London Fintech Podcast
00:00:01 · Nik Storonsky, S1
[00:00:01] S0: This [00:00:06] S1: is the London Fintech Podcast brought to you by your host, Mike Balaman, bridging the worlds of suits and T shirts of finance and technology, bringing you insights, stories, and inspiration from the golden age of opportunity and innovation happening in London right now.
00:00:28 · Tony Clark
[00:00:28] S2: Hi. This is Mike Valerman. This is London Fintech Podcast Episode 75, brought to you in association with Synchro and Arch over the smart pension. And I'm delighted to welcome Nik Storonsky, Co Founder and CEO of Revolut to the Global Money App. Revolut has certainly knocked the ball out of the park in terms of fintech customer acquisition. In the less than two years since launch, they've gained over zero five million customers who've done over 21,000,000 transactions with a total value of $2,500,000,000 In terms of The UK, at the top of my head, this makes them the most successful Fintech at acquiring customers or at a minimum in line with the Zopas of the world who took a decade longer. The original claim to fame was delivering interbank exchange rates to their retail customers as well as payments to other Revolut users and those without an account via SMS, WhatsApp or email. Later they added more personal financial offerings which we shall dive into in the shoe. Unlike Monzo however who have gone down the banking route, Revolut decided to roll out these additional services without becoming a bank. To be or not to be a bank is a hot topic in The UK at the first half of twenty sixteen. Zopra becoming one, or to be more precise setting one up, no doubt with new style Chinese walls to avoid conflicts of interest. Funding Circle have not lost the faith and are not. So it's timely to dive into the heart of financial services much deeper than the P2P lendingborrowing baubles to where we all hold our money and how we acquire basic services around that. Do we need a bank for that? Do we need a poorly named by the regulators eMoney platform as LFP 31 with Rich Wagner, CEO of Advanced Payment Solutions on non bank banking? Can we get away with neither of these just plugging into banking as a service as per our previous show LFP 74 on reinsurance as a service? All good questions, all very timely and who better to speak to about not going the banking route in personal financial services than Nik Storonsky? Plenty to talk about, so let's get on with the show. Nik Storonsky, thanks for joining me today. Hi. And this time I shall press the buttons right. I have to send you a crate of champagne or something for the listeners, you wouldn't realise this, but some button had got pressed that I didn't realise.
00:02:28 · Tony Clark, Nik Storonsky
We were sitting here having an excellent conversation without actually the recording taking place. So just diving in again, I was asking Grace your marketing and social media supremo what to talk to you about and she said I should ask about water sports but as this isn't an 18 podcast I thought I'd ask you about kitesurfing and windsurfing instead. [00:02:47] S0: Yes, that's true. So, I'm a big fan of kitesurfing. So, I already did it for six or seven years. Actually, initially, I started doing windsurfing. And then, you know, one day I came to, I think it was Croatia. There was no wind enough for windsurfing. And I saw, you know, kitesurfing guys were still able to kite. So that's how I started kiting. [00:03:07] S2: I was in Rye recently in Kamba Sands and it was incredibly windy. It was so windy that walking along the beach was turned round because it was so strong and there were a couple of really good kite surfers obviously out in that and They had to come on the beach for some reason. The strength of wind was just phenomenal. I don't actually know, just in terms of simple physics, how they stopped themselves being blown up. The guy was leaning almost horizontally with his heels in the sand. I had to get some kit or something like that. Obviously the angle of the kite, but he was a big strong guy and he was really struggling with it in this sort of like gale force winds. [00:03:37] S0: I think kitesurfing is not about being strong but more about your technique. Generally the way it works, stronger is the wind, the smaller the kite you take.
00:03:37 · Nik Storonsky, Tony Clark
[00:03:37] S0: I think kitesurfing is not about being strong but more about your technique. Generally the way it works, stronger is the wind, the smaller the kite you take. [00:03:46] S2: Right. So it's the same as in windsurfing where you adjust the sails and I guess the same as in sailing as well. So originally, you were a trader at CSFB and trading derivatives for many years, presumably having fun. Then presumably one day you woke up and thought, I'm now going to set up a startup, did you? [00:04:03] S0: Yeah, definitely. So, I was in trading for eight years overall. And then, yeah, simply kind of decided to go on my own to start something new. Banking became- well, not only banking but trading as well became very boring and generally not that rewarding as well. And I decided not to go on my own. [00:04:21] S2: Yes, I've noticed that people who make things happen in the world tend to be people who don't have an infinite boredom threshold. Some people somehow are either able to be bored and it doesn't cause them great torture and they carry on for their whole life doing one thing even though they lost interest decades ago. But other people who you're clearly one and I'm also one as well, they can only tolerate so much boredom and you think there must be something else to do in life. [00:04:47] S0: Yeah, mean the reality is that you need to have something inside of you that tells you every day that you need to kind of get something done, achieve something right and that's probably one of the qualities that you need to start a business.
00:04:47 · Nik Storonsky, Tony Clark
[00:04:47] S0: Yeah, mean the reality is that you need to have something inside of you that tells you every day that you need to kind of get something done, achieve something right and that's probably one of the qualities that you need to start a business. [00:04:59] S2: And so in derivatives, you were very much a B2B person at Credit Suisse, and now you're very much a B2C person. So what kind of thinking led you to when you woke up at 03:00 in the morning thinking, oh, I'm now going to start Revolut, a global money app which will give into bank rates? What kind of process led to that? [00:05:16] S0: Well, was, first of all, it was my personal problem. So I traveled a lot. I also sent money abroad, right? And I was always kind of fed up with the rates that I'm being charged. So then I started searching the market for the product, which would help to solve my personal problem. I didn't find anything. I ended up setting multiple bank accounts in multiple countries. And the whole, you know, construction was very clunky and not very user friendly, right? So, I decided, okay, why don't I do it for myself first, right? [00:05:44] S2: Alright, it's personal pain. [00:05:45] S0: Yeah, exactly.
00:05:45 · Nik Storonsky, Tony Clark
[00:05:45] S0: Yeah, exactly. [00:05:46] S2: Which is when Nigel Vuitton was on the show with a currency clan some time ago who clearly had done very well on the B2B perspective in that. And he told the story about being somewhere in France and having a nightmare just trying to send money back to The UK and having to use a fax machine and all that kind of stuff. And in terms of the early days of fintech, clearly some firms approached fintech from a very marketing perspective shall we say. I'm thinking particularly of TransferWise and Crowdcube and they're people without a background in FS. But other people like Nigel Verdon at Currencycloud and New at Revolut are coming from an FS perspective and the one thing that I've noticed over the years is that people with an FS background are tending to be more successful in Fintech which is in part a phenomenon that you would expect anyway so that if you were trying to disrupt aviation for example the chance of you or I disrupting aviation is quite low because we don't know the industry at all, we don't know why it is the way it is and what things which can be changed and partly like aviation I guess it's because it's regulated and these things make it very different. I think if you don't really have a background in FS or a background in a heavily regulated industry, you can get some initial momentum in terms of waving flags and hyping things, but it's very hard to go beyond that.