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CFO Interview: The Secret to Working with the Big Banks

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Ben is the Chief Financial Officer at ezbob, heading up financial servicing and strategy for one of the leading startups in the lending-as-a-service (LaaS) sector. ezbob helps banks and financial institutions optimise and automate their lending processes. We discuss automation in the time of lockdown, how to work with big financial clients and the role of the startup CFO in 2020.

Q: Ben, could you give us a little more information about what ezbob does and where the idea for the company came from?

A: ezbob is a technology business. We provide ‘lending as a service’ software to banks and financial institutions that need to digitally transform the business, mainly SME and consumer lending. We used to be a direct lender in the past to SMEs in the UK, then three years ago, we pivoted to a software provider.

We have big-name clients like Royal Bank of Scotland through Esme Loans, Metro Bank, American Express and Clydesdale Yorkshire Banking Group, with more big projects coming soon. With so many small businesses now being forced to shut due to the government-sanctioned lockdown is an opportunity for us to help businesses that desperately need working capital. Our solution is offering banks and financial institutions the chance to make lending in an automatic, remote process so the economy needn’t stop in these strange times.

Q: Many startups and fintechs are now moving outdated and more traditional face-to-face processes to digital platforms, be that on mobile, tablet or point-of-sale. Why do you think it’s taking something as drastic as the current lockdown to make big banks do the same?

A: It’s strange, but banks are fundamentally very conservative organisations. They have a lot of staff working on the shop floor, which is a very traditional setup. As a result, they are typically slower to embrace the gains that fintech modernisation can provide.

I think it’s also to do with fear. Banks often have a huge IT department, who sometimes try to keep things in the firm. Where our solution comes in is that we allow banks to conduct their lending business much faster, much cheaper and with less people.

Q: What was it particularly about lending that was rife for some kind of innovation and optimisation? What were the hurdles and frustrations that ezbob was able to overcome?

A: You can see problems in every procedure that you do in a bank. In the UK and every other bank in the world, there’s a lot of manual documentation and meetings, even reviewing documents is a manual process.

When you expand that out to manual account checking, accessing bookkeeping systems, running anti-bribery procedures, it’s actually pretty unbelievable that banks are still conducting business this way.

It’s amazing that we are in 2020, talking about digital transformation. This is something that was supposed to be the norm ages ago. It’s not even as if we are talking about one bank in particular that is lagging behind. It’s very hard for a large bank to change its systems when their organisation has hundreds of branches, thousands of staff etc.

That’s one of the advantages ezbob has. We can use our system as an add-on to work with the bank’s existing systems without having to completely discard the legacy system altogether. This is obviously very appealing to the bank, as changing the legacy system can cost an enormous amount of money and cause a huge amount of stress.

Q: For startups and fintech innovators looking to work with these big organisations, how important is being able to work within existing systems?

A: It’s critical, but it’s also urgent for banks to optimise processes and create a better user experience.

Our approach comes from a place of wanting to help existing processes operate more accurately using big data. It isn’t just that we check more data in our process, we also do it in a way that allows the banks to tailor their loan pricing to the level they need. If they want to take on higher risk lending, they can do it and adjust their pricing accordingly, and immediately. Automating these processes while also managing the risk of lending in an accurate way is hugely important to most lenders.

Eventually, I think all banks will modernise and update their systems, but we shouldn’t sit and wait for that to happen. That’s why we have taken the approach of having an API that allows us to link up with many different systems and lenders. If for instance, a bank just wanted to use our risk analysis features, that’s an option. They can also pick any of the smart onboarding, servicing, payment features, whatever fits their particular requirements.

Q: Coming back to your role as a group CFO, you joined ezbob as the company was in the process of scaling up. How easy is it to navigate that process of scaling up, and is there any kind of advice that you would give to other businesses looking to go through a period of that accelerated growth?

A: Personally, I enjoy working specifically for this kind of organisation, it’s where I like to work. I have been lucky enough to enjoy that not only in a high-tech, younger organisation, but also in big organisations, almost all the companies that I have worked for. In general, companies need to have good growth processes in order not to lose control or money through inefficient processes.

My role is quite visible in that respect, meaning to have the right procedures nailed down, adding both a finance and legal perspective to everything new we implement. But this can’t come at the expense of the entrepreneurial environment. It’s a trade-off, like growing pains. At the beginning, everyone is doing almost everything. When you grow, you need to do things in a more mature, scalable way, you need to think like a grown-up.

Often in the early days, you can start a contract with a supplier, but nobody is making sure that the contract is in line with your company’s growth plan. Someone is more likely to say: “let’s hope that it will grow and then we’ll talk.” Then, once your company grows, you need to discuss the legalities again.

You need to make sure that these processes are being done in the right way, meaning working within budget, measuring the processes and the effort that is going into them. Does a task really take 100 hours? This past time did it take us 50, 150, 200? No one checks. And these kinds of processes need to be evaluated retroactively to make sure that it’s in line with the business strategy.

So it’s not just implementing processes, it’s also reviewing them and making sure that they are working, and that they are the right processes. You also need to be open to changing them when they aren’t. It’s a difficult thing to do in an entrepreneurial environment, but it’s something that needs to be done because otherwise you’ll lose control, which isn’t good for anyone.

Q: In your experience as a CFO, what kind of role do you play in fueling the innovation within the business?

The CFO wears many hats in the startup arena.

I’ve worked for a number of high tech companies in my time. The thing about working in a fintech business is that the product offering is really close to my professional experience and knowledge. That gives me the ability to have a better view on the product, on the roadmap, on the market, on the customers. In other businesses, I could give my two cents, but it wasn’t professional advice. In that respect, working for a fintech company is totally different, because in many ways I am the target audience.

Q: I guess just to round off, it would be great to hear what you believe the future of banking and fintech as a whole will look like?

A: I believe that this is the 5-10 year period when the industry will change dramatically. Even when we get back to business as usual, there will be a change in the way that the people interact with banks. Devaluation in the market will force banks to become leaner in terms of staff, which will require them to find solutions that will assist their customers in the way physical staff used to. Banks will not only need to find a cheaper, more efficient way to lend and operate, but also a more accurate way in terms of the risk.

I believe that by the end of this century, no banks will be operating the way they do now and lending will be the first area to change completely, first with onboarding, then risk assessment, then the possibilities are endless.