Welcome to Breaking Banks, the number one global fintech radio show and podcast. I’m Brett King. And I’m Jason Henricks.

Every week since 2013, we explore the personalities, startups, innovators, and industry players driving disruption in financial services. From incumbents to unicorns, and from cutting edge technology to the people using it to help create a more innovative, inclusive, and healthy financial future. I’m J.P. Nichols, and this is Breaking Banks.

Anthony Thompson. Brett King, how lovely to see you again. Good to see you.

Good to see you, my friend. We meet in the strangest of locations today in Abu Dhabi for Abu Dhabi Fintech Week or Finance Week. Finance Week, yeah.

But we go way back. We did an event somewhere, I think it was in, I think it might have been in South Korea or Hong Kong or something like that, which was the first time we met, and we did a debate. We did a debate on branch versus digital, and then we repeated it for the financial services forum.

When was that? Oh, that’s got to be 2007, 2008, because it was prior to the launch of Metrobank. Right. It wasn’t far off the launch.

You were definitely on the PR circuit talking about the launch, and the launch was imminent. The first challenger bank in 100 years was the way you used to put it. Yeah, well, it was the first new high street bank to be licensed by the UK regulatory authorities in 150 years.

150 years. Yeah. You remember the one before that, Brett.

You’re old enough. And then you have Clearance Bank, right? It came after you guys, was it? Clearbank? Clearbank, yeah. Yeah, there were a few out then, Monzo and Starling.

Yeah, Starling. And of course, Atom. Yeah, Atom.

But back in those days, what was interesting is I was the digital guy, the death of branch guy, right, back in those days. And you were still, well, there’s still a role for branches, and Metro sort of proved that to some extent. But I want to get to Metro and Atom and 86400, obviously.

But let’s go back a little bit before that. What were you doing before you became a next-gen challenger banker? It’s really interesting because that’s all kind of led to the launch of Metrobank. So in the 90s, I built a marketing services group.

So basically, an advertising agency, marketing services group, research, design, but focused exclusively on financial services. And it became the biggest of its kind in Europe. And in 2000, I sold it to Publicis.

Oh, really? Yeah, who then the second largest ad agency group in the world. And I was precluded for a digital ad agency. Okay.

Moda Media. Have you heard of that? Yeah. So I ran the Asia division for Moda Media for a while.

I had no idea you were in the ad space. You kind of get a sense of how old that must be if it was called Moda Media. So back in the day, it was very, marketing was very traditional.

And in financial services in particular, it was quite backward. And marketers in financial services used to think it was a kind of zero-sum game, that they could only win at the expense of the consumer. And more enlightened marketers in other categories realized that it could be a win-win.

If it was good for the consumer, it was also good for the organization. So anyway, sold the agency to Publicis in 2000. I had a non-compete, so I couldn’t start another agency.

But I knew everybody in financial services in the UK and Europe at that time. So to leverage that, I started an organization called the Financial Services Forum, at which you very kindly spoke. And that was about bringing together senior executives from financial services who had an interest in marketing on the basis that good marketing should be good for the consumer.

So that’s what underpinned the Financial Services Forum. And as a marketer, you know, I’m not necessarily a very good marketer. But at the time, I used to look at marketing data to find an insight that would drive an opportunity.

And in 2000s, through the early 2000s, right through to 2007, I looked at banking data. What it told me was, what the data told me then, the data still tell me today, is that what matters to customers is value. And all of the big banks in the UK at that time perceived value to mean price.

Now, price is an important constituent element of value. But it’s not the only thing. Price is important, but service is important to customers.

Convenience is important to customers. Bear in mind, this was at a time when banks were open from typically nine till three. And then if you had to go in in your lunchtime, they were understaffed because all their staff were on lunch.

So you go, what’s more important to me, price or actually being able to see a banker when I want to see one? And it was clear to me, again, from the data that the traditional banks had just lost sight of the customer. They believed that they were there to make money. And I believe passionately, I believed it then, I still believe it today, and it underpins pretty much everything that I do.

That profit is a byproduct of giving the customer a better product or a better service or a better experience. And if you do that well and you manage your business well, you will be profitable. But for me, it has to be that way around.

And the huge opportunity for Metro Bank, as it became in 2010 in the UK, was to put customers first and recognize what value meant to them. So we started, you’ll recall because you came to it, the launch party. The very first branch of Metro Bank, or store as we called it, was launched in 2010.

In Holborn. In Holborn. And people said, how are you going to change banking with a one-branch bank? But the reality was, we did.

Because what we said was, what matters to us is customers and putting customers and what’s important to them first. You might recall a few years ago, I wrote a book on the marketing of money. Co-authored it with Lucy and Cam.

One of the things that I was really interested in was, there seemed to be this dichotomy of views, this divergence of views. If you ask banks, do your customers trust you? The banks say, of course they do. We’ve got all this research which shows how our customers trust us.

And then if you ask consumer groups, or you ask customers themselves, do you trust your bank? They go, no, I don’t. Not particularly. I’ve got all this evidence.

And you go, well, one of them. Look at the face. One of them is lying.

But actually, what our research told us was that they’re both right. Because there is a body of psychological evidence which says, there are two types of trust. There’s what’s called cognitive trust, which is about competence.

And there is associative trust, which is about intent. So put simply, cognitive trust is, do I trust you, big bank, when I put my salary in at the end of the month, it’ll still be there the next day? Yes, I do. Do I trust you, big bank, that you pay my mortgage direct debit on the third Thursday of every month? Yes, I do.

Do I trust you, big bank, that if I put my card into an ATM, cash will come out? Yes, I do. So people trust banks to be competent. Associative trust is about intent.

And it’s, do I trust you, big bank, to have my best interest at heart? And the answer is, no, I don’t. And that underpinned a lot of what we did in Metrobank. And you might recall one of the things we did.

My partner in the venture, Vernon Hill, had a little dog called Duffy. I remember. And Vernon came up with- Which is why he had the snacks for dogs in Metrobank.

Well, this was it. He said, let’s put dog bowls and dog biscuits into the branch, into the store. And I went, yeah, why not? It’s $0.50 for a dog bowl.

It’s $1 for some dog snacks. It’s not exactly a major expenditure. But what happened was the customer scores went through the roof.

And you go, well, how can this be? It’s not a big deal. But the reality was all the other banks said, you can’t bring your dogs into our bank. And we said, not only can you bring your dogs into our bank, we’ll give them a water bowl.

We’ll give them a biscuit. And the customers, because I researched this, the customer said, if you don’t mind us bringing our dogs into your bank and peeing on the floor, which dogs do, or worse, maybe you care more about us as a customer than you care about you as a bank. And that was just an exemplar of what we tried to do.

So we opened seven days a week. We open from 8 in the morning till 8 at night. So people go on the way to work, on the way home from work.

Because we ran three shifts, at lunchtime, we had double the number of people. So if you had to come in your lunch break, we had double the number of people to serve you. We had some rules in the contact center.

So one of the great rules was it takes one person to say yes to you. It takes two people to say no. So if you went in and you asked for a loan, and the person you were dealing with couldn’t agree to that, they couldn’t say no.

They had to then escalate it to a more senior person, and they would look at it and maybe find a way around it. But if not, and we had to say no, we had to say no. Obviously, you know, we’re in the banking, we’re in the risk business.

But we didn’t just say no as default. Yes was the default answer. No had to require a second person.

So what Metro Bank did was challenge the banking status quo. It challenged the belief that what mattered to customers was price, and replaced it with what matters to customers is value. We tackled not only the issue of competence, of trust around competence, but associative trust about having our customers trust us to believe that we put their interests first.

We were open when they wanted to bank. We let them bring their dogs in. Our default was to say yes, unless we really couldn’t say yes to people.

And we changed the way banking worked in the UK with one branch. Within two years, all of the other banks, the big banks, were opening at least five days a week, often six days a week. They were opening from nine in the morning till five in the morning.

So I take great pride in thinking that we did manage to change a category. Because what’s ironic about that is the opening hours were a function of technology restrictions back in the day, because you used to close at three, because you had to do the batch processing overnight on the old Cobol mainframes, right? And there was no reason to do that after we had better tech. But of course, you had the bank unions then saying, well, no, but our staff only have to work till three now.

What are you going to do to get them to work till five or six? And that was another great example. Nobody who worked in the bank was paid a bonus for selling anything, unlike all the other banks, which were buy a transaction account, can I sell you a credit card, can I sell you a loan? We didn’t do any of that. All of their rewards, all of their bonuses were based on customer satisfaction scores.

And I’ve said before, and I’ll say it again, there’s only two metrics that matter to me, customer satisfaction scores and advocacy scores. Because if I’ve got satisfied customers recommending me to their friends, all of the other metrics will fall into place. And bear in mind, this is 2010, the iPhone, I think it was three years old, apps were still relatively new.

The iPad, I think, had only been out pretty recently. So it became clear to me by 2012, because I’m generally about 10 years behind you, it became clear to me by 2012 that the future of banking was going to be digital in general and mobile in particular. Which, of course, if I’d listened to you five years earlier, I could have saved myself a lot of trouble.

Well, I mean, I was too early. That’s part of the problem. But let’s go back.

Let’s talk about how you and Vernon Hill got together. How did that happen? Serendipity. So Vernon, as you will know, and some of your listeners may know, had built a very successful bank in the eastern seaboard of the US based on customer service.

And at that time, 2005 to 2008, my young son was living in Philadelphia with his mum. He was seven years old. So I was going every three weeks to visit him.

And I’d heard of Commerce Bank, as it was called then, and arranged to meet Vernon for coffee and just talk about it. And we got on incredibly well to the point that I said, look, this model would work incredibly well in the UK. And he said, well, take it with my blessing.

I can’t do it. You know, if I went to the UK, my shareholders would kill me. So I started to develop the plan in the UK.

And it was about 18 months into that journey when I’d been on holiday to Japan with my family. And I was actually here. I was in, well, just down the road in Dubai.

And I got a call from Vernon. And he said, are you still doing the bank? I said, yeah, well, you know, well on the way with the plans. He said, I’ve just sold Commerce Bank.

I’ve got some money. Would you be interested in a partner? And that’s how we came together. And five great years, I spent more time with Vernon than I spent with my wife.

And Vernon’s wife used to, for sure, used to call me Vernon’s London wife because I spent more time with him than she did. But by 2012, it was clear to me, as I say, that future banking was digital in general, mobile in particular. Vernon didn’t share that view.

He built an incredibly successful branch-based bank in the US. We’d built a bank from an idea, the two of us in a fish and chip shop in London, to 3,500 people, $5.5 billion market cap. He didn’t share that view.

The board didn’t share that view. So I stepped down as chairman of Metrobank, raised $100 million and started Atom Bank, which was the first mobile bank in the UK. Yeah.

Now, I remember us having many conversations on the phone about in the early days before Atom was a thing. And I was knee-deep in moving at the time. Yeah.

Yeah, we had many. If only we’d got together then, Brett. I know.

I might be half as good looking or as rich as you. I will say, one of the things that was very interesting about that period, and I don’t think it’s the same now, but it was very collaborative. I would have regular calls with Josh from Simple, particularly.

We would be comparing notes frequently with Ricky from Tandem, later on with Anne from Starling, and there was generally a view that we’re all in the trenches together. Let’s see if we can help each other. I don’t think it’s like that now.

It might be like that in AI right now, but back in those days, there was a lot of openness about what we were doing and comparing notes and so forth. It was quite an interesting period. I think Anne, Tom, Ricky, I still see them today.

And I think the view was we weren’t in competition with each other. We were in competition with the big banks. With the old guys.

We weren’t trying to steal market share from each other. We were trying to steal it from the big banks. And there was a bit of naivety about it.

I look back and you go, how hard can it be to start a bank? I’ve done three of them now. You go, well, there’s only five things you’ve got to do. You’ve got to build up the technology.

You’ve got to get a banking license. You’ve got to get the people. You’ve got to raise the capital.

You’ve got to get some customers. How hard can that be? But of course, underneath each of those five things, there’s 50 things. And under each of those 50 things, there’s another 50 things.

So there’s 25,000 things that you have to do. And it’s not easy. And particularly, back in the Metro days, raising capital was incredibly tough.

I mean, look, I had this conversation when talking with Valentin and others about this in that period of time. In 2013, Moven had a quarter of a million people on our database. We had 60,000 cardholders.

And we couldn’t raise a dollar for Moven back in the time, because people were like, wow, we don’t know whether this neobank thing is really going to work. Today, if you had a quarter of a million customers, you could go out and raise $40, $50 million easily as a digital bank. So just to that particular story, Vernon and I tried to raise some money in the UK.

And everybody’s going, well, a new bank? Are you guys crazy? It hasn’t been a new bank for 150 years. So we went to the US. And as you know better than I, at that time, it was roughly 8,500 banks.

Banks came and went. The investment community was used to the idea of new banks. So we did a roadshow.

Typical, you’ve done these. A lot of your listeners have done these. Mind-numbingly awful.

You do 10 meetings a day for three weeks. We were based in Vernon’s house in Philadelphia. We’d be in Manhattan in the morning.

We’d be in Boston in the afternoon. We’d be in somewhere else. I can’t remember where we went.

It’s just like a blur of planes, trains, and automobiles. And after three weeks, we had commitments in principle to $116 million. We were looking for $100 million.

And I flew home on the Friday evening. And unheard of, but I got a free upgrade with BA. Never happened since.

Never happened again. So I was sitting there drinking. Has to have been a good sign.

I was sipping a glass of champagne and thinking, yeah, we’ve done it. We’ve raised the money. We’re going to do this.

Got home on the Saturday morning to London, which is where I lived at the time. Told Louise, my wife, the good news. My joke is she then went out to spend the money.

On the Monday, Lehman Brothers went bust. Of the $116 million we had committed, $65 million disappeared that week. Within two weeks, all the money had gone.

Not only had all the money gone, but some of the companies who were going to put in the money disappeared. I mean, you remember how traumatic it was at that time. So it was tough.

They were hard yards. And I’ve been asked a few times, what is the secret of any success that you’ve had? I’ve had a modicum of success over the years. And I say, I get up every day and I go to work.

And people go, well, that’s not much of a secret. They go, well, on that day, in September 2008, it would have been very easy just to stay under the duvet and go. It’s done.

We tried it. It was, you know, it’s just Audrey DeVille. But I got up.

I went to work. And then 18 months later, things changed. We raised the money and we launched the bank.

Interesting. Looking back at the Metro time, you invited me in to meet with Vernon in High Harbour, up above, if I remember correctly, up above the first floor. First floor, yeah, yeah.

And you wanted me to talk to him about social media. And I was talking about the fact that customer engagement and particularly in terms of what we would traditionally have called the net promoter score was moving to social. That reputation of brands was going to be aligned more with social.

And his, you know, I don’t want to talk ill of Vernon, but his answer that was, my wife Shirley is really good at the social stuff. Which I didn’t think he really understood what I was talking about. But there was obviously, you know, me being the digital guy and talking about digital engagement and in the social media space and mobile, you know, the nudges and behavioural elements, things like that.

It was clearly something that he just, he didn’t see it, wasn’t interested in it because he’d had a formula that worked for Commerce Bank and he was trying to replicate that. And Metro Bank was doing incredibly well. Don’t forget, sadly, since then it’s passed its zenith and perhaps closer to its mid-year.

But at the time we were doing incredibly well. And I had many conversations because I was looking at market data which told me of this inexorable move towards digital in general and mobile in particular. And I’d been looking at this longitudinal data for 20 years and I’d never seen a shift like this.

And I said, look, this is, you know, you’d been predicting it five or six years earlier. It was clearly coming. And I knew intellectually because the data were telling me what was going on.

But do you know what actually brought it home to me once that was? I’ve lived in London for 30 years, you know, know the Tube network like the back of my hands. I’d go to work on the Tube, go home on the Tube, travel around. And the shift from everybody was on in the morning reading the free newspaper to everybody was on in the morning looking at their mobile phone.

Yeah, yeah. And now I was in London. Was it on the Black Line, Hoban, was it? No.

It was on the Piccadilly line, the northern lines of Black Line, which is when I lived in Hampstead, the line I used to get. And I get on the Tube and you’d see a hundred people. They’ve gone from the Times.

They’ve gone from the newspaper to their phone. And I went, this is the future. This is where we have to be.

And it was funny when we were, as I say, stepped out from Metro, raised 100 million. To launch, 100 million dollars to launch Atom Bank. We were talking about Atom Bank in its concept.

I talked to you, as you say. And everybody was talking about this as remote banking. Yes, I remember that.

I went, it’s not remote banking. No, it’s highly personalised. Me having to walk out of my office down to the high street, go along 200 yards to walk into a branch.

That’s remote banking. This is banking wherever I am, whenever I am. And my bank is never going to be more than an atom away from me.

And that’s how we came. That’s how we came up with the name. It’s one of the stories.

There are other stories I can give you. I like that. And a similar story for 86-400.

I know where we’re going to go with that. But here’s my question for you. Because this is a really valid question for why we haven’t seen traditional banks become yet fully digital and why you’ve got massive growth of NewBank and Revolut and other players in the space capturing market share digitally with acquiring customers.

Why wasn’t it easier just to right the ship and turn Metro into a truly digital bank rather than starting at it? Oh, it could have been done, but the board then didn’t share that view. So it was culture. Yeah.

And your question could equally be, why didn’t the existing banks become digital? Because the technology existed. You might recall I was on the board of the UK board of FISA for a few years. And the technology existed to digitize end to end all of the traditional high street banks.

And it wasn’t particularly expensive technology. Certainly in bank terms, the banks could all afford to do it. So why didn’t they do this? And the answer was twofold.

There was a cultural issue, which I’m sure we’ll talk more about. But the bigger issue was the risk of implementing a new digital system. And the movement of existing data, customer data from an old system to a new system.

Virtually every big attempt to do this in the 2010s through the 2020s failed. And the effects of the inability to migrate customer data effectively is catastrophic. My friend, Paul Pester, who is one of the best bankers in the UK, was the chief executive TSB, and he was forced out through no fault of his own because of a migration of data which didn’t work.

So I think at the time, the digital banks had a real opportunity because they could use data. They could use technology to do two things, to square a circle that otherwise we hadn’t been able to resolve before. So in banking, you did one of two things.

You either were efficient, low-cost, low-service provider, or high-touch, high-cost, high-service provider. And forgive me, I keep going back to data. Must be a bit of a data junkie.

But all the data told me, and still the data tell us today, that the most satisfied customers are those that serve themselves. So how can this be? Well, because the dirty secret of banking is nobody likes banks. Nobody wants to do banking.

It’s just a chore. You want to do it when, where, and how you can. So when digital banking came along, the opportunity to do it when, where, and how you liked, the digital banks were getting incredibly high customer service scores for self-service.

But because they were using technology and no service operators, very, very efficient. So you were able to square a circle otherwise previously unable to do, which is create a very, very efficient business, giving very, very high levels of service. Yeah, it’s interesting.

You often come back to the NPS stuff, the Net Promoter Score. When we look in China, Alipay and Tencent, WeChat Pay consistently outrank the best banks in China in terms of NPS. And I’ve had this thesis for a while that it’s because of their utility.

That when you want to move money or you want to get something done, it just works. And it works at scale. And they know it works at scale.

So that’s where the trust comes from. So unlike it being, well, these banks, because they’ve got a banking license and because they have a lot of money, and they obviously are good at managing money as being the baseline for why you can trust them institutionally, is now shifting to, well, they need to be good at technology because the ability to move my money quickly and do what I need to get done is now a technology issue rather than an institutional licensing issue. There’s a slight nuance that I’d attach to that, which is people are happy to self-serve and they don’t mind if they can’t talk to someone if it’s a relatively low-cost engagement.

If a transaction goes wrong and it’s $10 and it takes me a week to speak to somebody, it’s not the end of the world. But on bigger transactions, like a mortgage, so I was transferring some money to Australia to buy our place out there. And I could have used a Revolut.

But it was a big, big amount of money, which had to be there on a particular day. And if it wasn’t, I’d lose a lot because I wouldn’t be able to complete on the property. So I paid for a more expensive means of transferring the money, simply for, in effect, the insurance of knowing if it didn’t work, I could speak to somebody and get it resolved.

So I think there are degrees of engagement that people have. But I mean, that’s the argument for why people still need branches. And yet the reality is we just don’t see people.

That’s the psychology. But the reality is people just aren’t using branches anymore like they used to. Because those instances are becoming less and less now.

And the digital. But there are other ways of doing it. You can have contact centers.

You and I were talking about AI a little bit earlier, before we started this conversation. And there will be a point within, I don’t know, the next couple of years, when it will be indistinguishable to me whether I’m talking to an AI bot or a person. So problem solved.

I don’t think those that argue, I always want to talk to a human, I don’t think they understand that. A, that an AI persona, whatever you want to call it, is going to be so good at its job that A, you won’t know it’s not a human. But B, it’ll be so much better at servicing you, because it understands your behavior before you even ask a question, that you go, boy, that service was amazing.

And the same is going to be true of healthcare and other areas. But I’m getting off the track. All right, let’s take a quick break.

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All right, so let’s now dive into Adam, because this was the, in the scheme of things, in terms of what I’m talking about for this book and this series on the podcast, in terms of the challenges. Metro was called a challenger, in that it was the first challenger bank in the UK. But the other term we used to describe banks were neobanks.

And I actually think that Dave Birch was the guy that came up with neobank as a term. That’s the first time I heard that term. I heard it was from Dave.

And that was probably circa 2009, something like that. But I would say a challenger bank was a licensed, you know, next-generation licensed bank, whereas the neos were something different. You know, a technology-type bank.

Now we tend to- Challenging the status quo, but in this instance, using technology to underpin that change. But Adam, was it a true digital pure play approach? As was 86400, the follow-on from Adam. And we will get into that as well.

But when we look at the sort of digital pure play approach and how you got into that, after having done Metro, and obviously there was, you know, New Tech involved in Metro as well, because it was a relatively newer bank. But when you started planning for Adam, what were your founding principles for Adam that was going to make it materially different from Metro? Except for, you know, obviously no branches. But, you know, what was your, you know, what did you want to do differently with Adam? It comes back to the point we were just discussing a few moments ago, which is this ability to give a better experience when, where and how the customer wanted it.

And there’d been this inextricable move to digital and people were starting to live their lives through their mobile devices. And it was clear, how can you give them a better banking experience through that mobile device? So that was the conceit that underpinned Adam, which is a cue for a joke. So we were talking about trust a little bit earlier.

Why can’t you trust an Atom? I could probably work this out. Because they make up everything. Oh, there you go.

I like that. So Atom was about, how do you create a better digital, a better banking experience at the glass? And it was interesting, because we were entering the market at roughly the same time as Starling and Monzo. But we had a very different strategy to theirs and quite deliberate.

And I think it’s worth just teasing this out because I think that the jury’s still out to a degree on it, which is Tom at Monzo and Anne at Starling, but had a very clear view, which was we will build large numbers of customers very quickly through this brilliant experience at the glass. And we’ll do it in a skinny balance sheet way. So we won’t do particularly savings and lendings.

We’ll just do transaction accounts, which require very little regulatory capital. Don’t make any money out of them, but we’ll build bigger numbers of customers, at which point we will then cross-sell them or they will cross-buy other products and the bank will become profitable. And I wasn’t sure about that strategy.

And I’m still not convinced about that strategy. Although I’m a great admirer of both Tom and Anne. Although Revolut has done it well.

Yeah, they’re both there. But in a different way, they make their money through transmission. But anyway, coming back to this particular UK model, I still thought it’s worth building a traditional asset liability model.

You take in deposits, you lend them, and you make your money on the spread. Yeah, because Adam was one of the first NEOs to really do the lending. Yeah.

Right? I mean, if you look at it, apart from some fairly primitive credit products, it took a long time for the NEOs to get into the credit side of it. Well, they didn’t. This is the point.

So just to kind of complete this little section, we started out with a very clear intent to build liabilities and assets, which A, is hard. Actually, building liabilities is easy. Getting deposits is easy.

Lending is difficult. But it’s also very capital consumptive. So we were constantly raising money.

Very, very tough for an early stage bank. You know, most businesses, you go, we’re growing really fast. Here’s some money back to shareholders.

In banking, you go, we’re growing really fast. Give us more money. Because we need more money to grow.

So it was hard yards to build it. But now, 10 years later, Atom is profitable. Probably make, not a huge amount, 30 million this year.

But it’s making money. Monzo and Starling went the route of build big custom numbers. And they had a million customers.

And they were losing, I think, on average, 15 pounds of customers. So they’re losing 15 million. To get to 3 million customers, they’re just losing 45 million.

And I think they are now realizing that to make money, they have to offer assets and liabilities. And I’m sure they will be successful. I’m sure they will do it.

But you’ve got some hard yards ahead of them. The commerce bank thing worked quite well for you. I mean, the metro and commerce thing worked quite well for you.

But let me ask you, coming from the marketing slash data world, particularly with Atom, where you, I know you obviously had a co-founder in that. And you’d had some more experience. But what was the toughest learning curve for you in that process, the metro Atom process? Obviously, by the time you got to 86, 400, you knew how to do this.

But what was the biggest learning curve for you? I think I’m of a different generation to people who’ve grown up digitally. My kids have all grown up in a digital world. I grew up in a very analog world.

And we’ve joked about this. But it took me a while to realize the digital transformation. Become an immigrant.

You kind of got it really early. I got it a bit later. And I think there was a cultural thing.

You might recall, I invited Will.i.am to be an advisor to Atom in the early days. That’s a pretty cool move, actually. And the way this came out, I was sitting in my kitchen one Friday afternoon.

Must have been late afternoon because I was having a glass of wine. And thinking, it’s an old marketer’s game. If Atom were a person, who would it be? Who would it be? What are the anthropomorphic qualities you would want to see? And you came up with Will.i.am. Well, he sort of popped into my head.

I was thinking, you want somebody who’s a digital native. You want somebody who lives in social media, who’s social media savvy, who’s really keen on and understands and engages with technology. And he just sprung into mind.

And you go, well, that’s interesting. So I did a bit of research. I googled him.

And yeah, what did we do before Google? I don’t know what I would have done. Yeah, you would have circled Peter Britannica. I’m not sure he would have been in there.

But anyway, so I researched him. And like everybody, he’s a seven-time Grammy Award winner, had a song transmitted from a satellite going around the world. Well, I didn’t realize he was one of the very early investors in Beats by Dr. Dre, early investor in Apple, really, really interested in technology.

So a story for another time, how we connected. But he loved the idea. And everybody said, oh, you brought him in as a brand ambassador.

And I went, no, I don’t care about that. What I want is him spending time with me and the board and the executive team. He’s a good design thinker, right? Just talking about what it means to live in this digital world.

And he was brilliant. We’d sit down with the design team and go, we’re going to do this. And you go, why? Why are you doing that? And they go, because blah, blah, blah.

And you go, no, because why wouldn’t you just do that? And you go, fuck me, that’s clever. So he wasn’t a technologist. But he had this innate understanding of how people interacted with technology.

Because he’d grown up in that world and had a real interest in it. So back to your long answer to a short question, biggest challenge for me was understanding what it meant to be digital. Probably should have read Chris’s book at that point.

But fortunately, I was clever enough to surround myself with really bright people who understood that world. And my job was just to help keep them focused on relentless delivery of that customer experience. The technology is just an enabler of the customer experience.

No, no, I get that. I mean, everybody gets hung up on technology, but it’s just plumbing. No, I know it’s just plumbing, but you’ve got to have that delivery focus.

And then you build the technology to use the tech to deliver that experience. And this is one of the problems with the traditional players in this space. So let’s sidetrack for a little bit.

You have a couple of notable failures of big traditional players that built technology banks. Chase with Finn in the US and RBS NetWest with Bo, which both failed dismally. Not because of the tech, because the apps look great.

They copied the, like they basically tried to, Bo was a copy of Monzo. Finn was a copy of Muvin. And I have a theory for that, which is based upon absolutely no evidence whatsoever.

So tell me what your theory is. I’ll share with you. Is so big bank goes, we’re missing out on this digital stuff.

So we’re going to create a digital bank, or digital something. And we know we can’t put it here in our headquarters because it’ll just get stifled. So we’re going to get them trendy rooms somewhere in downtown Manhattan with beanbags and table tennis table away from us.

Coffee machine. Coffee machines. And we’ll let them go and build.

Do their thing. We’ll give them $100 million to go and build something. And you go, brilliant.

And then the CFO goes, I’m responsible for that 100 million. So I just want to keep an eye on what’s going on financially. So I’m going to put somebody in there just to make sure the money’s managed properly.

And the chief risk officer goes, yeah, it still sits under my risk, enterprise risk management framework. So I’m going to put somebody in there. I’ve never seen this work in traditional banking before.

I’m going to put somebody in just to make sure we don’t breach any of our… And then clearly we need to have an HR person in there because we’ve got a compliance person in there. And within six months, it’s just a version of the big monolith. Yeah.

Yeah, fair enough. That’s a good perspective. I mean, if you look at Bo’s experience, they went through three CEOs in 18 months.

That’s pretty indicative of the cultural battle of trying to cannibalize. We want you to come in. You’ve got a free reign to do anything you want.

Apart from, yeah, exactly. Okay. So then, you know, tell me about the process that led to you finishing up at Adam and then deciding to move down under.

So Adam was great. I really enjoyed my time there. We had a great team of people.

Are you still on the board or advising? No, no, I stepped down in 2014, but I think I’m still the largest non-institutional shareholder. Big supporter of it and what it’s done. They’re doing some fantastic stuff in terms of making it a carbon neutral bank and not involved in any way, but very proud of what we created and what the guys are doing and how they’re building it since then.

No, very simply, our first cornerstone, one of three cornerstone investors was BBVA, the Global Spanish Bank. Came in at, I think, 10% originally. And because we were constantly capital raising, it was really difficult.

Our three core investors, of which BBVA were one, were the primary providers of that capital. So as they’re providing more capital, their percentage of the business increases. And they were at 26%, got at 26%.

And I got a call from the chairman of BBVA saying that we’re doing capital raise, we’d like to go up to just over 30%. How do you feel about that? And so I think it’s great for the bank. But for me, it feels a bit like working for BBVA.

I think now would be a time for me to step down. So all very amicable. We parted on very good terms.

But I was fortunate. I was at a point in my life, I was going, you know, what do I want to do the next 10 years of my life? We’re independent, we can do what we like. Kid’s grown up, we’re financially okay.

And I was sitting in the same kitchen in our house in Somerset with my wife saying, you know, what do I want to do the next 10 years? And she said, how do you feel about moving to Australia? And my joke is, I thought she just meant me. But fortunately, she meant both of us. And she wanted me to retire.

And I said, look, I’ll go crazy. I can’t retire. I’ll go crazy.

You’ll shoot me. It’s not a win-win. So I spent 20- You seem to be pretty good at starting banks.

Yeah. Well, no, in fact, I don’t. So I went to Australia.

I did 10 trips in 12 months, 2018. Just to kind of understand the market and get a sense of what I want to do. And I thought the most likely thing is, I’m going to invest in a couple of fintech early stage businesses.

Right. Maybe if they’ll have me, I’ll join the board and we’ll see what we can do. And on a good day, you think, there’s an opportunity here for a digital bank.

And on a bad day, you go, you know, can I be asked? It’s a lot of work. Do I want to go through all that again? And about halfway through my journey, it was six months into it, I met the chief exec of a company called Kaskal. Yeah.

Which you will know Kaskal, Craig Kennedy, wonderful guy. And Craig said, typical straight talking Aussie guy. We sat down, we had lunch.

He said, look, we’ve got a handful of people. We’ve got some great technology and we’ve got some money. We’d like to start a digital bank.

We’ve never done it. You’ve done it a couple of times. Would you come in and share it? So we cut the deal that if it worked, I’d make a bit of money.

If it didn’t, I wouldn’t. So you go, yeah. What’s the worst thing that happens? I spent three years living in Sydney.

So went out there January 2019. There was seven people. Brilliant, brilliant CIO.

Yeah, what was his name again? Brian. Brian, that’s right. Such a super, super clever guy.

Nice guy. The less likely looking CIO you wouldn’t come across. But he was just a certifiable genius.

Anyway, took that, recruited a CEO, built out the team. And again, very simple proposition, which is how can we give people a better experience at the glass? Four big banks in Australia, lost sight of the customer. How can we really be a customer centric? I regret to this day that I’d accepted a role as a board advisor for Zinja because you approached me not long after that, asking me to join you guys.

And I bet the wrong horse, it turns out. But anyway. I was just, I was too late again, yet again.

I was too late to get to you. Anyway, so we built that super, super team. Fantastic.

Rob Bell, CEO. We just focused on, you know, what are the customer pain points? How do we solve them? And got it to market. It was growing very, very quickly.

Got an approach from Ross McEwan, who I knew from his days as chief exec at NatWest, now chief exec of NAB, saying, look, we’ve got a problem. He’s a super guy, Ross said. We’ve got a problem with Eubank technology, their digital bank.

Got a burning platform issue. We’d like to buy your technology. I said, look, Ross, don’t want to sell it.

Don’t want to sell you the technology. And it very quickly morphed into an offer to buy the bank. We were three years into our journey.

It was a three and a half X return for the shareholders. Great opportunity for the management team. They wanted to do the deal.

Shareholders wanted to do the deal. So I was very happy to sell it. We sold it to NAB for $440 million.

And once again, I was out of work. So let’s take a step back before we talk about your post-exit strategy there. But how was 86-400 different from Adam the second time around? What had changed between the time you built Adam and your time you built 86-400? It wasn’t as much what had changed as what we did.

And with the benefit of hindsight, I think it was a mistake in Adam not launching a transaction account from the get-go. And again, with the benefit of hindsight, you go, well, it’s fucking obvious why you would do that. Because if you are launching an app-based activity, you want to give people reasons to be looking at that app 10, 20 times a day.

And while you’re getting your mortgage, you’re going to be looking at it 10, 20 times a day. But once you’ve got your mortgage, you never need to look at it again. So the benefit of hindsight, not launching a transaction account was a mistake is the wrong word.

Because you can’t look back in 10 years and go, it was a mistake. But we led with a transaction account with 86-400 on the basis that we want to give you reasons to look at our app. That was the entire proposition of moving, nudging you every day around your money to make you financially healthier.

So everything was about how do you do that? And I’ll tell you a brief story which you can edit out because it may be incredibly boring. But 20 years ago, this guy I knew who had a business which sold T-shirts and clothing for motorcycle racing enthusiasts. And he had the idea, this is 20 years ago, believe it or not, wasn’t happening, for one of the race teams to go and suggest that they did a line of apparel for the Formula One race team.

So he went to see the chief executive of this team who was, you work out who it was, who was in a wheelchair. Yeah, yeah. And he wrote him a letter.

He got an appointment, goes in. The guy wheels. Right, with schmillions.

Guy wheels into the meeting, goes, are you here to tell me how to make my car go faster? And my friend goes, no, I’m here to talk to you about a line of clothing apparel. Frank Williams wheels out and goes, on his way out goes, come back when you tell me how to make my car go faster. So Chris went, what was that about? And he thought about it, made another appointment, goes back, Frank Williams wheels in, and he goes, are you here to tell me how to make my car go faster? He goes, yes, I am.

He goes, I’m listening. He goes, got this idea for a range of apparel, T-shirts, all these nice things here. We think you’ll sell a million dollars worth.

You make 40%. That’s 400,000 you can put into R&D to make your car go faster. And he goes, tell me more.

And you go, well, what was the difference between his first time he was there and the second time? Because Frank Williams knew why he was there. What he was doing was making a brilliant point, which is this business has one focus, and one focus only, which is to make these cars go faster. Make our car go faster.

I don’t want to be distracted by anything else. Everybody who works in this business, everything they do is about making our car go faster. And one of the things I sat down at Atom and then with Rob Bell at 86100 went, what will make our car go faster? What is the one thing? And it was about customer engagement on the screen.

How can we get people using our app more and more? So everything we did was focused on that. And one of the early things that we did, which is quite commonplace now, but was very unusual then, was we gave you all of your other banking balances within our app. Yeah.

Now, this was pre-API days. This was all screen scraping. Yeah, I agree.

And the banks hated it. And we had blah, blah, blah, blah, blah. But we did it.

So not only would people look in their app to see their transaction on their 86100 account, but how much they had in their Westpac account or how much was on their credit card with Amex or blah, blah, blah, blah, blah. And everything was focused on getting people engaged with that. And again, back to something I said earlier, only two things that matter, customer satisfaction scores and advocacy.

And we built a great relationship. Customers loved it. We had the highest app store ratings, highest customer satisfaction ratings, and therefore highest advocacy ratings.

So for every customer we acquired commercially, we were getting four, in invert commas, free through advocacy. Which reduced your acquisition cost to improve your lifetime value, et cetera, et cetera. Exactly.

What, if any, were the biggest technical hurdles to Adam and 86400, if any? I think, I’ve got to cast my mind back. You know, I think one of the issues was around from a regulatory and compliance perspective. This was all relatively new to the regulator.

So they needed convincing that you could build a successful relationship with a customer digitally. Now today, nobody would even think of that. But back in the time.

And it was a bit of a learning curve for the regulators. Yeah, for sure. Looking at that dynamic in Australia and the UK, I mean, this is one industry that has struggled with that to understand that you can be a bank that’s entirely digital and be just as competent as a traditional bank in doing that.

But we’re entering a phase of banking that is dominantly technical and digital now. And are the regulators up to task for that yet? I sit on the board of a bank here in Abu Dhabi called Weo Bank, which is an incredibly successful digital bank. And the regulators have been incredibly supportive.

I’ve been involved with what’s going on in KSA. Similarly, the regulators there in Europe, Australia. I think regulators around the world are very good at working together to learn from each other.

So, you know, a bit like, I suppose, regulatory equivalent of an LLM model. They’re all learning and improving all the time. And, you know, my experience of regulators is that what they want ultimately are better consumer outcomes.

And they are starting to realize you don’t get better regulatory, better consumer outcomes through regulation. Right. You get it through competition.

And I think the big challenge for the bank, for the regulators in the last 20 years has been… And I had this conversation… Which is why American banks still suck because they haven’t allowed competition. And I had this conversation with Andrew Bailey, who was then responsible for bank regulation, now the governor of the Bank of England. And I remember at a conference him saying, you know, we want more competition.

And I am very relaxed that that means some banks will succeed and some banks will fail. And I remember saying to Andrew, I said, yeah, you don’t mind banks failing, but you don’t want it to be on your watch. Because nobody wants… Because it’s a kind of admission of… They saw it as an admission of failure.

But actually it’s an admission of the success of free markets. Yeah. And I think regulators now have taken the view as long as, in consumer banking in particular, as long as consumers, it’s not to the detriment of consumers.

They don’t care if a bank fails and the shareholders are wiped out or the bondholders are wiped out. That is the risk that they take in providing the risk capital. They just want to make sure that consumers are not adversely impacted and there is no idiosyncratic or systemic impact on banking.

All right. One final question, AT. 20 years time, you’re sitting on the porch overlooking northern beaches of Sydney or wherever it is that you end up in your retirement.

You’ve got the grandkid on the knee. What are you most proud of through this period that you think you’ll reflect on? From a working perspective. Yeah, from what you’ve built.

And family, of course. But I think it would be that I have played some small part in improving banking for consumers and small businesses. That it’s moved from being banks purely thinking of customers as a number and a source of profit to banks today, increasing numbers of them, new and existing players who actually recognize that profit is a byproduct of giving the customer a better product or service or experience.

If I’ve had some small role in that, I’d be happy. Fantastic. Well, Anthony Thompson, thank you for joining me today and thank you for participating in this little project of mine.

And it’s good to count you as a friend and a collaborator. It’s great to speak to you again. And please tell me what the next breakthrough in banking is going to be, because I promise to listen to you this time.

Adjentic banking. Adjentic AI banking. Let’s do it.

All right. That’s it for another week of the world’s number one fintech podcast and radio show, Breaking Banks. This episode was produced by our US-based production team, including producer Elizabeth Severance, audio engineer Kevin Hirsham, with social media support from Sylvie Johnson.

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