Russell: [00:00:00] Thanks for downloading show 109 of the csuite podcast the 6th in our special series of episodes that we’re recording in partnership with the European PR Agency Tyto and their own Without Borders podcast, where we are interviewing leaders of unicorn companies to find out about the key issues, pain points and challenges that startups face and how they can address them with a strategic approach to marketing and communications.
My name is Russell Goldsmith, and as regular listeners will know, I co-host these particular episodes with Tyto’s founder, Brendan Craigie. Joining us both online from Hamburg is Dr. Tim Sievers, CEO and founder of Deposit Solutions, an open banking platform that, as reported in the Financial Times, reached unicorn status in September 2019 after securing a $55 million investment for a 4.9 per cent stake from Deutsche Bank. So welcome to the show, Tim. Great to have you as part of the series. And actually, you’re our first unicorn leaders to join us from Germany. Do you want to start by giving us a quick overview of the business?
Tim: [00:01:01] Yes, of course. Thanks. Okay. So with Deposit Solutions, we do open banking for deposits. Deposits obviously are simple savings products. It’s about overnight accounts, fixed-term deposits and notice accounts. And for savers, deposits are an important product category for the financial services needs. That’s just where you put your money, the excess cash that you want to save. And for banks, this is a really important funding source. 40 per cent of European banks balance sheets are funded in deposits. And what we bring to this product category is the ability for a customer to use products of different providers under an existing home bank relationship. We call that the point of sale, the interface to the customer, because the point of sale can implement our platform into its own offering. And then if their own customers access all these third-party provider products and on the other hand, the product providers, they gain access through our platform to a huge additional addressable market for their funding. So it really is a win-win. And it’s also called open architecture and something that’s quite well known from other product categories. And we are really bringing this into the product category of savings.
Russell: [00:02:14] Tim, I mentioned that at the top of the show that Deposit Solutions achieved Unicon status towards the end of 2019. Did that milestone change the perception of your company at all?
Tim: [00:02:25] Yeah, that’s an interesting one. Maybe. I think in many ways it didn’t change much. I guess it brought us maybe a little more attention and it was maybe sort of comparable to when Peter Teil invested. I was also surprised how that gave us some more credibility with parties that didn’t know us before. And in our industry, obviously, as a fintech and especially as a B2B focused fintech like us, we’re selling to banks. Banks are very conservative organizations and typically they’re much larger than us. They’re always worried about whether they can trust a partner, whether the partner’s going to be around for long enough and all these things. So I think on that dimension, it may have helped us a little bit.
Russell: [00:03:08] And how do you build a company culture in such a fast-moving and high growth environment?
Tim: [00:03:14] Right. I mean, obviously. So this is a challenge, right? Because we are fast-growing. And that means many people who work with us today haven’t been with a company for very long. And also, the environment that we are in is changing quite fast. It’s demanding on the team also. And I think the first thing is you’ve got to make sure that you find the right people who were looking for this. Who are you looking for what we are, eager to take responsibility.
So that’s sort of the sort of team-building aspect of it. But then when everyone’s here, I think you’ve also got to make sure to unite them behind a common goal. So that’s really a communication challenge. You’ve got to make sure everyone understands the vision so they can make the right decisions decentrally, even though they may not have been with the company for it for such a long time. And then also finally, what I’ve noticed is that it’s not only important to say what behaviour is wanted. It is also important to have a very clear code of conduct like what isn’t acceptable. And I think this is also something that one has to kind of find a consensus and build a consensus around. And yeah, I mean, as you say, it’s a challenge every day, but it’s also exciting.
Brendon: [00:04:26] That’s fantastic. And one of the things that we’ve seen with quite a few of the Unicorn CEOs that we’ve we’ve spoken to, Tim, is that they’ve usually been involved in other kinds of companies before and I believe you founded and sold a company that created internet solutions for midsize companies. What did you take away from that experience? And were there any mistakes you made along the way that you’re kind of now learning from with Deposit Solutions?
Tim: [00:04:57] Yeah, I mean, I’ve got to say, this was ages ago. I was my early 20s. I had just finished university and this sort of late 90s period, the turn of the century with dot com bubble going on. I first joined a company with a friend of mine, building up the German subsidiary of his startup. And then I founded my own company for the first time and did that with a friend. And I mean, many things were different and it was a different industry. I was, as I said, much, much younger. But I guess the two things that I took away from this was to focus on team and product. And I think that’s that that’s what I’ve done this time around also. And I think that’s important when you start up something new.
Brendon: [00:05:39] Yeah, it’s so exciting building teams and kind of navigating that. And you kind of opened up there, Tim. Obviously, you’re part of this big transformation that’s going on in financial services. Talk about open banking to anyone that’s kind of maybe new to that subject area. And what’s going on? What what is open banking and why do we need it?
Tim: [00:06:02] I think this is really important also because there is sort of some discussion and unclarity sometimes around what exactly banking is. And to me, open banking is about putting the customer at the centre of everything.
It’s not about pushing products onto a customer base off your balance sheet. It’s about really understanding what your customer wants and needs and adapting around that. And I think this, of course, includes the whole PSD2 world, which is, especially in the UK, I think, the focus of the discussion a lot. And that’s rather recent. But it also means contains the whole world of open architecture where we play in, which is actually a little older and some product categories. This is already 20 or 30 years old, and it’s the principle of making available on top of your own products.
Also, third party products to your own customer base and the two together, PSD2 and Open Architecture are really, I think, very powerful in transforming the industry to the benefit of the customer. And they also create huge opportunities for those industry players that embrace it and especially the incumbents. I think, of course, also there are a lot of challenges like new players in the industry, but especially for the incumbents. I believe open banking is a huge opportunity.
Brendon: [00:07:20] And I think maybe just kind of as a follow up to that, you obviously have your consumer-facing brands and then you obviously have like a more of a B2B focus. What was the kind of thinking behind having that kind of two different dimensions to your business?
Tim: [00:07:36] Yeah, that’s right. I mean, our vision is to build an infrastructure for the deposits product category, and that is a B2B focused vision. And that’s how I set out as well, like 10 years ago when I started the company. And we spent about three or four years building the platform. And then when I went to present it to the first partners, I tried to get them to participate. And the distribution partners told me, look, come back when you’ve got products on the shelves. And the product providers told me, come back when you have distribution.
Right. So there was the giant chicken and egg problem to solve. And at that time, we started our own B2C point of sale. Our own client’s direct line facing business. It runs under the brand of ZINSPILOT in Germany and SAVEDO in our international markets. And with that, we distribute the products listed in our platform directly to savers. And this was really useful because it proved to other market participants that this works as it’s feasible. The regulator is fine with it and customers want it. But it also meant that for product providers, I could say, look, here’s the vision. We’ll have lots of distribution for you.
But regardless of what happens, I have this channel here which works already and I can get you deposits tomorrow. So with that, we were able to beat the product panel and were able to bring more policy partners. We have more than 100 today and product providers from for more than 20 European countries. But since then, the B2C platform was really helping us overcome the chicken and egg problem. It’s putting it like that shows that we are all about B2B, but it kind of understates, I think, the relevance of ZINSPILOT, the B2C business a little bit, too, because I think even stand-alone, this has definitely been one of the most successful European B2C fintech and is doing quite well today.
Brendon: [00:09:31] I can see how that’s very compelling to be able to show it in action as well.
Tim: [00:09:38] Yeah. It also means that we can learn from the user experience and, you know, sort of optimise our product with direct insights. And so it has many sorts of secondary advantages. But what I just said about the chicken and egg problem. That’s how we got started.
Brendon: [00:09:50] And you obviously get exposed to kind of the fintech ecosystem on a global level but not around the world. Where are you most excited at the moment in terms of where you seeing the greatest innovation coming out of, you know, which kind of fintech hubs?
Tim: [00:10:08] Yeah, I think that’s a really tough one. I think one thing that is interesting. I mean, there’s lots of exciting stuff going on right around sort of new regulation, PSD2, around payments and around low intent in saving space and, you know, all these sorts of new products and performance also that are tested on customers. So there’s lots of exciting stuff.
What I find interesting is that this is one area where, you know, it’s not like the innovation is happening in the US. And then the rest of the world follows. There is exciting stuff being invented in Europe as well as in the states. And in fact, there are quite a few European startups which are starting up businesses in the US now, we are one of them, as much as the other way round. Right. So I think this is exciting, but also beyond Europe and the US. I think it’s quite interesting also to see how, for instance, in Africa, they’re leapfrogging directly to mobile applications and those sort of how behaviours. Customers haven’t learned the desktop behaviours, so much, so they are more open and to try new formats on mobile. And there’s sort of exciting stuff happening there as well. I wouldn’t be able to pick one winner, I guess.
Russell: [00:11:13] Just picking up on what you just said there about launching into the US. So how are those plans going?
Tim: [00:11:17] Yeah, you know, it’s going really well. So it’s really far advanced as well. Actually I think this is sort of one of the projects that have been delayed by the Coronavirus crisis. We are looking to launch as soon as the, I mean within this year, obviously depending a little bit on how the situation in the US evolves. It’s something that we’ve been preparing for two years already. This has been a big challenge for us as a company.
We want to make sure that, of course, we want to use our core strengths. At the same time, the product market fit in Europe doesn’t translate one to one into the product market fit in the US. So we went to great lengths to actually make sure to adapt the product to the local requirements, not just in terms of regulation and sort of the contractual frameworks but also in terms of the competitive landscape and customer needs. So we went we actually invested quite a bit of time and have a team in New York, which is their own home office, of course, we’re currently preparing our market launch and we’re on the last mile of that.
Brendon: [00:12:23] So you, I think we if we’re correct, you’re up to about 300 employees now. And, you know, sticking with this kind of theme around communications, I think as a leader, you always have to kind of balance the need to communicate with individuals, but then also need to communicate with the team and kind of get your message across to the entire company. How do you, as a leader, how do you navigate that? What’s your kind of approach?
Tim: [00:12:51] Yeah. So I think, the Coronavirus changed that a little bit too, right. But I think generally found that it’s good to be bigger. So we’ve experimented with this and I find that sitting with the team helps just because there’s sort of more informal communication that happening all the time. I also tried for some time that being in a separate office just by myself, which obviously when you’re on the phone so much, has its advantages. But I think the other model was good so we went back to that. And I think that helps because there’s lots of informal communication.
But then also what we found over the years is, especially coming back to what I said earlier about uniting a team behind one common goal and vision, you have to have some sort of organised, centralised, format of communication on top of the informal things that are going on. And obviously lots of that is happening, trickling down the sort of line management structures like every leader with their teams. And then you kind of speak to the team leaders and so on. But also at the, I think, direct formats we have experimented with. It’s not always easy to make it like at the same time.
You know, it’s hard enough for everyone to keep attention for long enough to be able to provide sufficient substance. But we found this has become quite an effective format for us, too. So I tried to communicate directly to all as well as to the individual leaders or sort of individual people. And my colleagues in the management tried to do that, too. I think what we’ve seen on the Coronavirus times, where we have remote work and people are at home, is that people tend to get on video calls with a whole team several times a day. And what we have also found is that it’s quite useful to provide a higher frequency of internal communication formats, like a newsletter, you know, to still get across that you’re part of one team, one community, even though everyone sitting at home.
Russell: [00:14:59] Has this period challenged you as a leader of the business?
Tim: [00:15:02] Yeah. Absolutely. I mean, this has been really quite challenging, I think especially on the communications side, but also in other respects. While we are I think, you know, lucky in many regards compared to other industries, this is still been hugely challenging for our clients and for us with delays and projects and teams in different places. And, you know, all these things. So, yes, this has been definitely a challenging time.
Russell: [00:15:31] Yeah. I mean, we’re actually recording this just as lookdown is starting to be eased. But when we were talking earlier, before we actually started the podcast, you were saying there are still only a few people in the office. And I think you said today it was around 15 or so. How much of an impact has the COID-19 crisis had on your business as a whole?
Tim: [00:15:48] Yeah, I think this has had an impact on everyone, I guess. And it’s certainly had a big impact on us. We are in our fourth month of home office and remote work. We started really early, like the beginning of March. Fortunately, the team has done well so far, but it’s affected us. I mean, it’s affected how we work for sure. It’s also affected our business. I mean, in that sense we’re in a fortunate position because we’re not in trouble like in the restaurants business or whatever.
mean, some of industries have been hit much harder. But for us, it means that quite a few projects that we had planned to implement with partners in the second quarter had been delayed or even canceled because the partners were busy with business continuity management and crisis management. So it means that we are this year growing slower than we had planned to grow. We will still grow. So I think we’re still I mean, we shouldn’t complain too much demand for our services hasn’t, like, broken down or anything, but it’s definitely been a tough time for us.
Brendon: [00:16:46] Just thinking, a bit more broadly around the economy and the environment we’re in at the moment, it always slightly depresses me when I look at what interest rates I can get on my savings. And, you know, I’m kind of like thinking, why do I bother, when you literally can’t get return? And I’m just wondering. We see interest rates still seemingly going down. You know, you’ve got negative interest rates. How is this a viable business for the banks at the moment? It’s kind of managing people’s money for savings.
Tim: [00:17:23] Yeah, it’s a challenging time for everyone, savers and banks, I guess. As I said earlier, for banks, deposits are really important as a funding source. And the recent turmoil and that sort of capital markets and variations in the wholesale market. Funding costs for banks have brought home the importance of retail deposit funding because that is it’s stable, it’s granular, it doesn’t run away in panic, like when something like a crisis hits. So it’s an important funding source for banks, regardless of the interest rate level and having access to it and diversified full of retail clients to tap into for your funding is of strategic importance and risk management boards, regardless of the cost, but also for the same as it, it increases the pressure.
So when your home bank is giving you zero or threatening to give you a negative rate, that’s I mean, the other way to look at it, like; okay, why should I even bother?’ The other way to look at is like; ‘okay, where can I sort of make sure I’m not losing money?’ So we feel that demand from savers has not at all been going down with this decrease in rates over the past year. If anything, the problem of the saver has become bigger. And also the question is what else to do right?
What else do you do if you don’t put it in the bank? In the bank, at least it’s deposit insured. You can be pretty sure. I mean, you will get back your money. You might not earn a huge interest, but you wouldn’t get back your money if you put it into the stock market. Of course, in the long term, that’s likely going to be giving you a good return. But then you have to have good nerves to take those swings of 30 per cent down and 50 per cent up. And you know what we’ve seen like these past months and also depending on what stage in your life you’re in.
I mean, if you’re saving that’s fine if you’re in retirement. Maybe you have 30 years until you want to get access to your money. So I think you don’t want to put the cash under your and sofa. Right. We see that there is a huge demand from banks and from savers. And it’s pretty robust. And the market is huge in Europe alone. It’s more than €10000 billion. So that’s a pretty exciting market. And it seems and it seems very robust to any changes in the interest rate.
Brendon: [00:19:42] And do you think in terms of the threats of recession or, you know, which perhaps we’ve seen recession called in a different, term you know, in different economies already. Do you think that defaults from consumers and businesses on loans, how will that feed through to the sector?
Tim: [00:20:01] So, again, I think looking at both groups who we are working with the savers and the banks. So for banks, when they have defaults and default rates are increasing, that means that the swaps and spreads are going to widen. So it means that funding is becoming more expensive for them. And when they try to get it in in sort of wholesale markets or capital markets this also means, relatively speaking, deposit funding is going to be more attractive and more important, especially as maybe some banks worry about rating decreases or things like that in the deposit market.
Everything’s deposit insured at least up to a cap of €100,000, which is well above the average, which is at €40,000 per saver. So savers don’t need to worry about counterparty risk. So this is something this is a really important funding source. It doesn’t dry up in a crisis. So I think from the bank’s perspective, if anything, a recession is going to make deposits more important and more attractive. And from the saver’s side, of course, people in a recession might have less to save. But then also typically stock markets aren’t doing so great. So, you know, this all comes back to the deposit just being a very robust market, partly because it’s so huge and partly because it’s a default of what you do with your money.
Russell: [00:21:23] Tim, I want to bring this conversation back to communication, its a key part of what we’ve been speaking to all our unicorn leaders in each of these episodes. And what we look at it is, as we talked about earlier, is that journey to becoming a unicorn as a tech startup where you’re based in Europe rather than Silicon Valley. What’s been your approach to raising awareness and also differentiating yourself in such a noisy and crowded area?
Tim: [00:21:51] Yeah, that’s an interesting one. So I have to say, the first couple of years I didn’t spend much time on communications at all. I think we are very product-focused sort of on focus on building the team. And I think it’s probably something that with hindsight, we maybe could have started to do a little earlier. So we weren’t at all in the whole sort of founder process. And this is pretty much focused on just getting the right product out. And obviously speaking to our clients, getting the product-market fit. And this is led to, for the first couple of years, people were typically surprised, firstly that, you know, wondering who we are and then secondly, surprised that who we were.
We were actually I’m perceived to be smaller than we were. Most of the time, I think what we have done over the years then is that we have increased our attention to communications, firstly, by contributing to the debate around topics that are relevant for us. So we’ve got a sort of thought leadership program where we sort of commission research around our areas of expertise, around deposits and bank funding and all these things.
And we’ll be participating in industry conferences and have an event series where we invite industry players and sort of present on different topics, both sort of our internal knowhow, but also have external speakers. So actually today we’re doing much more than that in the past. And but I think in the early years, we’ve been rather inward-oriented. I think we’re still today we’re still not the loudest in the room. But you don’t have to always be. I mean, after all, we are a pretty B2B focus and we’ve got convincing products.
Russell: [00:23:39] And how do you view your role as an external spokesperson and representative of the business? And what have you learned along the way?
Tim: [00:23:46] Yeah, this comes back a little to what I said earlier. I think you shouldn’t be too loud, too early. I mean, we have been criticized sometimes for being too quiet. Externally, it’s sort of been hard, not getting enough attention. But I think it’s also good to not be too loud, too early because it helps build credibility.
And then if your product is too far behind the narrative that usually catches up with you also in sales. So that’s not good either. I think what we have, we have been trying to do is contribute to the as I said, to the industry debate with our sort of research pieces. We have also tried to contribute to the debate by participating in different committees. For instance, in a committee of the German finance ministry on different sort of fintech-related questions, together with industry leaders from the sort of established banks and sort of similar formats.
We are also participating in a workshop series of the German Banking Association. And, you know, in the countries we are in, we sometimes also try to get involved with the sponsoring. Industry events or participating in roundtables and things like that, so I think there is there is this sort of participation, which I think is important for us, in terms of shaping our space we are active in. I mean, we have many challenges. Like, for instance, the European single market, which just isn’t as great as it sounds. In practice, it’s just so far from where we need to be, that I think there’s a lot of work required by everyone active in this industry and it’s affecting fintech firms in particular. Especially the ones that have been looking for international markets. And yeah, I mean, this is has sort of been our focus.
Russell: [00:25:38] And what about you personally? Have you always been a natural communicator or have you had to work on it and formulate a plan? Because quite often when someone has an idea and launches a business, they want to be behind the scenes and getting it built, building it and not necessarily be at the front end of that business. Has it been a natural thing for you to be a communicator for the business?
Tim: [00:26:00] Yeah, I don’t know. I mean, it’s been a development for me, too. When we started off, I wasn’t used to giving speeches and presenting to large audiences. So this is something you pick up with practice along the way, I guess. And I guess it comes with the job I guess on the interpersonal side. Also, I don’t know whether I mentioned this, but we are quite an international team.
We have I think of the 300 people are from 44 nationalities. When collaborating, there is these sort of cultural aspects are on communication, too. And I’m northern German, so I tend to be pretty direct. Right. So I think this has also been a journey for me, which is sort of trying to adapt and, you know, get make my points, but maybe also work a little bit on the style to be more compatible for people from other cultural backgrounds.
Brendon: [00:26:52] Who is the least direct do you think?
Tim: [00:26:55] Right. Oh, that’s a hard one. I think there are there are sort of I wouldn’t say least direct, but there are sort of more elegant ways of saying no, for instance, in India than there are in northern Germany.
Brendon: [00:27:07] Right. Okay. That’s interesting. Excellent. That is very nicely done.
Russell: [00:27:11] Actually, sorry Brendon. Just in terms of with your communication across the business, then, do you use English across the business as a consistent language? Or is it German?
Tim: [00:27:22] Right. Yeah. So about three years after I started the company, we realized that the it was hard to find the people we need in the local labour market. So we switched the company language to English and then just started hiring internationally.
Brendon: [00:27:37] And thinking about your career so far, Tim. Well, what’s been your biggest communications challenge that you faced?
Tim: [00:27:45] I think the Coronavirus crisis has been the biggest challenge in many dimensions, but also in communications. It’s been difficult because you have to be straight and honest with the team. And I guess the people you’re talking to. And so, you know, you can’t pretend like everything’s fine, but at the same time you want to make sure to also provide context and calibrate it correctly and you know that there is no need for panic.
And it’s been a challenge to find a balance. We’re doing that right. Also, obviously, through new formats, because we’re conscious of getting everyone together and or maybe have, you know, sort of walk through the rooms and sort of having a chat with everyone or present to individual teams on which sorts of stuff that we’ve done in the past when we all were in the office. But you have to do it all remotely as well. So this is this has been a communications challenge.
Brendon: [00:28:38] Yeah, undoubtedly. And thinking about communications, again, what’s the kind of best piece of advice that anyone’s ever given you. Anything that stuck with you, that that you that’s been passed on.
Tim: [00:28:53] So I guess it’s an important piece of advice would have been to stay authentic. You know, I think something that people notice when you’re not authentic. So I think you’ve got to stay close to who you are and then sort of work with what you’ve got.
Brendon: [00:29:11] I think that’s good advice.
Russell: [00:29:13] Tim, thank thanks so much for spending some time with us today. We’ve got one final question for you, which we’ve been asking all our unicorn leaders. And if you were to go back in time and speak to your old self, what guidance would you give about communications and what steps would you encourage yourself to take in order for you and the business to excel in communications?
Tim: [00:29:34] Ok, so I think I would agree. I’ve challenged myself on this before, and that I think I would stick with focusing on product and the team in the early years, but then probably we should have switched earlier. In particular, I think we should have started to contribute to the wider industry context around our expertise earlier. This is proven to be really effective for us. It’s I think it’s it’s it’s been a good instrument for us to to reach our audience, our target groups. And I think I guess this is are we are having good success with it now. I think this is something we have started five years ago.
Russell: [00:30:19] Tremendous. Thank you so much for speaking to us Dr. Tim Sievers, cheers for joining the podcast. And good luck with the launch in the US, hopefully.
Tim: [00:30:30] Thank you very much.
Russell: [00:30:36] So, Brendan, that’s a unicorn leader number six in the can. Thoughts on what Tim had to say today?
Brendon: [00:30:42] I mean, he was great learning about their business and kind of the chicken and egg point that Tim mentioned about how they kind of built their own consumer platform to demonstrate the value of the business. And then I think probably picking up on the theme of communications. The thing that struck me is that kind of that reflection Tim had on the need to actually be out there engaging with the industry and contributing. And then perhaps in hindsight, you know, they should have done that earlier, but they’re now doing I think that’s kind of maybe an important learning that other CEOs might benefit from.
Russell: [00:31:19] Yeah. And one thing I picked up, because bearing in mind this whole series is about European unicorns, the fact that he said he’s got 44 nationalities in the business, I mean, that is a challenge that they’re not necessarily going to get if you’re starting up in the States. As we talked about.
Brendon: [00:31:34] No, that’s a huge challenge. And, you know, it’s interesting to just hear how they made that decision to, you know, make English the dominant language after three years. And it sounds like, yeah, but they have got some great approaches in place to manage all of that communication.
Russell: [00:31:53] Yeah, absolutely. And I look forward to, as I said, seeing their growth in the US very soon. Well, that’s is actually it’s for this sixth episode in this special series that we’re producing with Tyto. So if you want to find out more about Deposit Solutions, their website is simply deposit-solutions.com.
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