Fintech is becoming more of a crossing of emerging technologies, with machine learning, blockchain and digital banking often being utilized by the same organization.
Julian Sawyer is an expert well-placed to give his take on both the neobank and cryptosphere movements. As well as being the Managing Director of Gemini in Europe and an Advisor to the Board at the newly established Australian neobank, Volt, he also co-founded the UK neobank giant, Starling Bank, and led it through a period of high-growth as its COO.
DisruptionBanking asks him what it is like to steer a high-growth fintech through trust in the digital age, the current talking points of decentralized finance and where the future lies for the emerging technologies.
*Founded in 2014 by Cameron and Tyler Winklevoss, the Gemini digital currency exchange supports the Gemini Dollar (GUSD), a stablecoin that maintains an even 1:1 peg to the United States Dollar, with a daily traded volume in excess of $40 Million.
Could you share the keys to gaining and retaining high-growth as a Fintech?
As a fintech you have to be totally focused on the customer and the customer’s experience. You have got to be highly customizable to the customer. Look at content, at providing an engagement and be engaging with your customers.
This is not about having technically the best product, but having the most engaging product out there. The product and service that people are wanting and that excites them. Comparing some of the fintech products which have the same product as an incumbent or traditional organization you say “technically they have a lot of similar features” – absolutely. But then another layer, is engagement.
“the voice of the customer is critical
That is by providing content to them, insights, a different way of doing things. That really is critical in getting that viral customer growth.
If you go back to that question and what does it truly mean, it means “how can I acquire customers on a cheaper basis than I would as a traditional player?”
How do I do that? Word of mouth – the voice of the customer is critical. How do I get word of mouth? I get that by having a fantastic product, and being engaging and having passion. Because we as humans talk about things we are passionate about. If we are not passionate about it and have no particular interest then we don’t engage.
How important is gaining customer trust in the digital banking age?
Trust is absolutely critical. Look at Maslow’s hierarchy of needs, right at the bottom is safety and security. What that means is if you’re looking to have my money then I need to be sure it is secure.
Banking products offering a current account or savings product – you want to make sure money is safe. If you are like Gemini, a crypto currency exchange, then you’ve got to make sure you’ve got the best, most robust, compliant and secure exchange in the world.
That is just basic – 101. If you have a banking product that is a little too fun, flippant or immature then consumers may use your product to have a play with, put a few pounds or euros in. But they are not going to put their salary in. They are not going to put their investments in and trade on that exchange. So trust is everything.
I think more and more consumers and industry commentators will be talking about trust.
What is the most interesting project happening in DeFi at the moment?
What I think is super interesting is we are at a pivot point now where crypto is coming out of the ‘geeks’, people who are very technical – people that absolutely understand and are excited about the technology and moving it now to mainstream conversation.
That is from across all stakeholders; regulators, financial institution services and the consumer perspective. Overall as an industry, we have got to that pivot point.
And this happens in any industry. You suddenly start getting to that pivot point. With the new energy in the market you will see a divergence of actors in the market as different propositions and solutions come to market. Are all the exchanges the same? No, they’re not. They will approach security, compliance differently. Some will offer a very wide range of currencies.
What we believe in Gemini is we want to offer the currencies that are liquid, that are safe, that are stable; that are secure.
“Delving down, not every platform is equal
These differences go further than just the exchange component – customers are looking at the way you would want to store your digital assets. Custodian or wallet. Again, there are different types of services. You would have to decide how much insurance your provider is going to offer in the marketplace.
Delving down, not every platform is equal, some are more equal than others. Because the consumers and institutions are going; “I want to go to the company that has the highest insurance cover, I want to be with the one that has got the best custodian product or I want to be with the one that has the most liquid market.”
That becomes really interesting. I have been seeing this in the challenger bank space because three or four years ago people were saying the challengers can all be lumped together – they are all equal. Now your starting to see some very different businesses, strategies and ethos.
I’m not going to say who is right or wrong in that market. I have joined Gemini because I clearly believe that they are really doing it the right way. That’s where the market is really interesting.
When do you think stablecoins will be used widely as a medium of exchange and storage of value?
I have two views on this. One is that in the last 15 to 20 years people have been saying the ‘death of cash’, that credit cards and debit cards will take over and then its mobile wallets will take over and guess what, we’ve still got cash. I don’t see stablecoins suddenly coming in and replacing fiat in every instance.
I think the use case for stablecoins are at the beginning, the first chapter of the book. Gemini is an infrastructure play. We own that exchange, that capability, that storage of the Gemini dollar (GUSD) in State Street in New York. When you want to look at what the next chapter of the book is with stablecoins, it is what are the use cases?
There are a few out there at the moment and they are really interesting. But I think we are in the position that not all use cases have been developed. By providing the infrastructure, this will enable other organizations, fintechs and traditional players to use the stablecoin and build truly innovative products.
Gemini are going to see really intriguing opportunities on many factors; B2B payments, cross-border, storage of value and probably a hundred and one other ideas that are yet to emerge. The point is I do not think it is a replacement. What it will be is a different part of, or an addition to the payment infrastructure as it has some unique features that help consumers and businesses.
State Street and Gemini recently announced a new pilot. For Large Fintechs like Gemini it is easier to gain strong collaboration but it has been remarked that Open Banking and Fintech/Financial Institution partnerships have not taken off as much as it could have been hoped. What are your own projections?
Starling’s CEO and Founder, Anne Boden, said “you don’t drive innovation with regulation.” Open Banking is a classic example of the regulator trying to drive something in the industry.
It doesn’t work.
Looking at crypto, you have got to mirror it back to the very early days of the internet. Or contactless cards – how were contactless cards in the market before they ‘got critical?’ In the UK it was about 8-10 years. The pivot point for that was when the London underground and the London transport network accepted contactless. They removed their in-house payment mechanism, Oyster, and changed it to being contactless. That was the transformational moment.
That payment of technology helps consumers, makes it quicker and easier for retailers. We all know and love contactless now. It took eight to ten years to get that out there. We can see that the journey for crypto as with any technology will be along those lines of that pivot moment.
It is now undisputed that blockchain is a fundamental technology for this century. We know this is going to power a whole range of things, of which cryptocurrency is one of those examples.
The technology is now being adopted. Now being accepted. We have got to a point where a lot of those big financial institutions that had crypto or blockchain projects that were in the innovation lab, in IT, are now being surfaced with banking business owners actively engaging.
“Fintech is a way of execution; it is a mindset
State Street is a fantastic example. We have been talking to them for a long time. They are a strategic partner to us and we have done a whole range of things with them. Our stablecoin Gemini dollar is banked with State Street. This is where you get that pivot point which I was talking about earlier – where you’ve got these organizations that are starting to say “I’m moving this out of labs, out of innovation”, as an academic or intellectual question to now being “I want to apply this, I want to put this into the market.”
This is not about fintechs vs. banks. In my previous life I spoke a lot about how that does not work, that concept of ‘fintech vs. bank’, for a whole range of reasons.
What Gemini have got is a whole fundamental pillar of its business which is around compliance, regulation and security. It has a way of working as Gemini is a New York Trust company. That is equivalent to a bank in Europe. That is a very high standard.
That is not a fintech, that is an institution. It just happens to be an institution that is very technology-orientated.
It is very customer-orientated as well as focused on security and compliance. I don’t think its fintech vs. banks, I think this is much more around the organizations that are providing a service, a fresh service, a more engaging service that these bigger players are going – “I need to have that / I need to work with that.”
What we are seeing over time, certainly a lot more this year and going forwards, these institutions are making steps and these steps all go back to this ‘pivot point’.
Fintech is a way of execution; it is a mindset rather than a regulatory status. If you understand that it is a mindset, Gemini is a mindset around being agile through our technology but having a lot of rigour around our compliance.
What are daily operations like inside a successful fintech like Gemini?
As an example, at Gemini I run a daily stand up – replicating the Agile approach.
Everybody at the team. Whether your compliance, or product or the MD, you will be in that stand up. We will talk about what we did yesterday, what we will do today. What things worked, what are our customers doing, what things didn’t from the marketing and communications perspective. What are we going to do tomorrow?
Having that total engagement, having that rhythm. That beating of the drum every day. 9.30, its mandatory. Everybody attends. If you’re not there in person, you dial in. Your expected to be able to update.
We talk about numbers. First thing. How many customers? What have those customers done? So that everybody in the organization understands our customers, the KPIs that we are working to, so we are all aligned on what I report back to my colleagues in New York. But also, what makes the difference in the business is talking and communicating.
The people who I think are really successful and the organizations that have proven themselves very capable are those with people who can roll their sleeves up, get the job done, who understand that the job is more important than the politics.
Eradicate politics out of these conversations.
We should be talking about why are we for our customers. We should be talking about how we help them, how we communicate with them. What we don’t want is people sitting in a particular function and are blind or deaf to everything that is happening around them. What you want is people who are very hands on, very technical about what they do.
What is a new emerging Fintech trend and why is it coming about?
Fintech is a very broad subject area.
In the UK, consumer banking, the current account – that battle has been done, with Starling and Monzo out there. I think in Europe there are some markets where it is still open, but with players like N26 operating there. But SME banking is huge. SME banking is where the next big opportunities are sitting without a doubt.
What I am seeing is a lot more people talking about crypto who would not have spoken about crypto a year ago. They are having more conversations. There are people I would have thought ‘I didn’t know you knew anything about crypto’ are now having a conversation about that.
“There are significant opportunities
I also think there are some very promising pockets of opportunity. There have been pockets in the past that haven’t got traction. I think some of the robo-advisory businesses, the first generation, have really struggled. Great ideas but haven’t got into that mass market yet.
What we are seeing in Europe overall is a rapid adoption of financial technology and the ways that technology can help manage your money, better. At the end of the day, that could be a whole different type of range of money. From crypto to fiat to it being invested or borrowing or just transactional payments. There are significant opportunities.
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