Thursday, January 28, 2021

8:30 GMT

Interviews with practitioners: How to transform SME banking with Laurence Krieger

Interviews with practitioners: How to transform SME banking with Laurence Krieger

Join the second episode of DueDil Live 2021 to find out how Laurence Krieger, UK CEO at Tide, and his team have been helping SMEs over the course of 2020.

DueDil Live is a new series that showcases the practitioners of transformation and innovation within the SME financial services market. So far, we’ve had the opportunity to speak to a number of industry leaders as they seek to disrupt this fast-paced industry.

During the second episode of DueDil Live Series 2021 Denis Dorval, COO of DueDil, welcomed Laurence Krieger, UK CEO at Tide, to the discussion table.

Hey, good morning, all. My pleasure to have Laurence Krieger, CEO of Tide UK, joining us today for that Episode 7 for DueDil Live series with practitioners of SME financing transformation. Good morning,Laurence. How are you today?

Good morning, Denis. Yes, very good. Thank you.

Cheers. I think it is coffee or teatime, depending on your preference or taste. I can see that you are, like many of us, working from home, so I guess this is something also that Tide had to follow the guidelines. Are you guys all working from home?

Yes, my preference is coffee. You'll be pleased know from your origin, from your heritage, coffee is definitely magic.

Yes, across the channel. Actually, it is tea in this. English in some shape or form. Congratulations also on the recent news at Tide. You guys are launching an international expansion. After all the news, we'll have time to cover that. Also, congratulations to you, Laurence, as you're stepping in also, taking in the reigns of what is becoming Tide UK as part of that expansion. Really, very well done and congratulations.

Thank you very much.

Without further ado. We will touch on Tide and your phenomenal success the last five years as CEO also at UK, what you're doing for 2021. I think the audience will be interested. Before that, I always start with a bit of background question.You have a quite really phenomenal background also in financial services, having worked at really big brands, Revolut, digital brands like Yahoo, but also you are an entrepreneur. You've been leading the charge in some companies you found, et cetera.

I think it would be good if you could share a bit of your background and your journey before joining Tide because we all know that transforming an industry usually comes from a vast and rich experience that has been accumulated through the years because you have a vision, and you know how things could be done better for the future, et cetera. Interested to hear about your journey before Tide and your background there, Laurence.

Sure. Thank you, Denis. My background is, I actually keep on feeling older and older, that's because I'm getting older and older.The people I've worked with seem to be getting younger and younger, so it's probably more to do with my age than anything else. It seems like only yesterday when I started in digital. I went straight from university, and it was really the birth, in 1994, it was the birth of my work. Even then I believed that it was going to change the world. A lot of my friends thought I was crazy. They were going into the usual banking, consulting, accounting, law. Those were the normal things, and I was about todo a law degree.

I just saw that the world wide web had so much potential. I started working in the very, very early days. There weren't many companies that were even doing anything web orientated, but I started working for a company to develop websites for other companies. It was quite interesting actually because back then, I was going to see various very large businesses, companies like Motorola, for example.

A big thing, Motorola was huge. Ask them, who is Motorola? They may have forgotten that now.

Exactly, but Motorola back then were huge and there were all these big blue chips that I was seeing. I was educating them on what web could mean for their business because they didn't even have websites back then. Or sometimes the blue chips would have a website that the IT guy in the back room had put together. They looked really unprofessional, but it was like,"Oh, yes." They weren't interested in the web. It was like that little thing that people sometimes look at.

Obviously, that has changed, but along the way, I started up my own business back in, during the dot-com boom. I then went to work for Yahoo. We're back in 2000, and we're seeing some of the heady days I think of the stock market. The way in which people were plowing money into anything internet related. I'm pleased today that the stock market is a little bit more logical, but I saw a couple of shares yesterday that just went through the roof.

Back then in 2000, there was the internet boom and then there was the .com bust. I went to work for Yahoo, because they were the leading internet company worldwide back then. They were number one. I thought, better go and work for a company that's going to weather this storm. Was great time there, Yahoo. I headed up business development, and then ended up heading up sales.

That was really the first time I got into payments, bizarrely. Yahoo, we had everything because it was such a wide product, but I started getting very interested in payments because I saw that we've gone through a transition stage. We've gone from being the internet of information to becoming the internet of purchases, of buying things, and it was just starting. Amazon was the beginning obviously with books, but then more and more businesses were starting to sell online, and I realised that this was definitely the future.

After spending a few years at Yahoo, I then go into payments. I actually created a payments card with Yahoo, and then also one withMoneySuperMarket as a partner because they were a partner of mine back then.Then worked as really as a consultant for a number of years, helping businesses to build payment solutions. I think that really got me into Revolut, which was, back then, it was not near banking. It was really payments that Revolut were interested in.

One of the early backers of Revolut actually asked me to go and meet the founders. I met the founders of Revolut. The next day, I have intended to work with them, but then again, I was hired as a Consultant, originally, helping them to set up and start up the business. Then, I stayed on as COO and saw tremendous growth at Revolut. This was then the entry into SME because we've launched Revolut for business. We believe that actually having looked at the world and looked at what was going on within payments and banking, yes, the retail sector was interesting, but really, the underserved sector I saw was SME. I really realised that SME was completely underserved.The banks had focused on retail, they focused on corporate, but SME haven't been unlocked at that point, and were suffering because of that.

I realised it was a huge opportunity, and that was when I was also approached by the the investors in Tide. I had a great time. I saw phenomenal growth. I wanted to work on the use case with SME, and they offered me the role as COO, so I came and worked for Tide. Similar stage where I joinedTide, there was a handful of us. Now, today at Tide, we're over 450 people.This year, we're probably close to 1,000 people worldwide, and we're growing phenomenally rapidly. Today, we service about 1 in 20 of all SME businesses in the UK, close to 300,000 business owners with accounts that are over the world today.

Yes, phenomenal growth. We'll touch on that now, but just regarding your background, I think there is-- This is Episode 7 of our series here and we've made a point to talk with what I call practitioners of transforming SME finance. It's really interesting to see that you guys have all- some common patterns, that mix of entrepreneurial spirit, but also having had the exposure of working with the best in class or brands in the digital space and also financial services space. I think it is this combination of things. That's helped moved deal and trade new products on digitised products that remove frictions and create new propositions.

It's really a common pattern, and I think that for the audience out there, it's really interesting to realise that it is that wealth of experience that then made sure it was possible to retransform.

Right, Yes. I'll add one other thing, which is that having been a business owner a few times in my life and having started a business from the beginning sometimes without massive VC funding, really starting it, bootstrapping it, I understand what it's like to be a small business owner, being a small business owner. I've done it a few times. Having that understanding, also, really mentally pushed me into Tide, because I realised what it was like to struggle with this just complex myriad of different choices that I would need to make, that it wasn't really core to my business, but I had to do these things, all the admin, all the finance around a business, and how important and vital it is to businesses.

Being an SME don't have a huge finance team behind you to really do these things. Very often, you're doing it. It's the business owner doing it late at night very often, from their home, when they've done everything else they have to do all day. I had that understanding. I think that's really why I'm passionate about what we do at Tide because I really want to help small businesses. They're the engine that's going to get us out of the mess that we're in today.

Exactly right, in terms of, and we'll touch on that, but you emphasised on this, the economy out there, it's just, again, 95% of class, 99% of businesses items, and they represent up to 60% of the GDP of any developed economy, and sometimes 50% 60% of the workforce as well. That actually aligns very well with also what we do here at DueDil. We're partnering with you in some of the things you do, KYB, et cetera, but behind there, theDueDil Live is also, how can we help or continue to remove friction for SMEs. They don't really have much or not enough choice, et cetera.

Again, good to have the likes of Tide offering something different, et cetera. Let's go to Tide now. Five years in a row, phenomenal growth. You're saying, 300,000 business owners relying on Tide. Tell us a bit about that. What's the mission Tide, what did you guys do to generate that success up to relaunching in 2020? We touched on the pandemic after, but let's go through what you guys have done, and then what was the mission?

Look, I've been in Tide now for four years, pretty much since we started. During that time, as you said, we've seen rapid, rapid growth. Today, we are the number one challenger. If you look at all business banking, in the UK, you've got the big five and then there's Tide. We really have built that position in SME from a standing start. We don't have the years on us that most banks do in the UK, but we've built that business up in literally four years. It's been quite incredible to see and to be part of.

I think the really, the reason being is, as I said before, what we're trying to do is we're not trying to just repeat the banking product or banking proposition of the past, actually Tide, we're much more than that. In fact, we're not even trying to be a bank, we're a business financial platform. What a business financial platform means is that, as I said, before, there's all these financial decisions that a business owner needs to make, that an SME needs to make on a day-to-day basis. There's a lot of admin as well that goes around the banking layer, that could be like invoicing, it could be receiving management, it could be cash flow, it could be accounting, it could be tax. There are tons of things that you have to do, that all kind of fit together within banking or part of banking.

Therefore, what we're doing at Tide, is that we're building much more than business banking, we're building a business financial platform that solves all those needs, solves the needs of an SME in anything that is financially related to their business. Our mission is really to giveback time to business owners so they can get on and do more of what they love, which is banking-- Sorry, not banking, banking is not what they love, which is their business. Banking is the least thing that they love and the thing that they're probably not really wanting to think about on a day-to-day basis.

That's really been our mission from day one, and our vision is this business financial platform. We want to not just be number one in the UK, but we also want to be number one worldwide. Having that very strong mission, having that very strong vision, really feeling and understanding the pain points of what it's like to be an SME, I believe is the reason why we've grown so rapidly as we have.

Denis: That's, again, very impressive. I really like the business financial platform concept. I think that from what I gathered, you guys want to be the hassle-free business, financial platform. I like the giving business owners back time, because that's what actually banking should be all about, delivering digital, financial service that allows business owners to get on with what they have to do, because yes, they are returning well, they're delivering services products that are helping their communities, or the business, or the market out there. I really like that.

I think that the platform notion is really interesting one, and maybe I'll get back also to international expansion and why, for example, India back to your vision of becoming a worldwide leader. The platform has also something to do with how you build because platform play is also a long-term play. You need to be able to add a lot of capabilities on top of layers of capabilities on top of that platform, as opposed to build just a very verticalised, monolithic end-to-end product.

I think that's where some of the big guys are trying to become platform. You could even talk about the likes of Amex, and this and that, but they're a little entangled into there, whether it's an end-to-end process. Tell us a bit about how to go and have you been building that digital platform that is the powerhouse behind what you want to do. I think that's a big thing for you guys.

That's a really great question, Denis and something that's very much our focus on a day-to-day basis. Yes, Building a platform is, as you said, it's very different than building just a product. What we're not trying to do is we're not trying to build everything ourselves because actually, to be so wide that we are, we need to work with the best. We are definitely integrating with many partners in order to build this platform model.

To build a platform, firstly, you need to kind of industrialise it, our CTO in those terms, industrialise the platform. Really what that means is it needs to be massively scalable, it needs to be very, very stable, and you need to build, micro services architecture so that you can plug into that platform, various different services as you need to.

The other big part of this is internationalisation and scalability. We are not just building for the UK, we're building internationally. Obviously, we just announced recently that we're going toIndia, and that's the first part of our international play. What we're not trying to do is we're not trying to build one platform for the UK.

What we're building is we're building a solid platform that allows us to scale internationally very easily, and then customise what we need to customise when we're in each of those local markets. That's how we think about it. That's how we think about how we build on a day-to-day basis and also what not to build as well, because as I said, if we try to build everything ourselves, that becomes probably a losing battle. What we've tried to do is focus on the core, we're platform models, we're building on the platform. Then, we partner where we can, and where it's suboptimal, we will sometimes build our own solutions, but mostly, what we're trying to do is partner with the best.

Then really, the value that we add is not that. The value we add back to the SMEs, that this becomes just seamless. Actually, this stuff is all in the background. Really, the value we offer is connecting the dots. It's all the use cases where you connect different products and services together to build an even more powerful value add to the end customer. That's the magic, the magic is connection.

That's what we talk about a lot. We talk about connectivity a lot in our business. A good example of that is, for example, today at Tide, you can create an invoice on Tide. You can track their invoice, the invoice will trace itself. Then, once the invoice gets paid, you'll be notified because it goes straight into your account at Tide. Then, that data then can be fed to your accounting software through Tide. We will then manage the cash flow for you and help you to get a better view on your cash flow.That's the kind of example of how we connect the dots.

I think again, you touching on something, we talked about it with some of the other previous interviewees, is that that continuum. The way we see business financial platform like Tide and others, make a difference is because they have that capability in-house and they have built by design that it is a business and technology continuum. That's where I personally feel, and certainly, we see that legacy players have a big and huge book of business, but they really have a big challenge ahead, is that they are entirely not prepared and they don't have those capabilities to really be iteratively fast on the market, because digital is all about velocity at the end of the day. Things are just accelerating constantly. It's really, really powerful actually to understand and see how you guys are building those platforms.

One question for you also. 2020 has been really an extraordinary year for all of us, unprecedented, the pandemic, I think the whole let's say Western world completely forgot what a pandemic could actually bring in terms of disruption, because nobody had really serious memories of that since the Spanish Flu or even before.

It's been a tough, tough year for a lot of SMEs out there, however, there are also silver linings. SME digital economy barometer shows that there's been more companies that operated in 2020 in the UK than the previous year. You guys have seen really a lot of pickup and a lot of both during 2020. Can you tell us a bit about that and why you think you've been so successful during this pandemic at extraordinary times, and even more customers?

Firstly, it's been as you have and as we all know, unbelievable year is probably an understatement. I mean that in a bad way. We, obviously, as a world, it's been a terrible, terrible situation. Of course, it massively impacted, massively hit SMEs, and all businesses for that matter, but in particular, SMEs have really suffered throughout this period. What has happened really is the big difference, I think, between SMEs and large corporates is really cash flow and liquidity. Those businesses, typically, we're looking at two, three months of cash flow runway, whereas big businesses have much more.

It's honestly been a huge impact in mostly a negative way of course to businesses worldwide. We have been very mindful, and what we try to do is try to help businesses as much as we can throughout this period. We obviously entered this period back in this time last year, I remember in March, we were obviously very concerned about the macroeconomic environment.

What we did is we from day one, we decided we were going to really try to do as much as we possibly could to help our members, we call our business, businesses that supports our members. That was really our mindset from day one. I think that a few things happened along the way. What we saw was that there was a real drive to digital. Whereas before, businesses had maybe put up with some of manual services of the past. Now, there was absolutely no appetite for that, and businesses just needed digital solutions. It's not just with Tide, it's with other businesses. For example, Zoom is a great example, but digital became the new normal.

Businesses, they looked for digital solutions that could help them throughout this period. We were there luckily, in that sense, to help small businesses with really end-to-end digitalisation in the banking and finance space. That was I think one major operator. The other thing was that, whereas some banks have been able to create nice front-ends apps for business banking, what they hadn't done is they hadn't done the end-to-end digitalisation.

At Tide, what we really concentrate on and we did this prior to COVID, was how do we digitalise our entire business? I always look at it as the iceberg. Actually, what the customer often sees, is the tip of the iceberg. Then on the surface is really where all the real work happens in this space. We had made sure that our operations in particular, for example, was fully digitised. Then what that meant was that prior to my new role, I was actually Chief Operating Product Officer. The day we locked down was the day that everybody opened their laptops at home and started working.

What we actually saw was that our productivity, and our SMEs, and everything remained unchanged. We were working as per normal because we'd already digitised our operations. I think what we were then able to do was we were able to adapt, and we were able to help our business customers as much as we could, and we saw very, very strong growth.

What we did is we just kept hiring, we kept servicing.

It was tough, it was very hard to grow. We've grown phenomenally fast in the operational space, because I was just looking at then umbers. We've more than almost trebled the number of people that were working for us this time last year. To do that in the lockdown was huge, challenging, but we were there and we've done a lot of other initiatives, for example, withTide Charity. All these things, I think what we're trying to do was just help as much as we possibly could. We just saw exponential growth, we saw very, very big uptake in our service.

The secret sauce here, again, it goes back to the digitisation of the full value chain behind or operational aspect of the business, I think that's much better than some of the well-established legacy banks, where not everything is digitalised in the backend, and then they could not cope with the volume or adapting to change. Change is a constant now. Again, very well done for that. I am conscious of time so I'll just ask you a last question. I hope that, Laurence, maybe I'll see you back in this series, maybe to talk about Tide UK going forward. I know that you have big plans, a building on the great platform you've built and get on with more members, et cetera. Fast forward five years, how do you see SME finance? What do you think is going to be fundamentally different compared to today?

I would like to say, by the way, that one of the big reasons we've been able to accelerate the way we did within operations is partners like DueDil. That has really helped us as well. I just wanted to mention that.

We're very happy to have the opportunity to partner with you and our teams have been working great together. We are happy that we could contribute to actually help Tide UK scale.

Just very quickly, coming back to your question. What I see in five years time, well, basically, I believe right now we're going through disruption, complete disruption in the banking sector. This is the same disruption we've seen in other sectors all the way along, Obviously, banking is huge but I really do believe is coming back to what you were saying about the speed of change, the speed of change is phenomenal. I think COVID has accelerated that change.

We've seen, as I said, a massive drive to digital.You've seen that in all areas of payments and banking and solutions. I really think that if you look at the players both in retail, and SME, then companies like Tide and developing and building their capabilities so rapidly, I honestly don't think that the traditional banks will keep up. I think in five years' time, there'll be a very different landscape. Will the bank still be there? Of course, they will. I don't think that they're disappearing, but I just think they're going to have to adapt themselves and probably become much more servicing layers to some of the more experienced layers that you see in such as Tide. I think it's huge. This is already happening, it's accelerating and in five years' time, I think the banking landscape will look very, very different.

Laurence, thank you very much for your time. I really thank you for sharing also all your experiences and also some of the recipes behind Tide's success. I wish obviously the very best also for Tide UK in going forward now that you are at the helm of it. I hope that we will have the opportunity to be back maybe later in the year, talk, and maybe both from our office, considering that we'll get back to a bit of a more normal. Thank you again, Laurence, for your time today. Thank you for also your trust in DueDil. We're proud to be one of your partner, and looking forward to even more acceleration at Tide UK going forward. Have a great day.

You too. Thanks, Denis.

Tide is one of many companies disrupting the financial market with the help of FinTech such as DueDil.  Our KYB For Life platform is available by API, Web App or native interface, making it easy for us to deliver up-to-date intelligence that can transform the way our partners work with their customers. Learn more about DueDil to find out how we can transform your business lifecycle.

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