‘Innovation has always been the bread and butter of a FinTech company. But, coupling scale with this innovation is a trickier balance to strike.’ FinTech Connect

Michael Kempe is COO of our corporate markets business and believes in driving positive change for his industry. 

Michael Kempe - Photo.jpg

Last year, he was asked by FinTech Connect (who you can read more about here) to be moderator for the ‘coupling scale with innovation’ debate during their FinTech Founders Forum conference in December 2019. 

The panel was made up of CEOs, CFOs and managing partners of trailblazing FinTechs and start-ups. Steered by Michael, we heard their views on:

  • The rise of rules and regulations
  • The industrial society versus the network society
  • Brexit as a growth blocker or growth opportunity
  • Should your company stay public or go private?
  • How private equity helps companies to scale

The discussion honed in on the challenges of entering hyper-growth; a stage made up of many components and challenges: leadership, financial modelling, regulation, infrastructure and cultivating culture to name a few. 

So what golden advice did the panel have to give? 

The rise of regulation: a challenge or an advantage?

Michael kickstarted the debate by suggesting that developing and launching a product requires a very different skill set from building an organisation that can support the growth of that product. This is especially true in a highly-regulated space. So, he asked, what are the most important decisions you can make when managing those risks of rapid growth?

‘Regulations differ around the world, so there’s a balance between meeting them and innovating’

Eli Daniel Keren, CEO and founder of P.F.C (Sweden’s first neobank), sees regulation as a competitive advantage. He’s well-prepared for rapid growth and scaling, and thinks FinTechs need to stay ahead of the game. Regulations differ around the world, so there’s a balance between meeting them and innovating. 

But what does well-prepared actually mean, and how can you prepare your company?

For Eli, preparation is effective due diligence and the use of technology. He recommends you use technology and products that are trusted by regulators and build KYC processes into systems from day one. 

But, even with preparation, different local interpretations of rules and regulations can still temper the rise of growth. There’s also the challenge of regulating business, especially offshore entities, to consider.

The panel considered a particular challenging regulation, Payment Services Directive 2 (PSD2), which you can learn more about here

Digitalisation: working in the ‘network society’

Next, Michael delved into another hot topic: artificial intelligence. 

He asked the panel of experts, how can AI help scale a business; and how can it better serve its customers in a highly-competitive market?

Ivan Gowan, panel member and CEO of Capital.com, used AI to establish his business as one of Europe’s top CFD training providers and expand it into new regulatory territories. 

But how did he achieve his ambitions to take on the ‘big players with big budgets’ in a highly-regulated space? 

Ivan explained how he invested heavily in on-boarding and KYC, including rolling out MiFID questionnaires, and used mobile apps to tune into our ‘network society’ – as we leave behind the industrial society. 

Thanks to digitalisation, people prefer learning in bitesize chunks and through videos, which means they read less. Ivan embraced this AI and real-time learning trend as part of his strategy to make traders better.

‘Companies need to adjust to the ‘technological jump’

Ivan believes the behaviour of trading in the market directly affects trading outcome, and that’s why he developed an AI-driven system to give insightful instructions to be a better trader. The system uses machine learning to analyse trading performance and detect predisposition to biases.

It’s vital to focus on the end-user. The panel all agreed you need to consider how different demographics want different things; the new generation wants bitesize learning, while older groups prefer to read. Companies need to adjust to the ‘technological jump’.

Brexit: a blocker or enabler to innovation and scale?

The B word is front and centre of most debates right now, both in the news or at the kitchen table, and this one was no different.

Michael wanted to know, how is Brexit going to affect FinTech companies? And how can they best prepare to expand internationally once the UK is out of the EU?

Kevin Mountford, CEO of Raisin UK in the panel hot seat, believes Brexit’s ramifications won’t only affect Europe, but also the rest of the world. And he doesn’t see it as a bad thing. 

‘FinTech is a global and cross-boundary sector, so it’s not reliant on EU relationships and will continue to boom’

Kevin’s company has a Berlin parent, so he’s well-placed to consider what will happen in the near future. He thinks Britain’s exit from the EU won’t be a blocker at all due to the collaboration outside of the EU framework that will carry on long after the change.

FinTech is a global and cross-boundary sector, so it’s not reliant on EU relationships and will continue to boom. 

Catherine Birkett disagrees. As CFO of GoCardless, she sees Brexit as more of a threat. Needing a fresh licence to continue serving  European customers showed her that companies need to be prepared for every possible outcome. 

Catherine gained support from other panellists, like Eli who sees FinTechs as struggling to tap into the UK market because of Brexit. 

Stay private or go public?

Michael then asked the panellists about advice for companies who are unsure whether to list on a stock exchange.

Catherine Birkett was first to respond when asked if they saw going public as a last resort to fix a lack of funding or an opportunity they’d seize with enthusiasm. 

In Catherine’s previous role as CFO of Interoute, she took the business from €20m to €700m in turnover over 16 years. During that time, her focus was on scaling business rather than raising funds so she didn’t even seriously consider an IPO.

‘The changes in governance take many by surprise, as well as the increase in visibility and scrutiny'

She believes there’s no right or wrong answer as the benefit of an IPO is down to the individual needs of a company. Going public is a good idea for businesses with a strong valuation who are seeking more funding and brand awareness, especially if they want to avoid exiting through M&A.

Ivan Gowan agreed with the benefit of IPOs, but only as long as the company has a robust governance framework. The changes in governance take many by surprise, as well as the increase visibility and scrutiny (such as of their share price and performance), so companies need to have confidence in their strategy before considering going public.

It takes failure to grow

The penultimate part of the debate explored how early stage investors help FinTechs to scale.

Panellist Ben Cukier founded Centana Growth in 2015 after more than 20 years of experience in growth equity and finance. 

He sees a good venture capitalist as someone who leverages their industry connections to gain early stage investors and grow their company, but he makes it clear that failure along the way is crucial for FinTechs.

‘Private equity guys love to talk on stage about failures’

To learn, you need to fail, and there’s a danger for entrepreneurs who haven’t yet experienced failure as they haven’t learnt as much as those that have. 

According to Ben, private equity guys love to talk on stage about failures. They’re the best things to bring to the table to make sure experiences aren’t repeated. 

Ingraining innovation into your company’s culture

Michael’s final question of the debate was: in the midst of regulation, Brexit, control, influence and governance, how can companies continue to drive innovation?

Ben Cukier believes it all lies in the company’s culture. Innovation needs to be embedded in an organisation and in the people who deal with the products. They need to be able to anticipate a bump in the road and find the right new opportunities. 

Ivan Gowan says it’s all about relevant innovation: developing a smart proposition and taking the time to identify your target market so you can resonate with your audience. The key to innovation is being willing to fail with new ideas – while not committing to too much money!


We really enjoyed working with FinTech Founders Forum of FinTech Connect as their sponsors. Thank you to them for their collaboration, and thank you to the panellists for their insights. 

You can read an interview between FinTech Connect and Michael here, as he explores how FinTech start-ups grow from seed to scale.