriers to get in.
8:18 So who are you looking for to be members? Uh, well, our membership base ranges from a large corporation, uh, who’s looking to innovate and to, uh, back and to purchase from these smaller firms to pre-revenue startups, and we’re really, um, our membership is designed to be inclusive and cross-sector, so we’ll deal with payments providers and data analytics companies and big tech firms and wealth management, uh, companies. So we operate across the sectors, and, uh, at every size of organization, as well as at every stage of maturity, and we feel there really is a space, a need, to have a cross-sector, um, organization which enables collaboration between the big and the small.
9:11 The small guys bring tech. They bring innovation. They bring talent. They bring fresh ideas. They bring multi-disciplinary teams.
9:17 They come from all around the world to come to London, and the large corporates bring the experience of doing business on an international scale. They bring access to new customers, uh, they bring a tremendous amount of insight into the major infrastructure challenges a bank might have, and can enable a startup to, uh, refine its product to sell into the bank in a much more, uh, a much more, uh, easier and, and faster way. You know, we always talk about The Innovator’s Dilemma on the show, and it’s almost, I always kind of talk about it maybe too digitally.
9:56 It’s always like, you got Transfer Wise on this side, and you got Barclays on this side, and never the two will meet, and maybe in 5 years one will be acquired by the other. I don’t know which way. And, um, and so you never, you never know how they’re going to work together. We’ve seen Barclays. Do you know their accelerator now, with Techstars?
10:11 And you see the banks kind of dipping their toe, or the Fintech Innovation Lab, and, um, I was wondering what you think, Andrew, of an organization like Innovate, or some of these accelerator incubators where the banks try to innovate, but then it’s hard for them to innovate, cuz they’re such big organizations. Yeah, as in, I think all financial institutions will struggle, um, because of the culture, um and the legacy platforms they have. So they’ve developed what they’ve got over a number of generations, so decades, and trying to sunset that and replace it with startup technology isn’t straightforward.
10:48 Um, but it’s the culture that is, is the biggest blocker in my experience, which is the attitude of, you can do it, and you can do it really quickly, and you can break some, you know, eggshells on the way, and it causes a bit of mess. It’s the startup mentality of just get stuff done, and the bank is very much follow regulation, don’t cause a mess. Uh, make sure you got every, every box ticked etc. Um, and therefore it’s really difficult. The culture side is a really difficult part, and what you need to do is bridge that.
11:14 If you’ve got the experience, understanding how a financial institution will work, and you understand the mentality of how a startup will want to work, you have to bridge the culture more than anything else. Um, and everything else can work okay. I wouldn’t say seamlessly, but you’ve got to give them the freedom of working outside the bank. Don’t try and integrate them in, um, and then try and open up platforms through APIs. APIs will change the industry.
11:38 That’s the key part. You’ve got to give access to core processing platforms within banks, financial institutions, insurance companies, and allow the startups to innovate. The technology, which are modules of specific, uh, functionality. They’re not going to create a new bank. No startup will ever want to be a new bank.
11:53 But then you’ve got to ask yourself the question of what is a bank in the future, or what is an insurance company in the future? Um, um, so TransferWise is a great example. They do international payments very well, very different they’re doing a midpoint. They’re charging a flat fee. Banks have got a legacy platform, probably most of them on a business that probably makes some very little margin, if any, and all they need to do is, um, carve out that business and plug into a TransferWise and start to do international payments through them.
12:22 Will they ever do that? And there’s a big question of where could they go next, if TransferWise went to domestic payments, when that’s a higher margin business, and therefore they’re starting to potentially, um, intrude or cannibalize a revenue stream. So there’s nervousness, and my question always, with big financial institutions working with startups, is what’s the motivation? Is the motivation really to embrace a new culture and new way of doing things, or is it to keep the enemy close?
12:47 Is it to make sure that you’re being seen to do something? And that’s kind of again the challenge. The biggest corporate in, in our country is the government. So what’s the government’s real motivation to do this? Is it to be seen to be doing it?
13:02 Is it to stimulate growth within the financial, full fintech economy, or is it just, you know, ticking some boxes and, you know, being there and being seen? And that I’m skeptical. You know, I’ve, I’ve seen big corporates, and I’ve seen governments, and I, I would prefer not to work with them, because, you know, they’re just hard work, but in the end they have the money, they have intelligence. Is your job ultimately trying to bridge these cultures? I mean, is that really the core of what you have to do at the end of the day?
13:29 Part of it, part of it is a translation job. It’s, this culture operates in a very risk-averse way. This culture operates in a very opportunistic way. This has a completely different structure, decision-making process, and and I suppose, um, part of our work is, is about translation. It’s about information exchange.
13:51 This is how the sector these are the challenges they experience. This is how they’ll view the problem and the challenge um, and it is about a translation exercise, and, and sometimes I, I think a big success metric for us will be how many partnerships, how many collaborations we’re able to facilitate through our work at Innovate Finance, through our events and our accelerator programs, and, and we believe that we really can foster this collaboration where possible, but sometimes they won’t collaborate um, we, we believe in a competitive landscape, because competition means diversity. It means resilience, means greater quality to consumers, greater choice so, um, in, even in our, uh, current state, we have many different competitors becoming part of our organization, and that’s fine um, and so we acknowledge that, uh, that this is about collaboration.
14:55 It’s also about, um, competition, and that’s, that’s completely fine why? Why do you think so many people signed on to be with your organization, and did you design it in such a way, ’cause you could have done a bunch of other things. I’m sure, I’m sure you thought about doing it this way or doing it that way. Why, why do you think everyone is so, so on board with the way you’ve structured Innovate? Well, because it wasn’t me.
15:15 You, you keep saying you, and I think, um, it was us. Um, it was 50 entrepreneurs, 50 fintech entrepreneurs, who said, um, I believe in this structure of membership. I believe in the tiered price points to allow for an inclusive engagement, whether you’re a small startup or a big corporate. We have different price points for each uh, each size of organization, because we wrote a manifesto together, um, and because our organization is independent, um, and it will be, it has been spawned by industry, and it will be driven by, uh, industry players, and it will try and address industry concerns, terms, um, it will survive this year, next year, whatever administration is here, and our current administration has been incredibly supportive of this organization, opening the doors of number 10 for our round tables, being very, um, receptive, responsive to our feedback.
16:19 And that’s a big, a big benefit of becoming a member. Uh, we plan to bring you together and to, uh, to start to articulate, uh, what are the main challenges and recommendations that our entrepreneurs are making to make this a more favorable environment for entrepreneurship, innovation, uh, in financial services. You’re saying you distrust government a bit, but I mean there, knowing, I mean, noting like, you know, this Checker govern out there, and Boris is always out there.
16:49 I mean, I don’t see the American government getting behind, you know, tech, and that way, and it seems like they are at least trying to go above and beyond, you know, to really push tech. You know, do you not agree with that, or do you agree? How do you rate the government from 1 to 10? Zero, zero. Um, so, so I think there are similarities between the tobacco industry and, and the financial service industry, which is the UK government makes so much tax out of cigarettes, yet they have to be seen to be discouraging, um, but they would never want to discourage to the point of people stopping smoking, because the tax they get, if you think about how much tax the financial institutions and the bankers who work for them pay to this country, uh, and provide for the UK government, as well as fines.
17:33 You know, banks aren’t great, so they get fined a lot. We’re talking billions. And how much have the government put into this program? Zero. This is this is not, uh, this is not government backed.
17:44 No, but George Osborne will sit there and say, we support this, this is Innovate Finance, but this is to promote collaboration, right? So you know, put some, put some of the billions back in, change it, rig, disrupt it, make the banks think differently. You know, encourage startups to come through, do something, to, going to cause the disruption and change the industry. That’s, that’s my encouragement to them. Yeah, it’s inter, I mean, they have tax breaks, things like that.
18:04 I don’t know if we want the government directly investing in these things. Exactly, but your opponent. Well, how do you rate the government on a 1 to 10 scale? Let me get your opinion. I mean, do you know, you, you’ve seen what they do.
18:15 You see where they’re investing? They’re talking about 4G and 5G. Are they doing enough? Uh, I think they’re doing a great job at the moment, and I think, um, there’s always more to do, and we have ideas about that. Um, and, and we’ll continue to, to feed that back where that’s possible.
18:31 Uh, but I think, uh, there have been great tax reforms made. There are great incentives for investment. Um, there is a lot of talk about investing in the digital infrastructure in London, and we definitely need to do that, um, because it’s, it’s not, not ideal at the moment. Um, and uh, and I think this administration is receptive. We needed to be an independent organization.
18:56 We needed to be industry driven, uh, but George Osborne did commit an additional 100 million worth of funding through the British Business Bank, uh, to go through alternative finance providers, uh, and has commissioned a number of really important consultations so that we can lead on a global scale uh, in setting a cryptocurrency framework, uh, or, um, setting more favorable policies, uh, for financial services tech, uh, companies. You guys hosted a Bitcoin conference over at Level 39 last year, or this year? Yeah, last year.
19:33 I just wanted to get what what you thought about Bitcoin, in the future of fintech, since you’re dealing with all these organizations. Is it going to be an issue or rounding error? And then I want to get your thoughts to. Well, Bitcoin is just one of the, uh, cryptocurrencies out there. Uh, we think the technology is an incredible innovation, uh, and we think it applies to other industries as well.
19:56 We think this concept of a public, me, a transparent, a highly secure, uh, platform is an incredible innovation, uh, that uh, will enable a more effortless, uh, transfer of value, uh. We think it’s really exciting. We believe we need to set a framework. We believe we need to set tax, uh, uh, set tax policy that, uh, appropriately addresses, uh, this sector and uh, we’re very excited to be part of the consultation, uh, so it’s a great way forward uh, at the moment, but I can’t say, um, where we’re going to land in 6 months’ time or 12 months’ time, but we’re all very excited, and we have several, uh, cryptocurrency companies as members.
20:49 Yeah, there’s been a lot of talk about it. I think it kind of peaked maybe a few months ago, and, you know, as the price goes up, there’s more to talk about. But when I talk to e-commerce guys in the sector and people we’ve had on the show, they’re saying, like, a small percentage of their sales will be that in the in the future. What do you see? Do you have Bitcoin or crypto guys in your, in Bold Rocket right now?
21:08 Yeah, we’re housing about the five or six companies. Um, and it’s, it’s interesting. I think I agree with Claire. It’s the blockchain infrastructure that sits beneath it, it’s not the actual currency itself. Yeah, that’s fascinating, and what you can do with blockchain and where it’s going, and the progression of it, um, all the way from, you know, developing new currencies in, you know, no, no, no time at all to be able to trade it, to be able to hedge it, to be able to do insurance on it, etc.
21:33 You can create a new financial services industry off blockchain, um, and actually doing that and proving it and understanding what the stress points are, is where we need to get to in the next 12 months, as, and really push it hard, be, be aggressive. Um, I think there are, you know, Claire rightly says there needs to be some regulation around it, but actually, break it, ’cause there’s a need to be regulation around it by growing it quickly, and make people act quicker by putting regulation around it. But, you know, let’s not wait to put regulation and then grow it.
22:02 Let’s absolutely try and break it. Let’s absolutely try and prove what it can do. Let’s get as many companies working on it as possible, and do things like I, I’m a massive believer that in the future, um, a currency that we will trade is our own personal data, so using, actually, as I’m collecting more and more data through Internet of Things devices, wearables, etc., and people are exploiting that at the moment. Uh, big companies are making huge profits out of my personal data and using it for their advantage through advertising.
22:27 Let’s create a currency and work out how we can trade that currency through a blockchain infrastructure, and we’re working on some stuff in the background around that, ’cause that’s kind of the core of the people revolution thing I talked about before, um, of allowing an individual to be able to monetize their own asset, which is their own data. They’re a digital soul, yeah, and their attention as well. You’ve seen a lot of places like YouTube you can is working on, so you can do a subscription where there’s no ads, so it’s like your own data and your own attention.
22:52 Maybe monetize that in a way, as opposed to probably, economically giving it here and there and not being compensated for the right thing. Um, iPhone 6 just came out, and we got this near field communication, so we’re potentially going to be paying for everything with our phone. Uh, both of you, want to get your opinion? Is this going to change the world of finance at all? Is London positioned for this, or is it just the credit card companies making a win via Apple?
23:13 Uh, Claire, do you have any opinions on it? I know the tech is, the announcement is fairly new, but, uh, absolutely, we think it’s a, a very exciting innovation. Um, we think, uh, other, uh, mobile device providers will follow. Uh, we think it is incredibly powerful. It will have a huge impact on the current, uh, structure of banking service and payments and mobile wallets, and we think, um, it’s, it’s, it’s a really exciting innovation that will really impact the structure of the industry.
23:46 Are there startups that are going to take advantage of that, or is it literally the credit card services are already set up to work with Apple? Um, I think Apple have been clever, which is they’ve kept the existing credit cards, debit card banks on side by including them in a wallet, and they’re using the, the rails of the industry. Um, it’s interesting that, you know, there’s still not a majority proportion of merchants who have NFC capability in their stores, so actually it’s a small number, and especially in the big cities.
24:15 Um, so I think it’ll be a slow uptake. People will be interested. We’ll see what happens with security glitches, but Apple absolutely must have a roadmap of saying the banks and the debit cards and the credit cards go away at some point, and they’ll have a product which allows them to, you know, create another product line. Um, think they’re playing nicely for the first 12, 18, 24 months, um, and then you’ll see a roadmap of other things coming through. Is it the iTunes scenario?
24:39 Yeah, is, I, I think the primary credit card that will be used will be whatever you use on the iTunes, and then you can default to other cards, which is what whoever did the announcement, um, after Tim Cook said on stage, and you can start to see where this is going already. You know, Apple can monetize out of this product. Um, they don’t need the banks with them, but they, you know, to use the infrastructure, they played nicely. It’s where they go next, what they do with it.
25:02 Um, they made a big thing about not using the data of those transactions. Um, let’s see what happens, but that is very powerful, understanding every single transaction the individual is making, where they’re spending their money, what the patterns of behaviour are, and what you can do with machine learning that sits above that. Um, that’s really powerful, and I’d be surprised if they, they kept that position of, we won’t use it. I imagine they won’t use it unless you give them permission to do it, and if you give them permission to do it, they then can really influence your life, which then encroaches on Google.
25:29 So then you’re getting into the machine learning of actually, what does this person do, what do they want, where are they moving, is there an advertising associated with it, is the product push they can do. So there’s a lot of things that can come from this, which I spend most of my life doing an analysis, evaluation, assessment, etc., of a purchase using Google, so they know exactly what I’m thinking about buying. Apple now knows what I am buying. So the machine learning of the two, you know, Google will come in with a product, hopefully which is going to be competitive to Apple in some way, and therefore they know all the evaluation, the assessment, um, the needs of the individual, and may have the transaction at the end of it.
26:04 So there’s a big power play coming in the big loser from it, because Apple will move there very quickly, is e-commerce, e, uh, payments. So PayPal, because you know you can do seamlessly with a code, not using your credit card, is a similar thing to what PayPal is doing, and if you look at the stock price, it’s eBay, PayPal, who are suffering at the moment. Does that mean MasterCard and Visa in the end become redundant too? Depends where it will go. I, I think at the moment, absolutely not.
26:29 They’ve done a nice collaboration with Visa, Visa Mastercard Dynamics, um, and I think, you know, clever move by them. But, yeah, there was an interesting article also in the FT, and Steve Perry from Visa, the chief digital officer, uh, commented, he um, he feels it was a really positive move, obviously, and it would lower Visa’s transactional costs, and if you’re signed on to Apple, uh, iTunes with that payment detail, it’s really easy. It’s just that the banks will lose their branding profile, uh, because Apple will own that customer interface, and again, um, they become much more of this controlling party, uh, able to deliver a much more intelligent and, um, comprehensive customer experience, potentially.
27:15 Yeah, it could be the music industry and iTunes all over again, but then you can argue that it was going that way anyways. And you know, these seamless payment structures are going to happen with or without Apple. So, but think about what we could do with Amazon as well. So from the fact that you know what people are purchasing, and you’ve kind of got the transaction then sitting in a store, which it’s kind of, you’re in the Amazon world as well. So they’re all starting to intrude on one another’s territory.
27:36 It’s fascinating to watch Amazon, Apple, and Google. It’s just like, yeah, I mean, Google just announced like a new grant of like $100,000 for people to use the iCloud for startups, and obviously they’re positioning against Amazon. They’re both driving cloud rates down to nothing. Yeah, it’s fun to watch. Um, let’s talk about major tech sectors in fintech.
27:53 We have to look at New York City. Uh, Claire, is there stuff that you see that New York City that we could be doing that they’re doing, and are there some things that you see that we do much better than them? Yeah, I mean, New York City has the financial services sector. It rivals London, and Silicon Valley obviously has the great tech, but what we can claim is the fintech together. Um, I think New York City is making great advances uh, in digital infrastructure, uh, and, but what I think that London leads on is the, uh, the talent pool that we have here and the multi-disciplinary nature of our tech community.
28:44 We have a really rich creative sector and a rich, uh, design community, and these elements are really important. Even in fintech, we don’t, when we talk about fintech, we don’t off and talk about, uh, UX and UI, and, and customer experience, and I think we’ve got a wonderful, uh, multi-disciplinary and multicultural pool of talent here in London that will set us apart, and, and in the UK, that will set us apart when we seek to really differentiate on the fintech scene globally. Yeah, that’s a good point.
29:18 Something that Nick talked about last week or the one that we released this week, uh, about how he spent. I think he had 580 names before he came up with Nutmeg, which is not an obvious name by any means, and, uh, all of the, the UX they did before I mean, just finding out about people’s relationship with money, you know, which I’m sure you, you probably thought a lot about as well, and, and how, uh, is someone risk averse, or, or, uh, or the opposite? And he’s like, well, it’s not, it’s not that simple.
29:43 It’s not a digital call. You might have a pool of money that you’re saving for your retirement. You might have a pool that you want to make risky. And this whole thing. So yeah, the design is going to be an interesting aspect when it comes to, to, to Innovate Finance.
29:55 What is there something that you get constantly asked by, say, the smaller members or the bigger members, as like, what will make a success for them in like a year or two years? Is it like a specific partnership, or is it like an introduction, or what do you facilitate as a win metric for you, say two years from now? Yeah, there, there are a number of them, and each, each member has their own particular, uh, version. So that’s what makes this organization a, a real challenge, uh, for us.
30:22 But for us, it’s driving greater investment into the sector, particularly filling the VC gap between 2 million and 10 million here in the UK. We really want, uh, to drive more investments in that sector, as well as in the IPO, uh, stage. Um, we would also like to see greater, uh, more talent move into the financial services and tech sector. We want to drive talent from the universities, from the developer communities. Uh, we would love to see not, not just the proliferation of more fintech firms, but the growth, success, partnership, um, opportunities of those firms.
31:06 Collaboration is really important. So more and more, having a, if, if a large bank, for example, uh, declines a loan, it would be great if they would, um, be able to refer uh, the customer to an alternative finance provider, uh, for example. And I think mandating those referrals is a really positive, uh, a positive move of, uh, policy that we could make here in the UK, which would be, uh, really beneficial for the sector. Uh, I think there are, uh, further policies that we can set that will enable, uh, the UK to flourish uh, in financial services, and I think, um, uh, for us, a huge, a huge success will be a transformation in consumer perception as well, if the general public was more aware of the alternative, challenger banks, of the alternative finance providers, of a different option to manage their money.
32:09 Uh, that would be a real win for us. Social inclusion, being able to, uh, to see underbanked and unbanked communities access finance and be more aware of responsible financial management, uh, financial literacy rates. If they went up, I think, um, if we saw the decline, uh, in the need for, uh, for payday loans, for example, or for um, uh, for some of the shorter-term, uh, finance. I think if we were able to increase financial literacy broadly, that would be extraordinary.
32:49 Uh, we just are, just, in, are about to, um, launch a program with the Open University, a fintech curriculum that we hope to open up, uh, to the public, to enable, uh, everyone to learn the new lexicon of fintech and to, to embrace a financial management, responsible financial management. So those are some of the metrics that we have, but yeah I mean, I, we, we have big ambitions, uh, we, uh, and we need to bite off what we can chew. Um, but the entrepreneurial spirit is at the heart of this organization, so we’re going to go bold.
33:33 Uh, do you sometimes think to yourself, what did I get myself into? Uh, yes, okay, yes, I do. That’s honest. That’s a lot of mandates, and you have a lot of different people to try to keep happy from policy makers and, you know, tech people and Open Universities, and yeah, it’s big. You have some help?
33:49 I hope we do. Our team is growing, and we have incredible talent and a wonderful pool of advisors, and, um, and professional service providers and academics and investors, all reaching forward, all sending emails, picking up the phone, saying how can I help, I want to be part of this, and the momentum is really growing. Means we don’t get a lot of sleep in our office, but, uh, the help is coming. You know, Andrew, you’re close to some big banks. When you get these CEOs of banks and they like, what am I going to do, what do you tell them they got to do for the next 5 years?
34:26 Is it going to be like, you got some, some, some really hard decisions to make. Are you going to have to open up your APIs, which is something that a bank would never consider doing typically? Like, what do you tell them? Because I’m sure they ask you, you know, the the crossover guy, you know? Yeah, as, as you say, we’ve got a number of these conversations going on.
34:42 Um, and I think the first thing you say is start small and start outside the bank, so don’t try and do anything, because the immune system of any big financial institution or any institution will try and kill you. I like that immune system, you know, you’re a body in trying to do something which is a, a stable, uh, infrastructure, or, you know, the human anatomy doesn’t like foreign bodies, and it will fight, and it will basically try and crush it and kill it, and, you know, thinks it’s doing the right thing. And so what you have to do is start outside, bringing in some like-minded hypos, as I call them.
35:16 So bring the people who’ve got potential inside the organization, have that talent, have that understanding, understand, you know, the organization’s positives and negatives, who can help you move forward, and at some point, yes, you have to come back and integrate and, yes, you have to, you know, open up the organization and try and connect. And I was talking to someone this morning, it, quite an entertaining conversation of, you know, financial institutions have spent the last 25, 30 years building up a really big, high, thick brick wall, stone wall around their kingdom, their Magic Kingdom, and in their Magic Kingdom, lots of things happen and lots of different parts of businesses happening, just like in medieval kingdoms, and now there’s people like me who are trying to tunnel in, and they were, go, oh, you’re not allowed in our Magic Kingdom.
35:56 Our Magic Kingdom has got, got really high walls and really thick walls. Um, and all of the security is trying to prevent you from getting in, but I want to come in, ’cause I need to come in to get information out to be able to do what I want, and it is an absolute culture shock that someone wants to break through that with permission to get information to take it back out the bank to build the new bank, and that’s what we’re doing. You have to build the new bank outside the bank, and you have to bring out the information, whether it be, you know, permission by an individual customer to say, I want my transactions from the bank, I want to bring them out, and I want to do the analytics that I can’t do in the bank.
36:31 So allow the startups to start to do the analytics, the, the machine learning, the natural language processing outside, and find a way of visualizing it in a way that Nick from Nutmeg was talking about, which is, you know, a way that actually satisfies the needs of an individual. Every bank interface that you see has lots of information, really complicated, really busy, trying to sell you something, trying to give you what you need, not quite sure which one it is, different buttons all over the place. Simplicity, really understand it, spend time thinking about it, care about the design, the creativity, create something of beauty, of, of simplicity.
37:00 It’s really easy to make something really complicated. It takes a genius to make something simple. There’s a great quote about that, and it’s just, so you got to do it outside the bank, and that’s what I advise, which is start small, try and do it outside the bank, and see where you get to, and then when you integrate, integrate, grit your teeth, you know, hold, you know, hold a piece of wood in your mouth, and just take it, ’cause that’s kind of the reality of what you have to do for a few months to get the integration working, and then prove the model, and once the model’s proved and you have a platform that allows others to plug into it, that’s when you can start to let the startups do what they’re great at, which is innovate really quickly, do some disruptive things, but in a controlled environment that doesn’t damage the bank.
37:37 Cool. The financial institution, good advice. And on that same note, what do you tell the startup who’s got this great idea that’s going to revolutionize the banking industry, but they can’t get in the brick walls, and you’re talking about the bank has to lower them, but what, what about the startups that are trying to get in? Like, what do you tell them? ‘Cause I’m sure you deal with this all the time.
37:53 That’s part of the reason your organization exists. What do you tell them? You speak to people like Claire and I, which is you got to use the connections to say, actually, is it of value to the organization? The one thing that we, we probably can do better than any startup is articulate the benefit to the bank, articulate the benefit to a financial institution of this is why you should be doing it. Most of the startups don’t have an understanding of actually the, the restrictions organizations in financial services have all the problems it could cause, etc., so having some level of understanding around that and then helping kind of facilitate the conversation, push the product in front of them, not for self-interest, because what you want to try and do with the bank, or with anyone, in any, any situation, is build trust.
38:34 And trust comes from that credibility, the reliability and the intimacy, and it’s undermined by the self-interest. So it can’t be just about, I want to be, I want to be rich, I want to be successful. It’s about, I actually really want to change financial services for the better, for the customer. I want to make it great. I want to make it truly better than it is today.
38:49 Self-interest is gone, then what you need to say is, I’m credible, I can do this, I understand your business, I understand why I’m restricted, I’m reliable, I’m going to do what I said I could do, and I’ve got some closeness to you, some intimacy, and I’ve built a relationship, and I understand you. That’s how you build trust, and you got to build trust really fast within these organizations, because the, the, the senior people move very quickly, and therefore you’ve established trust with one person, and suddenly that the job’s gone. He or she has moved on, someone else in there established trust again, so you’ve got to get in you’ve got to deliver, and realistically most financial institutions don’t deliver quickly, and therefore you can just show the pace of delivery um, you know, we’ve built something in seven, eight months that probably would have taken the bank three years if you done internally, if they’ve even been successful of delivering it.
39:32 Connecting it is a different challenge. One of the pieces of advice we give to our entrepreneurs and startups at Level 39 is, turn your attention away from your technology, so slowly fall out of love with your own technology, your own idea, and fall in love with your customers’ problem or your customer’s need, and really stay focused on their, uh, their need, their problem, and the benefit your value proposition provides is really, really important. I think another way to help the startups, uh, sell into the banks and work with the banks is by bringing in another, more established partner.
40:13 Um, we ran an accelerator program called the 3D Fintech Challenge, and that was sponsored by Doo System, and it was a startup competition over 6 weeks’ time, and the startup who participated partnered with Doo System, and together they built a product, which they sold into the banks together. Doo System, well-respected platform provider, a long history of operating in highly regulated environments, and they partnered with a startup, very cool application built on the ex platform, and together they had a new proposition that the banks could invest in, a little bit, with a bit more comfort. So those kind of accelerator programs and partnership models work really well.
41:02 It provides a bit more comfort for the banks who are nervous about investing in an early-stage startup. They wonder if they’ll be in business in a few years’ time. So that’s, that’s another interesting model to help a startup move into, and move into the corporate world. And I think what we tell our corporates as well is that they need to take bets, that they do need to segment off sections of their budget, to be prepared to, uh, to play with, um, and to, to take some smaller bets and some larger bets on.
41:36 And it’s important that there is also cross-team buy-in, so you have the technical team, you also have the business team involved, and you maybe even have the marketing team involved as well. You have um, executive buy-in at the corporate level behind the project, and that’s really important. As you say, these, these organizational structures are shifting on a, on a regular basis, so it’s important you know what the decision-making cycle is and the decision-making structure is of your organization.
42:08 Awesome. That was a great six minutes. I hope anybody in fintech watches, just so I can get both of your thoughts. Um, Claire, I want to get your opinion on something I mentioned at the beginning of the show, as far as this is three in a row for us for women in tech, and I guess I’m noting it because it doesn’t happen very often, and I brought it up with, um, with Diane and with Sandy, and they both had different views, and I feel like I’m not even asking the right question sometimes, and maybe you can tell me the question I should be asking.
42:33 But Sandy last week from IBM said that in the States, actually, like computer science enrollment for girls is down, like, in the younger years. Um, you know, and Diane was saying we need to get women coding early on. We had Claire Suck Cliffe from Code Club here, and, you know, she does all sorts of programs getting people started earlier. I mean, what do you say when people say women in tech, are we asking them the right questions, or should we be talking about different things?
42:57 And what do you see from the top of your organization? Very broad question. Yeah, big question lately. I’m not the only woman in the room. There are several others around the table, which is exciting okay, and we wink at each other from across the room.
43:17 Uh, I think there’s certainly an education piece, and there’s certainly a, a piece of work to be done by larger organizations who need to champion and promote their internal teams, their women, into higher positions of management and leadership. So I think there’s some professional development work to be done by large corporations. I think startups need to also play a role here. We see such a rich tech startup scene in London, but unfortunately it’s often a group of guys, a small group of guys, and it’s really important that very early on in the development of, not only the company, the product itself, needs the female perspective.
44:10 It needs the female perspective built into the UI, into the functionality. Um, if we expect 50% of your users to be this customer base, then let’s represent that in the build and in the decision-making part of your organization. So I think we need to acknowledge that good business hygiene and good technical hygiene must involve women at the table. I think, I think we need to talk about it in the UK more. I think we need to share the salary discrepancies.
44:47 I think we should be more open, and we should say to each other, this has been my experience. I actually have experienced sexism. I have experienced, um, discrimination, and this has been, this has been my experience, and I think we should be, uh, open with that. I think sometimes we don’t like to talk about it. A lot of women don’t like to talk about it, because they don’t, I, I don’t want you to brand me as a woman in tech.
45:17 I want you to brand me as a, as a founder, as a CEO, as a businesswoman, um, as a business person I suppose, uh, because, uh, because I don’t want you to have that filter on me at all times. Yeah, Sheryl Sandberg, who wrote Lean In, Facebook, what is she, the COO or whatever she does there, but she said even she was like, can I talk about this? Can I talk about that? I’m a mother. Can I talk about all these other demands?
45:43 And, you know, she’s the top of her game in the top of, you know, tech, but she was still, you know, unsure about coming out, and then she was happy that she did. So is there a big stigma just even to talk about it? To talk about it? Yeah, and I think, uh, I think sometimes, uh, women struggle with talking about the issue directly, and then, and then actually, uh, asking for change. So we experience it, uh, but let’s, let’s try and come up with a solution.
46:19 Let’s actually look at the problem. Maybe the problem is you’re being paid 20% less than your, than your colleague who does the same job, or maybe even, you do, you have a higher job and you’re paid less than he does. Um, I think you need to look at that with a, uh, with a business lens, and have a, a business conversation, a tough business conversation, with your manager, with your organization, to say this doesn’t make sense. I would like something done about it.
46:52 You need to ask, and you need to articulate it, um, um, in, in business terms. It’s not good business hygiene if women aren’t, if there aren’t women on your boards. It’s not good technical hygiene if, if women aren’t feeding into the product development process, and it’s, it’s not good customer management if, if you are, if you don’t have a diverse range of voices, uh, at the table. I don’t, I don’t just mean women. I mean diversity as well, multiculturalism.
47:23 Um, it’s an important, uh, consideration, so we need to look at it from a business lens, and then we need to ask, and we need to say, well, actually, uh, this is what I would recommend, uh, to, to solve this problem. I think we need to say that more. There were 273 people at your launch meeting, August, August 6th. How many were women? Um, I didn’t see any in that video.
47:48 You actually, quite, quite a few. I think, uh, percent-wise, what are we talking here? I think about maybe 20%. Okay. I think we’d be, uh, doing quite well if it was 20%.
48:01 And the industry in general, what, what is it? Is it 20%? Is it 25? Is it, in fact, 10? It’s about, uh, 11 to 15 in accelerators.
48:11 Okay, that’s low. Well, I was about to ask you, what it is at Bold Rocket, but don’t, if I want to ask you, well, it’s going. I was just thinking when we, we were talking, um, I’ve actually got a very balanced team, and I don’t look at the world from a gender or color or sexual orientation perspective. I just look at the world as being, has that person got the right skills to do it? And I always have done, and when I ran the firm before, you know, a very balanced approach.
48:43 No one, there’s no pay discrepancies. There’s no view of someone is male, female, Black, white, whatever. It just doesn’t even come across my mind of being something that I would consider. Um, and if it happened, I’d kind of question myself and just fix it. I think there’s, again, from an industry perspective, um, in financial services, there is very much a stigma attached to maybe male dominance, and it’s probably, you know, backed up with stats, which absolutely prove it.
49:09 Um, you just got to treat people with the skills and the respect of being a person. It doesn’t matter what they are. Um, and I think people just need to, and if people are doing things which are sexist, ageist, whatever it is, then they need to be pushed out of the industry. People just need to, you know, not want to work for them, not be comfortable with them, and you know that will change the industry we’re in. Yeah, pay is a great start, ’cause that like levels everything, and it gets it out.
49:34 Like you said, Sheryl even said that she’s like, a lot of times the women will, they just won’t stand up and say, this is not cool, you know? And they, like, they won’t just stand up and say, no, this is not okay, and I demand to be paid, and pay me. And then, as far as changing the industry, it’s so hard, and, uh, I mean, education early on and getting people coding, of all genders and in all ages, and everything is an important thing, but it’s not easy.
49:55 Can I recommend three people for you to have on the show, if you haven’t already? Louise Bowmont from Platform Black. Claire, Finn Levy from Asencia. Okay, and Julia Groves from the Trillion Fund. Three female fintech entrepreneurs, all very, very smart businesswomen, uh, and incredible, uh, speakers.
50:17 Okay, all right. You’re calling me out on air. I like it. All right, I’ll have to follow that up. Good.
50:21 I’d love to have more women in here. Um, Claire, I always ask, uh, the person in the hot seat here a few questions at the end. I’m going to hit you with those. If you could make a phone call to the 20-year-old Claire and give that young woman a bit of advice, what would you tell her? Uh, yeah, don’t, don’t sweat the small stuff, it’ll work out.
50:43 Um, and trust your instincts. Uh, I suppose, were you, uh, in Toronto then? Were you, were you, did you have a tech slant at that point or not? Um, I was studying architecture and fine art and literature at University of Toronto. I was, um, a very, uh, curious undergraduate student, so I had a really, uh, a broad range of courses, and I, uh, I studied, uh, architecture, as I was saying, and I started a sustainable architecture company, so I was, um, it was my first entrepreneurial venture.
51:18 Um, and I didn’t, I didn’t know where it was going to lead. I just knew I needed to pay my way through University, and, uh, and I suppose I was just, just feeling out the world of business, and wondering whether I was going to, to make something of myself. Uh, and, uh, and I think, I think I, I would tell myself that, to, to trust my instincts. Good advice. We’ve heard that a few times before.
51:45 Um, to, uh, uh, to everyone, what is the best piece of advice you’ve ever received? It could be business, or it could be personal. It’s always the toughest question. So, be bold. Who told you that?
52:00 My dad. Okay, and, uh, were you able to manifest that in some way? Did you understand what he was talking about at the time? Uh, yeah, I mean, with more, more or less levels of grace at times, but, uh, yes, I think I’ve been bold in my career, and I think, uh, we uh, I think women should should be bolder in general, um, and I think, uh, yeah, it’s paid off. I’ve been, I’ve had a good career.
52:31 Okay, last question to the 20-year-old that’s listening to, uh, to us around the world, China, South America, anywhere, uh, who wants to get more involved in tech. What advice do you give to them? What should they do? Uh, educate yourself. Network.
52:47 Never have lunch alone, and tap into your own passion, because you can build with today’s tech technology. You can build a business, uh, out of whatever your own passion is, and whatever your own desire, whatever your own desire is in life. Never have lunch alone. I haven’t heard that one before. That’s pretty good.
53:11 And, uh, what are the chances of Bold Rocket becoming a member of Innovate Finance? To be, to be continued. Okay, fair enough. I’ve got to earn it. That’s a, that’s a great answer.
53:24 It could be a fascinating combination, but that’s all I said. That’s not why I brought you guys here today. Um, Claire, thanks so much for coming on, uh, and answering some of these questions. It’s a big job you have here and a big mandate, so, um, I hope, uh, in a year from now you can come back and tell us how great it’s gone, because you know, everyone sees fintech as London. It’s our way to break out uh, uh, we had uh, uh, deu peristawa here, a former guy at Google in new business developments.
53:48 I introduced you to him this week, and he said, uh, you know, the fintech company in London is going to be the next Google. You know, it’s got the network effect here because of finance and the city and the talent, the design people, like you said, and like, this is the shot, so, uh, I hope it happens. You know, between the two of you. Thank you very much. Good people like us, then you can come back, and, yeah, drive me around in your Ferraris and things like that.
54:09 So, um, uh, if you’re listening to us on iTunes, you can watch us on YouTube. Uh, if you have a guest suggestion, uh, male or female, uh, send us an email at hells silicon.com. And, uh, Claire, if people want to contact you, what’s the best way? Is it Twitter, your website? What’s the best, Claire, at innovatefinance.com?
54:24 Good. You always know who if the real, the real player, if they give you the email right, on, right online. So, um, fantastic. Uh, Andrew, thanks for coming. I appreciate it.
54:32 You’re jet lagged, but you’re still very much here, man. Really, I appreciate a lot of your insights. It’s good stuff. Good, see. Um, as we say, it’s about the people.
54:41 Thank you both, and all the best. Thank
