This interview is part of Scaling Enterprise FinTech | The Handbook, launched in Mar. 2021 in partnership with SixThirty Ventures and Finovate Europe. The Handbook includes proprietary research on ca. 65 Enterprise FinTech scaleups in Europe, Q&As with 16 founders on their journey to scale, as well as insights from 10 leading investors and financial institutions. Whether you are a founder with an idea, an early stage startup looking for inspiration and learnings, or an investor or financial institution looking to understand the difficult but rewarding journey to building a world-class Enterprise FinTech firm – download the Handbook here http://www.fintechforum.de/sef/
1. Tell us a bit about yourself and your company.
Railsbank is the leading global Banking-as-a-Service (BaaS) platform. It enables banks, businesses and brands to define the future of consumer and SME finance.
Marketers, product managers, developers, CEOs and founders are able to take their financial product vision and rapidly prototype, launch and scale using Railsbank’s open finance platform which consists of operations, regulatory licensing and a rich set of APIs.
Railsbank was founded by myself and Clive Mitchell in 2016, in London.
My own background started in the financial services industry. My first job working as an engineer in the motor industry and seeing the high levels of automation and “just in time” manufacturing achieved back in the late 1980’s early 1990’s. In the banking world this is called “straight through processing (STP)” and the financial world could learn much from manufacturing/process engineers in the motor industry.
I then learnt so much working in the capital markets business in one of the most innovative banks in the industry Swiss Bank Corp (today called UBS). This was back in the early-mid 1990s when this “internet thing” appeared on the scene.
Swiss Bank Corp were really the first real innovator to leverage technology in the capital markets area of banking to leapfrog the competition (e.g. better risk management, better options pricing etc.).
I built my first startup, Evolution, based on my experiences at Swiss Bank Corp to take the “internet enablement of capital markets” to many amazing customers like Goldman Sachs and UBS.
Roll on to 2007 and I had just left Dresdner Kleinwort Wasserstein to set up Currency Cloud. I founded Currency Cloud because the experience of a traditional currency broker at the time (name not mentioned!) was charging me 4% “no commission” and asked me to fax back my confirmation note and payment details to them! I didn’t own a fax machine!
So, with a colleague, Nick Bourner from Evolution (who is now currently Chief Architect at Railsbank) we built the Currency Cloud platform to offer straight through processing of physical FX and payments via APIs (we were the trail blazers in the API led fintech industry).
At Currency Cloud, we worked on jump-starting many fintech 1.0 clients like Transferwise, Revolut, Azimo and World Remit, which were born out of a demand by consumers to take more control over their finances and after the trust lost in banks in the aftermath of the credit crunch.
However, the Currency Cloud experience gave me an insight into how the old world banking industry worked, with a realisation that both the banking infrastructure and the banking industry itself, was clearly not adapted to the new digital world, and certainly had no clue about what a well designed API led business should look like. So, this experience led me to co-founding my current startup Railsbank, focused on solving this industry pain point for customers.
2. Give us the backstory – how did you get the founding idea, and how did the first sale come about?
Clive and I are often called serial fintech entrepreneurs and it’s a pretty apt description. We have been at the sharp end of creating and running fintechs for many years, and Railsbank is the culmination of those shared experiences.
The idea came about because we began to see there was a need for a company like Railsbank, an enabler that acted as a conduit for other fintechs, companies and brands to bring to market their financial use case.
The first sales came quite quickly, because we already had a following in the industry and our idea was not a suck-and-see theory – we had been sounding people out for some time. However, it’s a great feeling when you get your first few sales, as that’s the affirmation you need to then build the business.
3. Could you summarize your journey to scale from a sales, go-to-market and business development perspective, perhaps split into 2-3 key phases?
Our go-to-market strategy was not difficult, because it was an idea that had been road-tested within our community, so we were pretty confident it would get traction. If you’ve got the idea right, then sales come and once they start to develop, you need the correct business development perspective, because the pressure of a growing business can quickly overwhelm you. Although getting traction is difficult, it is only the start, because as you accelerate, the demands for money, time and resources grow keep growing, and you need to plan for that.
4. Which was the most challenging phase, and what would you have done differently?
Creating a startup is a complete challenge in itself and I’m sure every executive team has a long list of things that could have been done differently, that is the nature of business. But, as a team, we don’t spend time looking back, the key thing is to look forward and focus on the business now and going forward.
5. When did you decide to expand to the international/ US market, and how?
It was always the plan to expand the company out of the UK and Europe and our first step was Singapore, creating a launch pad in Asia. From here we are expanding into the wider APAC region and this includes helping to bring financial services to many populations which have historically been unbanked and underbanked.
The US came next and here, as well as offering our whole product suite, the focus here has been our innovative Credit Cards-as-a-Service (CCaaS) product, developed for fintechs, enterprise companies and consumer brands. In less than 12 weeks, Railsbank can deliver a credit card in the customer’s brand along with a user journey seamlessly embedded into the customer’s existing user experience. And its key to bear in mind that this process can normally take up to a year and it is one of the most painful processes a company can experience!
The idea is to encourage increased competition and innovation within the country’s USD4 trillion credit card market.
6.When did you first decide to raise venture capital, and what has been your approach to financing growth over the years?
Equity funding is one of the most effective ways to scale a startup and it allows you to quickly move from MVP to a proposition that customers will buy into. It was always in our roadmap to build our expansion this way and our approach has been to work with the best VCs who not only understand our business, but also share our vision and ambitions.
7. How is building an Enterprise FinTech firm different from a “regular” SaaS / Enterprise Tech company, and what three things should founders get right?
We are an enabler, the fintechs fintech if you like, so we are a right in the middle of the action. That means our core finance platform has to be spot on – it has to provide an unparalleled level of service for all of our customers who trust us to deliver their business proposition.
As to what founders should get right, its money, team and customers. Managing the company’s cash flow is crucial as without a solid financial footing, you’re not going anywhere. Then there’s the team – having the right people around from day one is hugely important, as is the realisation that you will need to continue to recruit the best people you can as you grow. Thirdly, and not finally, as without these you are stumped anyway, are the customers. And not only gaining customers, but the equally hard bit of keeping those customers happy. High customer churn means you will struggle to scale your business.
8. What’s on the priority list for you and your team for the next year?
Our priority is to continue to expand our global footprint, further strengthen our core product proposition, build out Credit-Cards-as-a-Service and help increase our lead in embedded finance as the world’s pre-eminent BaaS platform.
We will continue to expand our product range in APAC, developing our presence in such markets as the Philippines, Indonesia, Malaysia, Australia and Japan, and further strengthen our business in the UK and Europe.
We will also continue to invest in the team with the ambition that they be the best and highest performing pool of talent in the industry, and one which is able to operate on a global scale.
And broadly, Railsbank is on a mission to help to deliver financial inclusivity, via its customers products, to as many people as possible throughout the world. We believe that beneficial financial services are a human right and not a privilege.
9. Where is the financial services sector headed in the next 12-18 months, and what should we be watching out for?
The financial services sector is entering the most exciting period of its existence as power passes from the financial institutions to the financial consumer. It is now that we are seeing far more people getting the deal they deserve from an industry which has not always put the consumer first.
Open banking created a journey which has seen us quickly progress to Banking as a Service and Embedded Finance. This has allowed fintechs, companies and brands to use their
imaginations to build financial products that are not only beneficial to a wider part of the world’s population, but also has added excitement and engagement.
Key to this is Embedded Finance and this is where we will see the real excitement and engagement over the coming months.
10. Your favorite place(s) for a meal, coffee or drink (pre-COVID19)?
I do have a favourite cafe in London, but that would be telling, especially as a CEO needs a place for some R&R!