Episode 13 – Charlotte Crosswell

Episode transcript:

Donavan: Good afternoon, everyone. This is another emerging tech podcast from mad4 digital. My name is Donavan Whyte and today I have the pleasure of sharing the mic with Charlotte Carswell, CEO of Innovate Finance. Welcome, Charlotte.  I’d like to start by asking you to just give everyone a bit of an insight into Innovate Finance, what do you do? What are you trying to achieve, please give is a flavour of what Innovate Finance are about? 

Charlotte: Thanks Donavan. Innovate Finance is a membership Association. We call that an industry body and it’s there to represent UK FinTech. That doesn’t just mean we have UK members, but it looks at the UK FinTech ecosystem, whether that’s start-up FinTech companies, growth scale companies, but also the financial institutions who are bringing innovation to financial services. And then looking at the evolving role of big tech coming into financial services as well. So if you think financial services innovation through tech, you think about Innovate Finance. We have approximately 250 members split Between 200 FinTech members, and 50 larger financial and professional institutions sitting around our membership table.  It’s there to collate those voices and look at the growth of the sector and work through issues. So that’s the first pillar of what we do. A lot of people look to us as being the voice of the FinTech sector. We are fortunate because we talk to FinTech companies every week, we talk to the investors in FinTech, we talk to the banks looking at their own innovation programs and professional services firms representing them. It’s really important that we distil that and share that back into industry, but also share it into government, into regulators and our partners overseas, to constantly look at how the market is evolving. 

Donavan: You mentioned government; I’d be interested to know, how does the government support you and how does having the government as part of your ecosystem support the sector? 

Charlotte: It’s important to understand that a lot of FinTech groups have been set up by government to look at this, but we’re independent to them. Most industry bodies would have some independence to government. And that’s a good thing, because then you’re able to look at it objectively. Sometimes you have to lobby and sometimes you provide data, sometimes you provide research. Sometimes we respond to requests they have or what they’re looking to understand from the sector. So most departments we interact with on a day to day basis would be Treasury, and the DIT, department for international trade. The Treasury own the FinTech sector, and they want to understand it and what our understanding of the role of FinTech and how that’s evolving. They would ask us to look at particular projects, and we will understand whether we can do that or not, and we also want to feed data into them. Investment data and sector data within the different context. We want to know, how successful we have all been in bringing competition and innovation into financial services, post financial crisis. That’s really important. From a DIT perspective. They’re there to look at inward investment, but also to help companies on their journey overseas as they expand. So again we look to them to support on the ground, and overseas markets, they have science in FinTech, the Treasury is there to operationalize it and be successful. And what that means is that FinTech companies potentially have an easier way of expanding when they land in market. So we are able to provide the support for them. That’s quite unique to the UK, most overseas markets who have supported their Fintech hubs have been much more around a FinTech ecosystem. FinTech associations, all the banks, or government or regulators, in the UK, what we’ve done  post financial crisis, there was a team set up as the regulator at the FCA to look at competition and strategy. They had something called Project innovate, they also created the first regulatory sandbox globally that has been copied all over the world. Then you have the regulator sitting around the table at the same time as government sitting around the table, as well as the FinTech companies as well as the banks. So that’s the role for innovate finance, as an industry body is to bring that all together and make sure we’re the ones in the middle, making sure that everything is connected.

Donavan: I know that 42% of the FinTech workforce is actually from overseas. And I don’t want to get into a Brexit conversation. But what’s the likely impact of that with the impending no deal, and I just want to get your take on it. And what does innovate finances plan to do to support whatever is the Brexit outcome?

Charlotte: Request for talent globally in tech and FinTech is a global issue. And this was a problem way before Brexit as well? Brexit exacerbated some of that in the short term? And I think a lot of people have focused on the immigration issues and need for more visas. That’s a conversation that we had within the banks, within the tech companies and within the FinTech companies, do we have the right skill set from homegrown talent or have we maybe relied a bit too much on overseas talent coming in.  The general concern from across the market is if we just stop it dead the impact is going to be quite significant. So it is about finding the right talent, it is about again, feeding back into why FinTech is different, to those other sectors I mentioned, but also to look at the impact of that being a global race. So when we talk about 42%, of the FinTech workers being from overseas, and that’s 28% EU, and 14% non-EU, so quite a significant amount coming from the European Union. In the US 40% of tech on the West Coast is also from non-Americans, so people are able to move across the world. So you could say the same worker that we’re trying to attract here can also go and work in Asia, can also go work on the west coast. And everybody agree it is the main problem. 

Donavan: We need to make it as attractive as possible for people to want to come to the UK. 

Charlotte: So it’s for us to sit down and say, look at this great sector, why do you want to come and work here. Why do you want to study here, stay here. Use the start-up visa, use the entrepreneur visa and then post study work visa to get your next role. We have the advantage that we have some amazing universities here. And you know they’re looking at things like the FinTech sector and the tech sector, how do we get students into that? It is about inspiring the universities to say this is a sector you want to stay working in but we mustn’t forget that we have also got to look at our homegrown talent, and we have just seen the A-Level results where girls for the first time have overtaken boys taking science subjects. That is fantastic, the message is getting through. Yes it is, that’s really important that we look at that, and we don’t just rely on the boys who used to maybe come into the science subjects. Because if it is a global race for talent and we know everybody’s going have digital skill needs in the future. 90% of jobs created today are going to need digital skills, so it’s really important that we inspire all kids to be looking at this, including university students etc.

Donavan: Absolutely. And just on that point Charlotte, the FinTech for schools project that you started, can you just give us a little flavour of what it is because that’s obviously about building the pipeline and getting people interested as early as possible in technology, maths, science.  All of those subjects that we’re talking about, please tell us a little about the Fintech for Schools project. 

Charlotte: So for me, this started by saying we have to look at the five to ten year cycle. Now, you could argue that some people coming into FinTech may not want to go to university. I’m not saying we’re encouraging people to come straight into the world of work, they may decide to use an apprenticeship. So we felt that if we just went to the university, we’re going to potentially miss the whole pipeline. And potentially decisions have been made by the time they’ve chosen their subjects as well. So it is important that we show not just children but also the teachers that there is this changing way of working. There is a change in design from industry of what they’re looking for. And so FinTech for schools is a program that’s aimed at 14 to 18 year olds. So in their mind, they’ve made their GCSE decision, we could go younger, but we’ve got to be realistic on what we can achieve in the short term. So they’ve made their subject decisions at GCSE, but they probably don’t know what they’re going to do with them. So it’s looking at that and saying, here is a sector that’s going to give you innovation, it’s going to give you entrepreneurship, entrepreneurs and opportunities for the future. And then before they make those University decisions or decide not to go to university, they know that there is that skill set needed. So we think that is the right age group to start the program, we know decisions are made by the age of 10. But we are realistic on how we can get the program really going, and we are really excited about that. When we’ve been into schools so far and talked about FinTech they don’t really understand what FinTech is, they don’t really understand what a  challenge bank is. So what we’re also doing is using that program to educate them on how they’re going to use FinTech because every one of them as I tell them is already using FinTech. And they look at me and say, well, of course, I’m not using FinTech. I’ve never heard of it. Well, do you use Monzo bank, you may use Starling, but also you use an Oyster card, an Oyster card is a version of FinTech, contactless payment is a version of FinTech, refinancing your student debt is definitely a version of FinTech. You’re getting your SME loan maybe from a bank that doesn’t provide them anymore. That is right in the sweet spot. And as you come to your first mortgage, perhaps there’s an opportunity for you to get that earlier, through a FinTech provider. So we definitely want to get to people at their age before they start making maybe their first bank decision. Interestingly, some of the people we’re working with on that are the banks themselves, because they want to show that they’re not the bank of the past, they want to show their opportunities for digital banks. So we’ve made it very clear that we want to be tied to their programs as well and use their great networks. They have to talk about the changing face of financial services, whether they are a small start up to the largest bank. So it’s a great program and just an amazing reception on that so far so really excited. 

Donavan: Fantastic news; the program is very interesting, but I just wonder if you can tell us a little bit about how much is diversity and inclusion is a part of the program. 

Charlotte: That’s one of the reasons for doing it, that will run through the heart of the program. For me, as I say to maybe some more seasoned banking professionals. It’s very rare that your end customer is a white, middle aged men. Your end consumer is completely diverse, and therefore your teams have to be completely diverse. We talk a lot about social mobility in FinTech, and when you look at who might be using FinTech, there are people using payday lenders in this country, and there’s a lot. There’s 12 million people have less than 100 pounds in their savings account. So actually, when we look at who the users of FinTech is going to be, it’s going to be very diverse. And most kids at two or three years old can operate a smartphone doesn’t matter what your background is, they will have access to a smartphone, they can use. So how do we harness that power of technology that they have at such an early age, and say, how do we get that in those tech skills, into coding into computer science into engineering tech, but genuinely just sitting there thinking about starting a company or starting a business. And look at kids in school and say that this is where the opportunity is, and you may not have thought of this as a great career choice. But look at the power, look at the purpose that this sector has and what an impact you can have. 

Donavan: Looking at your report  (https://www.innovatefinance.com/reports/uk-fintech-state-of-the-nation-report/) I was surprised to hear that talent acquisition is actually a bigger challenge than raising funds, which is really surprising. 

Charlotte: It is, and great businesses have great funding, what we tried to do here is assist them through that cycle. From being maybe the start-up entrepreneur who does come out of school or University and wants to start a company. And what better opportunity to have that, they’re not going to have the Rolodex of investor contacts that maybe someone coming out of banking in their mid 40s is going to have so it is important that we help and educate on that journey. And we often have speed dating events where we bring venture capital firms in or maybe even angel investors in to meet some of these early stage companies to introduce them to that. And I think that’s really important. That is the role of an industry association that’s helping a growth sector. So the funding is out there, as I’ve always told you, so sometimes just finding it and navigating it, or being ready to do your first pitch for it is more challenging. And that’s why you see that talent potentially isn’t out there. Or if it is there, it may not be where the FinTech companies are. A lot of FinTech companies have migrated to London, even if they’ve started from across the UK. And you know it’s a bit of a talent bubble in London. So again, you have to look around and say, well, how do we build those needs? How do you have another office maybe outside of London? How do you start your business and stay there? We’ve been doing quite a lot of work this year across the country, Manchester, Leeds, Bristol, Edinburgh and Cardiff. Those all have FinTech hubs of some description. So wouldn’t it be great if we see companies coming out of universities, perhaps which we saw in tech from Cambridge back in the 90s and staying there not feeling like they have to move here? Because guess what, the talent pool is probably more available there than it is in London where everybody’s trying to have the same person.

Donavan: And the big organizations in London mop up most of the talent. 

Charlotte: Yes, they do! And they bring the salaries up, etc. So it’s been very interesting. As we’ve rolled out the program across the UK, we found something called the FinTech national network. And that again, is about connecting into that ecosystem.  Talent to FinTech, FinTech to bank or from FinTech to building society. And also looking at the FinTech companies and the issues they’re facing outside of London, quite different to what you’re facing in London. When you look at the solutions, they have bought in, probably different solutions, because London based FinTech may solve London based financial services problems. So again, we’re back to our diversity issues. It’s really important that we look at areas that are quite poor outside of London where that FinTech company might have seen that first hand, so why would we want them moving to London to capture talent here. 

Donavan: That’s a very good point. We’re always talking about the big enterprise companies and the big financial institutions, but a small FinTech company between either three or four employees, up to maybe twenty five or thirty employees. What advice would you give them to try and support competing in the skills gap area with regard to some of these bigger institutions?

Charlotte: It is a really good question. And we talk a lot to consultancies and say, how can we almost use their buying power? When they are going out on their grad program, and you go and do the milk rounds and sit there. Why would someone join an unknown FinTech company when they’ve got EY, Deloitte or KPMG sitting there knocking on the door? It’s tough. And again, that comes back to the education of what some of these FinTech companies are doing. But when we talked about challenge banks, we also see that others have been quite smart on accessing talent, like Starling, which sits in our building, has just opened an office in Southampton, they have put 200 people in Southampton. They’ve talked to Southampton University who’s got a great program down there to try to attract that talent. So they’ve thought about it in a different way to find their niche, and we are starting to see that in hubs around the UK. It’s a much more targeted and maybe giving them the opportunity to stay there. And perhaps it is more attractive than moving to London. Thinking about work life balance, London is not cheap city to live in. You have to look at it in a different way and have a different solution. How would you sell yourself. We see more tv adverts coming in from FinTech companies, people are starting to get it and understand these names. I always get very excited when I sit on the tube and I see adverts coming in from some of our members. We end up constantly snapping photos and putting them out and I think that’s great.  These companies will start to raise their profile and do it and then guess what you then have the opportunity to maybe do many things. Next year we are thinking about FinTech roadshows and looking at FinTech open house so students can understand what this new sector is all about and look at some of the opportunities. But also, if you’re coming out of school or University, how you can make a difference. This is what millennials want to focus on now, what’s the social purpose? You could argue that they’re going to have a bigger impact if you join the smaller niche company, than maybe join the big consultancies, and they can still be attractive to the big consultancies in the future. So they can potentially go both ways.

Donavan: That is a good point, a very good point. What’s your personal goal, and what are you trying to get personally out of this space? a better question is, what does success look like for Charlotte?

Charlotte: It’s really interesting, when I took this job, I took it on an interim basis for six months, and I thought it’s going to be interesting. I’m going to get in touch with FinTech companies and trying to influence government, this was post Brexit time, and I thought, what a fascinating job for six months. Six months became 12 months and eventually I signed and it becomes a bit addictive. When I talk about the voice of the FinTech sector, I might talk to a non-member as well as a member just as much because I’m trying to understand that. I would love to have the whole ecosystem at our membership table in whatever guise.  And yes, we do have a huge diversity program, we focus that initially more on gender diversity. Although the Schools Program is looking at all diversity. And again, helping female founders get funding, that is really important, because some of the bias against them is quite significant. So for me, it’s constantly knowing where I came from. It’s really about wanting to make the difference. I want to look back and I will say this to my daughter, I want to look back and go, yeah, I did that and I made a difference. Say maybe I helped FinTech companies grow, maybe I helped them scale overseas, maybe I could sit down and God forbid, I could actually get investment numbers into female founders above 3%, wouldn’t that be fantastic. But also start to profile some of these great companies there. I am personally very excited about the FinTech for Schools Program. Because I think it’s really important that we help kids around the country, not just look at jobs, but look in a different way and get them prepared for this new way of work, they are going to need tech skills. So it has to have things where you can make an impact and we are constantly looking at things where we had the maximum impact, and the maximum impact for our members, but also looking at maximum impact in the sector, as well. So yeah, not ambitious!

Donavan: And finally, why should someone want to be a member, who should be a member and why should they be a member of Innovate Finance? 

Charlotte: What I love about our members, and our membership initiative is that it can suit everybody. So when we talk to the largest bank around the board table and talk about their innovation program and how they’ve looked at that from a cultural perspective, from a diversity perspective, and how that’s going to drive through innovation in their company. That’s just as valuable to them as the smallest company who might be a four or five person company and how do they even meet the investors? How do I meet other CEOs? it’s a lonely journey as a founder and connecting them, that’s the great thing about it. We spend just as much time with our small FinTech members, and they’re great at coming to our events, and really taking advantage of them. In September, I’ve been told we’ve got 10 events for members, a couple of those are on diversity, some on Brexit advice, and helping them to navigate that. The other ones on connecting them to investors and connecting them to other founders, or other CFOs.  It’s about finding the matrix of how we help all parts of our membership, whether it’s the head of PR to amplify the message, or the head of policy who’s trying to influence government but can’t possibly do it on their own, because they’re just one company, but also for some of the junior people as well and supporting them. And that that’s really important. That’s what we are try to get right, looking at that and saying, are we servicing them and generally we have great feedback from our members. We provide more things to them than they can possibly take advantage of because they are growing companies. But we constantly look at that and get them around the board table and say, are we getting it right? Are we getting it wrong? What do we focus on? And hopefully we’ll get it right most of the time.  

Donavan: Thank you very much Charlotte, this has been another emerging tech talk with me Donavan Whyte. If you’d like to share the mic, please email me at info at mad4digital.com. Looking forward to sharing the mic with another emerging tech expert next week. In the meantime, have a fantastic week.