5 min read
Zooming out: 11 learnings from a decade in fintech
Guest author Richard Davies shares his reflections as he transitions from his role as Revolut’s COO to Non Exec at Revolut, and CEO of Allica Bank. As fuel for the future he looks at his learnings from Revolut as well as his wider experiences and inspirations over the last decade in financial services and fintech.
Talent is everything. People are the essence of good engineering, excellent design, strong sales and relationship management, and robust risk management. So the combination of a high talent bar and engaged, motivated staff is essential.
Getting a blend of talent can be a real success ingredient. I’ve really enjoyed working with a blend of people with significant specialist domain experience, combined with some raw smart talent that bring creativity and energy both at fintech start-ups like Penta and at Revolut.
In recruitment, you need to be clear on the skills needed and assess these thoroughly in the hiring process. Too many interview processes are unstructured and repeat the same high level questioning from multiple interviewers. Amazon has ‘bar raisers’, who are their most trusted interviewers, who are tasked with raising the talent pool with every hire. Psychometrics and tasks relevant to the role are also essential to get an objective, measurable assessment. For example, as Revolut values data skills extremely highly, all candidates do a data analysis ‘home task’ which is a key screening device for analytical skills.
Retention of talent once hired is really important. For me this is about:
- A strong organisational purpose that people believe in and want to get behind (the ’why’)
- A flat, agile, organisational structure that allows people to perform to their best
- Recognising success on a regular basis, providing positive reinforcement, alongside constructive feedback
- Integrity and collaborative values – value the ‘how’ as well as the ‘what’
2. Agile organisation, underpinned by technology platform capabilities
This is something I’ve written about before - and I’m passionate that the organisational model of customer service aligned cross functional teams, will deliver customer and commercial success. Product should therefore be central to the whole organisation thinking, with product owners driving all key external and internal customer services on an ongoing basis, not just one-off projects. For example a team focused on automation of manual processes in the customer journey likely needs to have process skills, design skills, data skills, and front- and back-end engineers.
The cadence of the organisation is also important to balance pace, autonomy, and alignment. I believe a quarterly cadence is good for the whole organisation to align around, similar to that used by a number of scaled agile organisations, where three months ahead is an appropriate ‘increment’. Then weekly or fortnightly sprints / progress reviews with an emphasis on iteration of output every sprint.
As per my past blog, scaled agile work also requires appropriate technology platform foundations – including modular architecture, CI/CD testing and release capabilities including automation integration testing and rollback processes. Otherwise agile teams with waterfall releases lead to frustration. Too many incumbents save changes for monthly or even quarterly large scale releases, often incorporating hundreds of changes. While huge effort is applied to their governance and testing, inevitably the interaction amongst hundreds of changes and the differences between development, staging and production environments lead to regular issues. So much better to release small changes day by day – while there may be more regular small problems, much better this is quickly managed through automated roll back, than incur major problems and outages.
3. Have a bias to action, being conscious of second and third order consequences
I have seen many times that iteration is generally critical to reach the best solution – it’s generally impossible to plan something to perfection – so getting things done rather than hypothesising forever (‘analysis paralysis’) is a really important cultural trait. The watch out here is where there can be second or even third order consequences which need consideration upfront to avoid regrets down the line.
It’s generally impossible to plan something to perfection.
Amazon’s concept of one way vs two way doors relates to this. Most decisions are two way – so reversible – which makes an iterative approach with a bias to action completely optimal. But one way door decisions need more careful and considered thought and analysis upfront to avoid negative consequences down the line.
The distinction is easy conceptually but often less clear in reality. This requires strong judgement in the management that can separate the two in the heat of battle.
4. Honesty – truth is the key
Too many people and companies don’t get the truth on the table, and truth is essential to the best decisions, alongside unity once a decision is taken.
This is well summarised in one of Amazon’s leadership principles: "Leaders are obligated to respectfully challenge decisions when they disagree, even when doing so is uncomfortable or exhausting. Leaders have conviction and are tenacious. They do not compromise for the sake of social cohesion. Once a decision is determined, they commit wholly."
This applies equally to leaders as people – well summarised by Ray Dalio: "How much do you let what you wish to be true stand in the way of seeing what is really true? So, what are your biggest weaknesses? Think honestly about them because if you can identify them, you are on the first step toward accelerating your movement forward."
Creating an environment where people feel they can say what they truly think, as well as hiring people who are not afraid to challenge, is a key duty of leaders. Being non hierarchical is a key part of this - people at all levels should feel able to provide honest opinions of what they believe is best for the customer and the business.
Creating an environment where people feel they can say what they truly think, as well as hiring people who are not afraid to challenge, is a key duty of leaders.
5. Data skills and accessibility throughout
This is such a striking difference when I think about Revolut relative to traditional banks. Data skills are hugely valued and are a must in hiring. A wide range of staff can and do use SQL in Metabase to create real time queries from the extensive data warehouse. This is massively enabling in terms of the ability of staff to rapidly investigate and solve problems (be that customer experience, risk management or commercial), and to have dashboards that provide ongoing monitoring and alerting. The comparison with traditional banks’ small centralised analytics teams is stark – having data skills and access widely distributed underpins much greater use of data throughout the organisation, and 10x faster progress.
One watch out here is the need for a common data model/dictionary and clear data governance / quality to avoid creating multiple competing versions of the truth on key data elements which can arise as people design different queries to answer similar questions. Change management of core underlying data tables is also a key element to check if many different people can build queries on top of a data table, that the person making changes to the table may not appreciate.
6. OKRs / KPIs
Revolut is highly KPI driven. Many companies are at a company level, but few take this top to bottom, setting quantitative KPIs that cascade through company, department and team level, measured via real time data, and central to performance management. This approach needs to measure everything that matters at a detailed level and allocated to relevant teams - eg success rates of all key journeys/features (from website, downloads, onboarding and activation), daily/weekly/monthly activity, retention, customer feedback from Trustpilot/App Store/NPS surveys, etc. Setting stretch goals here can then drive creative thinking on how to achieve break out from the industry - and make it happen mentality.
Two watch outs here though – firstly KPIs can’t be everything. Inevitably there will be side effects on things you didn’t predict – sometimes called ‘the cobra effect’. There is also the risk that people focus only on their own KPIs at the expense of collaborative behaviours. So a proportion of performance management should be on putting the company’s interest first and on measuring and incentivising good behaviours (collaboration, risk management).
7. Real time KRIs
With regard to risk management, one aspect of Revolut really stands out – the use of near real time KRIs for all risk areas. The aim here being to identify risk and then control for it via appropriate KRIs with thresholds set that provide escalation alerts to various levels if breached.
The majority of traditional organisations have monthly MI on risks that goes to a committee 3-6 weeks after month end. The difference is stark, and powerful.
To enable this, we’ve patiently developed a clear risk taxonomy of top level risks, and broken these down into risk components. The risk register is mapped in a common way against the taxonomy, with the KRIs set to measure performance against each risk on the register, and with thresholds for automatic escalation to second line, executive risk committee, or Board depending on severity if breached.
This is supported by a cross company process to raise risk incidents, and subsequently track these by second line (and thematically third line) which, in combination with the KRI data, allows for a very strong ability to predict areas of risk exposure, take co-ordinated action, and direct assurance and audit resources to highest priority areas.
Experience also matters from a staff perspective – this is an area so often neglected by banks for their operational staff.
8. Customer experience excellence
You must care deeply about the customer experience through design, including the user interface. Speed, ease, functionality and simplicity are vital as they mean a pleasing experience for the customer. This needs design to be embedded at the heart of the company and underpinned by a common, collaborative design tool, not entrusted to a third party agency doing one-off work as has often been the case at incumbents,. There must be constant thinking about how to improve the UI, including A/B testing for data driven identification of the best customer journey – this is central to the role of product owners.
Experience also matters from a staff perspective, particularly if you have high frequency processes – this is an area so often neglected by banks for their operational staff. Good process and interface design means greater efficiency and less frustrated staff!
9. Automate, automate, automate
Though really for high frequency staff processes you should automate. Don’t just accept an ever growing army of operational staff that you aim to make modest efficiency improvements with through process or organisational tweaks. Seek to automate processes and make them scalable.
For example at Revolut the process to ask a customer for source of funds information following a transaction monitoring alert has been automated to improve speed of response to the customer. What comes out is still reviewed by an analyst, but the information collection process is automated for standard cases. This is similar to many fintech SME lenders who have created automated processes for information collection from the client and bureaus, to be presented to the underwriter in a very digestible way.
Data skills alongside scalable process building skills are vital to identify where automation can be best applied, and to implement automated processes or models. There should be a dedicated product team for this.
10. Cost control
An undervalued aspect in many growing companies, this principle really stood out at OakNorth. Rishi instilled a culture of frugality which (combined with relatively large size loans) allowed OakNorth to break even within twelve months of launching as a bank.
Revenue is uncertain but cost is certain, so treat equity capital like your own money, is the core of this. It’s very easy for the principal-agent problem to arise in companies, where a manager’s KPIs are easiest achieved by spending money (on more hires, or third party consultants). Having a truly lean mindset, and rewarding this, is a key part of sustainable success.
I wanted to end with something that may seem weirdly specific… Jira is a powerful and highly adaptable tool that can be used for many things. Many companies use Jira for at least some processes – eg IT help desk tickets, or specific project management. The software is very powerful in the extent to which it allows easy configuration of workflows that co-ordinate the organisation, and allow automated reporting and follow up.
Revolut has really embedded Jira at the heart of all aspects:
- Team, programme and centralised backlog and roadmap tracking
- Governance including Board and ExCo actions, risk committee decision processes (eg new product approval), and risk incident tracking
- Service desks for each department to have visibility and control over the flow of all requests
This allows for great visibility of what is being worked on across the company and a common language to present and discuss roadmaps, automated MI production (eg what % complete is project X, how many severity 2 risk incidents are open and with what average duration), and an audit trail when needed on who approved what and when.