00:11:06 · David Senra, Nik Storonsky
[00:11:06] S0: think the American, like, fintech companies are doing wrong about this? To build a very large business, to [00:11:11] S1: capture large market share, it's it's just unavoidable. So I think in The US, a lot of companies started like Chime, Cash App. It was simple before ten, twelve years ago. They all never went for banking license. I think it's a big mistake. So they could never become a large business because Explain [00:11:29] S0: why they can't become a [00:11:30] S1: large business without retail. Just because they are not a bank. Right? They can target certain niche audience, certain cohorts of customers, I don't know, low income and so on. But they cannot never go to to prime audience. Right? And they can never become prime bank account without a banking license. [00:11:48] S0: But why do you think that relegates them to being a small company? [00:11:51] S1: Well, just because, yes, early adopters want 2% of the population will try them. Maybe it will go from early adopters to their friends' family and other like a 90%, so 4% of the population when you want 40, 50, 60, 70%. For example, in Ireland, we have our 80% micro penetration. For all In Ireland? Yes. Four out of five adults use Revolut accounts. [00:12:11] S0: Okay. How did that happen?
00:12:11 · David Senra, Nik Storonsky
[00:12:11] S0: Okay. How did that happen? [00:12:12] S1: Slowly, I think combination of lack of competition, very bad banks. They have only four banks which are bad, plus very small country with a lot of people living outside of Ireland as well. So I think altogether, it led to us being 80% of... 80% of the market. If you look at other markets, for example, in The UK, we're about 20% penetration. France is 20%, Spain. Certain markets are 30, 30, 40% penetration. So it is possible to go to 60, 70, 80 as as island shows. But for it, you need to be a banker. [00:12:47] S0: So I'm very curious, like, when you're going into a new market and you said there's just bad banks, just like low competition here. Like, what are you seeing that they're doing wrong?
00:12:47 · David Senra, Nik Storonsky
[00:12:47] S0: So I'm very curious, like, when you're going into a new market and you said there's just bad banks, just like low competition here. Like, what are you seeing that they're doing wrong? [00:12:56] S1: Well, they they they stuck in limbo of professional management who are extremely risk averse. As a result, there is zero lack of... Zero intention to innovate. And then all the resources are spent on protecting what they have already. Right? So for example, you can have a very old legacy third party core banking system. Obviously, you need to change it to your own or to some new provider, but then banking management will never do it because it introduces risk. Right? Because you need to migrate customers, you know, something might go wrong. And they never take a risk. Right? So that's the problem. Plus on top of it, because a lot of them, they are not technical. So they don't really understand how to do a lot of technical things. As a result, them, our default choice is to not do anything for regulators and then for legacy banks. Because doing anything is risky in an industry where you lack certain skills, so certain technical skills. And banking is about... It's not only about, like, regulation, it's also about building tech. And I think all these people are very bad at building tech.
00:14:12 · David Senra
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00:16:19 · David Senra, Nik Storonsky
Deal is trusted by over 40,000 companies and growing fast. Learn how they can help your business by going to deal.com/senra. That is deal.com/senra. So one of your advantages as you see it is you're competing against non founders, you're competing against professional CEOs, and these professional CEOs are not technical. So they actually can't invent technology, so therefore they cannot innovate. And that's what you're attacking. [00:16:42] S1: Yeah, exactly. They just don't even think about building products. Right? Because they they just don't feel it. They don't use it. They don't they don't know how to do it. They're just professional managers. I think it's very important for... To build successful business, you need to obviously be a great manager, like a very tough manager, be very in details, and be very good product person as well. To know how to build and turn the product, tech regulation compliance people altogether. It's it's like a machine. Right? So there are inputs and then the whole machine should produce you right output, which is amazing product that people use. [00:17:19] S0: Okay. Explain how you're building this machine.
00:17:21 · Nik Storonsky
[00:17:21] S1: I mean, you need to visualize in your head or kind of, you know, what are the inputs in this machine and what do you want to achieve? What are the goals? Right? And then inputs is obviously your organization, your structure, your people, how you build product, what do you want to build. And then you effectively observe kind of, you know, the whole structure working, the whole product being built, you always interfere. Right? If something goes wrong, and then you kind of change certain parts of the machine. For example, when we started, it was a very small team, 10, 20, 30 people. We hit the bottleneck when kind of team team grow, but then speed slowed down. Machine stopped working. So what I did, I I I just ensured that we have, you know, there... A lot of very small independent team who just work on the same platform. Right? And then speed increased because people people work was paralyzed. So they work on different products, different features using the same tools, and they were all independent. But then again, we hit bottleneck with regulation compliance. Again, I build another muscle in the machine, is the reg affairs, government affairs department, and so on. So they they had to produce certain outcomes. And we hit again the bottleneck with hiring fast enough good people. Again, we build a lot of process for recruitment, targeting the best people. And so on. So it's kind of, you know, moves in circles, right? You build something, then you hit the bottleneck. Right? You identify the problem, you solve the problem, you go again.