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Which Fintech started in a basement in Stockwell, has done over £65bn of FX business, do over 1 million transfers a year with 600 staff in 7 offices, whose chairman is a former deputy Governor of the Bank of England and according to price comparison sites offer better prices than other Fintech FX players on virtually all sizes of deal?

Worldfirst as many of you might not have guessed (though those of you reading this online will have had a huge hint in terms of the banner above 😀

Jonathan Quin their co-founder and CEO for 14yrs joins us today to discuss the art and science of international expansion – a truly vital step if UK Fintechs are ever to move beyond a potential audience of 1% of the world’s population to far far more.

Topics discussed on the show include: 

• the Isle of Mull; its mild climate
• how to get there
• Jonathan’s career journey in particular always wanting to form his own business before he was 30 and inspiration behind that
• WorldFirst former a year before Zopa which is often taken as the start of the modern era of “Fintech” per se
• before 2004 there was pretty much only hedge funds in terms of new independent FS players
• they raised no capital to start and self-funded, “start small, think big, move fast”; the relationship between this and Jonathan’s long tenure and WorldFirst’s very solid growth
• a comparison with Synechron, former brand-partner of the LFP
• WorldFirst’s evolution through identities as a FX provider, a payments company and now a Fintech company
• in the early days 100% of their deals were by telephone, now 90% are online
• they generate best prices by:
  • (a) doing large volumes (2017 £11bn) and thus getting tight prices from the banks and
  • (b) taking smaller margins than banks do esp on smaller customers [they can deal in £5k, talk to the client on the phone, make money and still charge finer prices than banks]
• 2009 opened in Australia, 2012 in the US, 2014 in Hong Kong, 2016 Singapore, 2017 small offices in the Netherlands, Japan, Korea
• the key aspects to successful international expansion
  1. Know “Why?”
     • opportunity to scale
     • UK very competitive marketplace, plenty of markets with less competition
     • netting opportunities, being able to work for both the exporter and importer
     • higher growth rates in other markets and more willingness to adopt new ways
  2. Cultural challenges
     • the spectrum of “going abroad” and “not changing (fail to dock locally)” vs “going native (&losing your value-add)”
     • their formula is to keep the product core about 70% unchanged and 30% localised
     • eg in Singapore they hire someone on a moped to drive round every day and collect cheques
     • pricing is different
     • speed of payment is different (eg slower in the US)
     • some of the necessary adaptations only become clear when you are in the market and you learn the hard way
     • control challenges
     • it can take a loooong time to really understand a local culture
     • Jonathan’s biggest challenge in the expansion has been that it is that much harder to “read” some in an unfamiliar culture than it is on one’s own (particularly crossing language boundaries)
     • challenges even if everyone speaks English (Iceland vs Japan qv)
     • China is their biggest market
     • local rules which in some aspects may be laxer, some tighter
     • the importance of respecting and being interested in the local culture (and complete no-no of judging cultures different from your own)
  3. Correct Assessment of RIsk
     • “people often over-price risk, they worry about risk too much, or they are irrational about risk”
     • Jonathan’s metric is to be at least 70% sure of what the risk is – you will never get to 100%
     • WorldFirst’s survey of the main reason more businesses don’t expand “it’s a hassle”, too busy with their existing business that they never got round to it
     • equally many business do not go abroad due to over-estimating the risk compared to their returns – eg fraud rates which whilst always a concern might be a fraction of the profit margin
  4. Organisational structure
     • their model is to pair one person who understands them and HQ, ethics etc and one local who understands the local market, partners, business approach, how to hire
     • ideally the latter will have been educated not far from (in cultural terms) their UK approach
     • “You have to carve out [of the organogram] and prioritise international expansion .. the person we have sits outside other reporting lines and reports directly [to the CEO] so that the internal immune system of the business does not close in on that and kill it as it’s a hassle and a worry and a risk”
  5. Choosing where to go
     • rational approach (where there is a lot of importing/exporting, where banks rates look high etc)
     • if you solely rely on this you risk missing opportunities and so you must also look at your gut feel – you need to get out on a plane, meet people and talk to them
• WorldFirst:
  • 86% B2B
  • main thing is services to importers
  • bank account solutions and payment services to exporters (esp e-commerce merchants (of whom they service ~60,000))
  • customer acquisition via Google, partners or word of mouth
  • their WorldAccount a multi-currency bank accounts for businesses
  • they are hiring new developers

And much much more 🙂

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