Railsbank is currently one of the most preferred Banking-as-a-Service (“BaaS”) providers internationally, backed by Visa. The founding team visualized the API-as-a-Service concept when open banking was a myth and just another compliance item on banks’ lists. They even used the window of opportunity last year to acquire Wirecard UK, accessing the unique know-how, technology, and people.

After reforming the traditional banking ecosystem, Railsbank is now “converting” non-financial companies into FinTech with their “embedded finance” concept. We were hoping to learn more and snapped the opportunity to sit down with the technology evangelist Nigel Verdon, CEO & Co-Founder of Railsbank, for our expert interview corner when it presented itself.

Banking is literally in Nigel’s blood; he is the great great grandson of Sir George Verdon, one of the founding fathers behind what is today called ANZ Bank. Before embarking on the Railsbank journey, Nigel created many other successful brands and previously worked at Swiss Bank Corp (now UBS) and Dresdner Kleinwort Investment Bank.

My most vivid memory of Nigel is watching him in a heated discussion with other BaaS providers at VivaTech Paris 2017.  While his opponents claimed that the world exactly needs more banks, he said, “world doesn’t need another bank, just five lines of code.”  Some of the more “old-school” bankers were shaking their heads unapprovingly, underestimating Nigel’s decades of experience and vision. Not even five years later, here we are with fewer incumbents, fewer bank branches, and more backend banks and APIs.

Hoping to benefit from the same foresight that led Nigel here, we have asked Nigel to gaze into the crystal FinTech ball and tell us what he saw:

  • Nigel, many people tend to call themselves serial entrepreneurs, but I doubt most of them having your track record. Evolution, Currency Cloud, and Railsbank, in addition to many more important roles. What’s your secret sauce when picking the right project?

Nigel: Evolution was the start of my entrepreneurial adventure in 1996. Railsbank is my third venture, following Currency Cloud. When building a company, many people focus on advanced technology and features, but the most important thing to focus on is “what problem are you solving” The secret sauce here is finding the right people. Different stages of the company require different people, so you shouldn’t choose the first person you interview. It would be best if you interviewed several people      until you find team members that align on the core values and create a diversity of people and cultures.  It’s the people who make great companies.

  • Quite important indeed, but a tough one! I see that your first batch of employees are still a part of Railsbank, which  is quite rare in the startup scene.

Nigel: We have a fantastic team, and the core team is not there from the first days of Railsbank but actually from our first venture, Evolution. My Co-founder Clive, leading the business development stream, and our CTO, Pete, was a project manager at Evolution and Nick (Chief Architect) has already worked with me throughout three different companies.

  • That says it all actually. Where are you currently based? I have read that you moved to Singapore to watch the Asian operations more closely. Was this an essential move to build a local model to scale?

Nigel: Yes, I am primarily based in Singapore. It’s a different market to crack. Local customers would like to see the longevity of companies and feel their commitment to the region as most companies come and go. We decided to come here to establish the local operations according to the customers’ needs. At this point, we needed to flip the coin with my Co-founder, and it was more logical for me to move since Clive has four kids, whereas I have two. Also, I had early cultural insights into SE Asia having lived there as a child     , which was helpful. We believe in this market.

  • Following the Philippines, Malaysia, Vietnam, Sri Lanka, and Singapore, Railsbank announced a market launch in Australia last month. Congrats! It seems like you are planning total domination in the APAC region.

Nigel: South East Asia is a long game. It’s definitely “longer” than London, where you can establish yourself in a matter of      months. We were thinking long-term and decided to start building our reputation in this ecosystem already.

  • Let’s take a step back and focus on the Railsbank building process: you and your co-founder Clive brought a novel business model live from scratch. How did you manage to get the investors to jump on the bandwagon? Considering your extensive fundraising and investor experience, are there any recommendations you have for fresh entrepreneurs with bright ideas.

Nigel: Ideas are quite cheap. Everybody has ideas; the real value is in what customer problem you are solving and being able to execute excellently on solving that problem.  Very early-stage investing is about the team. The domain know-how is the icing on the cake. Of course, priorities change in time. As you grow the business, it is about numbers.

I would suggest the new founders focus on their value propositions only and clarify who is buying. This will reveal the size of the market. In the end, people do not care about features; they care about their problems being solved.

  • What are some of the upcoming embedded finance treats we should be expecting from Railsbank?

Nigel: Actually, we are not providing treats. The treats are coming from our customers; we merely provide sugar, wrapping paper, and other tools they might need, creating delicious treats. An excellent example of this is simplified credit products that our customers can build using the Railsbank infrastructure.

More generally speaking, the ability to embed financial experiences into current value propositions instead of imposing inconsistent legacy experience. We don’t have legacy burdens and only offer digital experiences.

  • Railsbank’s services address brands across verticals and industries. Nevertheless, your product is very tech-driven. How do you onboard not-so-technical founders and teams?

Nigel: That’s an excellent question. Over the years, we have realized that many customers out there are not so comfortable with APIs. This led us to tweak our proposition and come up with the Houston project. Houston is a drag-and-drop environment, a UX that focuses solely on customers finding their own pricing. Houston is how we will provide onboard the non-techy customers. It’s a complete self-service mentality and built on the principles of the “no-code” movement. The product functions in a “drag-and-drop” way; we help the customer build a FinTech product and drop it into their own environments. We help them launch a prototype and scale, which will allow them to demonstrate their products to customers. This way, they can write apps without developers and test with real customers. Afterward, they are able to afford good tech people.

  • It sounds like Railsbank is becoming an equivalent of a fast-food chain for FinTech! Wrapping up: we can see many innovative ideas being quickly adapted, copied, and therefore populated. There are many waves of neobanks, crypto exchanges, PaaS providers following the successful first movers. In contrast, some market needs remain untapped. What are some of the underserved verticals in finance/banking that you think could need a push?

Nigel: To me, it’s more about restructuring than about some new verticals. Brands like supermarkets or clothing brands rather than neobanks are likely to become the customer-facing positions. This shift will allow customers to use saving and lending functions for tickets and give them fast access to payments instead of customers queuing for hours for tickets. We won’t be talking much longer about verticals or very undifferentiated neobanks. The shift of brands will mean that banks will position themselves in the middle between the brands and the customers, providing the balance sheets and working harmoniously with brands. Brands will face the customers and bring them real value. We have seen a similar restructuring in the music industry before finance; artists nowadays are going directly to fans without record labels, which used to be the industry’s cornerstone, using platforms like Soundcloud or Spotify. Record labels still exist as a significant ecosystem party but only between the artists and the customers; they are not the only way for accessing customers. Their costs got way too far. A similar transformation in the financial industry and platforms like us can help customers get better services and reduce acquisition costs. There are 6.1 Mio consumers tied to Railsbank infrastructure only in the UK. This number represents 10% of the population in the UK, which is way more than most mid-scale bank’s reach. And we can populate this number with the other markets – that’s the scale we are talking about.

Food for thought: In addition to being an inspirational entrepreneur and investor, Nigel is also a wine connoisseur, a guitar builder, and regularly sails with his family and friends. Even during a busy week, he answers his e-mails. Entrepreneurs: try to re-think before claiming that you are “too busy” to talk to your employees or customers. He even made time for addressing his cold-e-mail spammers via an open letter recently so that the salespeople can “better target.” Better read before you click send

Gazi University Faculty of Law graduate Ş. Elif Kocaoğlu Ulbrich has degrees in Private Law from Galatasaray University and MBA from WHU – Otto Beisheim School of Management, and is also a fellow of Jean Monnet, Joachim Herz Stiftung. After working as a lawyer in various international law firms in Istanbul and Ankara for more than six years, Denizbank A.Ş. She started her banking and finance career in 2013, specializing in business development, project management, FinTech regulation and lobbying activities at FinTech startups (FinLeap, Cringle, Lendico) in Hamburg and later in Berlin. Co-author of The PAYTECH Book, The AI ​​Book and The LegalTech Book, which are planned to be published in 2020 in cooperation with FINTECH Circle and Wiley, Kocaoğlu Ulbrich has been providing consultancy, training and publishing services since 2019 through Berlin-based Contextual Solutions, which she is the founder of.