Can we really ever have true innovation and entrepreneurship within Financial Services?

Renny Popoola

2015 has seen lots of noise around the emergence of new challenger banks in the UK with much being said about the potential for emerging firms to take on the big players and provide a credible alternative for consumers. The outlook for the sector looks promising. Whilst Metro bank was the first business to obtain a full banking licence in 150 years, 6 new banks have been authorised since 2013 and dozens more on the pipeline.

Clearly, the industry is aching for a game-changer. A company, firm or idea that reinvents the way the public engages with firms and delivers banking and financial services to customers that is relevant and accessible.

We have seen such game changers disrupt the leisure industry (AirBnb, Housetrip), transport (ZipVan, Uber), communications (WhatsApp, Skype), entertainment, (Netflix) and to some extent health (Myfitnesspal, Fitbit). Most have become leaders in their own sphere paving the way for a new wave of brands to offer a traditional service with a modern twist.

With systemic changes occurring in many other industries, it does raise the question- what will be the financial industry’s uBer?

The digital age has completely revamped most spheres of our life in an enormous way. But, the impact on how we bank, invest, insure and save has been relatively minor. Whilst the concept of financial advice has undergone some change with comparison sites and online forums, many other facets of financial services have yet to experience their digital awakening.

This is surprising considering that we’re repeatedly reminded about customer dissatisfaction with financial services.  The fact remains, barriers to entry are significantly high despite the regulators’ efforts to encourage innovation and competition. Obtaining authorisation is more often than not a long and expensive process.

Historically, disruptive financial brands have tended to be spin offs or marketing exercises from the larger players. For example, whilst Sheila’s Wheels innovated how insurance could be marketed, it was part of the HBOS group. Even firstdirect, regularly heralded as a game changer in the UK banking sector due to its reputation for customer service, is owned by HSBC.

It’s not a surprise that innovation within the financial industry comes mainly from established players, but it does highlight the difficulty for outsiders to reinvent the market. To some extent, the increased regulatory and capital requirements placed on financial services providers for consumer protection is the biggest hurdle to true innovation in the sector.

What we are beginning to see are individuals, once part of the establishment, looking to shake up the industry.  We’ve seen Nutmeg founded by former stockbrocker Nick Hungerford,  offering an accessible alternative for wealth management, and Stockopedia started by a former investment manager, allowing DIY investors to beat the banks.  With the recent shake up of the pensions industry, such alternative investment services are likely to experience increased demand.

In banking, new players like Atom Bank, Starling and Fidor aim to capture market share through offering digital services. Again, what unites these brands are founders with significant experience with the big players exploring gaps in the market to innovate.

Financial services are still some way off from experiencing its version of Amazon, completely turning the industry on its head. There is a possibility, because of the risk involved within the sector, that it will never experience such upheaval. What is increasingly evident is that if such digital innovation is to happen, it most likely will from within- be it an experienced individual who wants to change the status quo or even a traditional firm with new ideas on offering financial services.


The Knot’s intro to the Circular Economy

The enigmatic employee-owned business of engineers, designers and consultants that make up Arup played host to another brain tingling Knot event last night which brought together the Ellen MacArthur Foundation, Product Health and Arup’s Global Resources and Waste team to present ideas on The Circular Economy.


I’m not quite sure who coined the phrase, no one was claiming any firsts – but the round the world sailor, MacArthur apparently had an epiphany about doing more with finite resources whilst on her extraordinary solo voyage. She launched the Foundation in 2010 to champion the movement. It has 100 members including Arup. Ella Jamsin from the Foundation explained how our linear relationship with products begins at the design stage where they are conceived to be disposable, which in turn leads to US$2.7 trillion of economic value being lost to landfill every year.


There are 4 building blocks of a circular economy;

    1. Design and production (things that are designed to be reused)
    2. New business models (that sell access to products rather than the products themselves
    – for example Philips selling light, not lamps)
    3. Reverse Cycling (when things are taken apart so that components can be redeployed)
    4. Enablers and Favourable Systems (such as business collaborations and platforms that facilitate this)


Arup provided examples from its work in the built environment that included finding new uses for materials in building facades at the end of their useful lives (apparently it is a tough gig being the front of a building and 15 years is the average lifespan) and reusing steel without having to melt it down in a resource intensive way, just by paying attention to the way it is joined to other components in the original build.


Tamara Giltsoff, representing Product Health answered the question of why the Circular Economy will gain market traction with the example of a new business model that ensures ‘longer and healthier lives for powered products’ – in the first instance, batteries in remote places.


The trend towards the ‘internet of things’ heralds a near future where products will be able to continuously report in on their own useful state. In Product Health’s working example, batteries powering off grid solar energy in remote locations in Sub-Saharan Africa can send data on their performance and useful life. Being able to monitor individual battery performance enables significant resource savings as it will be possible to isolate and remove the one battery that has failed in an array of say, 10 batteries, where previously, if one failed, functionality was lost and all ten batteries would just have been replaced.


This remote relationship with products also enables companies to turn off the power if the customer doesn’t pay. Whilst this sounds draconian, the reality is that remote control to this degree means that people who can’t afford to buy kit outright can lease it, and the provider has a way to administer the defaults at very low cost, which makes the entire model commercially viable. An interesting take-out on the business model innovation is that it is the data and the connection that generate the long term commercial value, not the product.


Reflecting back on the last Knot event at Google that examined the future of retailing, the subject also turned to the internet of things and the importance of tailoring experiences using information on consumer behaviour and preferences. It seems that whenever we future gaze, more connectivity is the constant theme that comes through with implications for new service-driven business models. Now I wonder how to apply that to PR………………..?











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Which came first, the brand or the values?


Narda Shirley

One of the defining characteristics of challenger brand start-ups in the food industry is that they are unencumbered by legacy. They can source from where they like and the entrepreneurs behind the brands can lay down any number of guiding principles that give their brand a feel good factor that helps it stand out. Whether it’s good for the environment, good for producers, good for you, or a combination of all three.

‘Doing the right thing’ and ‘making a difference’ are often cited by entrepreneurs as their driving motivation for the hard graft of getting a new business off the ground. So it’s vital that they weave that ethos into the brand communication, making their values part of their business DNA.

But what happens to these small companies when they grow? How hard is it to maintain an ethical stance that is pragmatic and profitable at scale? Is the cycle of growth and sale to a larger, deeper pocketed company in part about being able to afford to stay true to your founding values? Or is there always a compromise once the entrepreneur cedes control to a bigger corporation?

We took a cursory peek at 3 British brands that have sold out – in each case ending up in the hands of US corporations.

Husband and wife team Craig Sams and Jo Fairley launched Green & Black’s in 1991, the first Fairtrade chocolate in the UK, sourcing directly from farmers in Togo and Belize who were rewarded with higher prices for using environmentally sustainable practices. Green & Black’s worked with William Kendall’s then private equity firm, Nemadi which engineered a sale to Cadbury in 2005 (which in turn was acquired by Kraft in 2010). An interview with Fairley in 2013 revealed that Green & Black’s Head of Sustainability went on to do the same much larger job at parent brand Mondelez. Fairley also cites Green & Black’s influence as the reason Cadbury first went Fairtrade with Dairy Milk setting off a domino effect that also saw KitKat and others follow suit. So it would seem in this case, that an early adopter challenger brand became a Trojan Horse change agent inside the major brand that acquired it.

Pret a Manger hit on a successful formula based on principles of product freshness, avoiding additives. Pret also started its own foundation to help feed the homeless. In 2001 McDonald’s bought a third of the business, which was later sold to private equity firm, Bridgepoint. In the meantime, McDonalds has successfully turned its own brand credentials around in terms of building a reputation among consumers of having an ethical supply chain. But back then, the perceived differences in values perhaps helped prompt this quote from Pret that “McDonald’s has never had any day-to-day role in Pret, nor has it had any say over what we do, nor how we do it.” (NB. Julian Metcalfe, one of Pret’s original founders went on to open Itsu. Proof perhaps that there’s a certain type of entrepreneur for whom once is not enough).
Paul Lindley founded Ella’s Kitchen, the UK’s bestselling baby food company, without a shred of retail or food industry experience. He did however have a background in media and children’s brands from Nickelodeon. He is quoted as saying “What has always driven me is the idea that business has a responsibility to be good for society.” Founded in 2006, Mr Lindley sold to US food company Hain Celestial for $103.5m last year. Hain’s main website offers up a slightly dated CSR Report from 2012, but it is front and centre on the home page which at least demonstrates the emphasis the company puts on its sustainability credentials.

In each of these situations, the challenger brand has led with its values and sustainability message. As an entrepreneur growing your own business, you get to decide what you stand for, and how you communicate it, without having to justify it to analysts or shareholders. It’s heartening to think that brand values that were once perhaps viewed by the city as a potentially costly indulgence by entrepreneurs are now increasingly priced in at a premium when it comes to a sale.


What’s driving Kenya’s entrepreneurs?


Beverly Amira

This last week has been consumed in a flurry of activity for Maarifa in Nairobi – a company set up by a serial entrepreneur who believes in the power of education to lift and propel a nation. Maarifa’s CEO Scott Royster is a man on a mission. He is already successful, having floated a media company in the US, so he has nothing to prove, so what is it that now drives him? Like many other entrepreneurs working in Africa today, I believe Scott is driven by profit with purpose. He won’t deny he wants to make money – in fact it is essential to his private equity investor, ECP, that he can show a return on capital. And it’s essential to the universities that Maarifa invests in that Scott and his co-founders know how to make money. World class tertiary education is not sustainable on a shoestring.

Being able to challenge the status quo, make a difference and turn a profit is a tall order. But entrepreneurs – successful ones, at any rate, are extraordinary people who can do just that. Which brings me to another entrepreneur, Njeri Rionge. Gong has been working with Njeri for a while now, helping put the power of her personal brand to work. Oscars night was made all the more special for having a Njeri on the red carpet. She hasn’t added film producing to her impressive skillset, but she has appeared as the ‘talent’ in a new ad for Cadillac. ‘Dare Greatly’ is a new multi-channel campaign that features a diverse mix of talented people from Silicon Valley entrepreneur Steve Wozniak to Boyhood film director, Richard Linklater. Njeri is there for her great daring as a former hairdresser who propelled herself to the point where she brought internet connectivity to ordinary Kenyans in the form of Wananchi – the company she founded. It’s extremely gratifying to see Kenya represented in that line-up, let alone a black woman. We’ll watch the fortunes of Cadillac with interest on the back of this new campaign – who knows, it may just qualify as a ‘challenger brand’ with all this edgy new attitude!

Staying with cars, I want to highlight the work of a very different marque – Mobius Motors, a Kenyan company that makes affordable off-road vehicles. They came to our attention through our work for Garden City. Behind the brand is social entrepreneur, Joel Jackson who discovered the big challenge facing rural Kenyan communities is immobility. His vision is to build more affordable cars designed for degraded road environments.

To keep costs down Mobius strips the vehicle of non-essentials, such as power steering, air conditioning and even glass windows (!), and instead invests in suspension and handling. As such, Mobius has dramatically reduced the cost of its cars putting them within reach of small business owners. Like all successful entrepreneurs, Joel has a bold vision; to build Africa’s first mass-market car brand to aid economic growth and create a positive social impact. That’s what I call a driving ambition.


Entrepreneurs: How (not) to get attention with Twitter


Sarah Caddy

Oops. Sir Richard has made another splash in the gossip columns this week with his ever-so-slightly cringe-worthy simile choices:

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The tweet split opinion in the office; some were mortified, others impressed that he clearly writes his own tweets (surely this would never get past a corporate comms professional?!). One thing we all agreed on: busy entrepreneurs can sometimes unwittingly strike the wrong tone. It takes time to consider all of the possible implications for our words (or pictures – Branson’s twitter feed includes the odd twit pic of “students changing their world one app at a time” – all of whom happen to be attractive young female students). Of course, this is why there’s a place for corp comms professionals to take over the grunt work of a social media strategy – one that our business leader clients are generally delighted to pass over. But we keep them focused – what does your overall Twitter stream say about you?

Entrepreneurs are focused on the big picture, and they often stand out by breaking a few rules. Case in point? Mario Gabelli’s FTfm face-to-face interview this week. Asked whether taking Gamco Investors public in 1999 was the best decision he’s ever made, the entrepreneurial CEO investor (startlingly) said, “Being born was the best decision I ever made.” Not what his PR team might want to read in terms of landing key messages, but then it probably won’t affect his investors’ opinions if he continues his solid track record of returns.

The final irony? On further investigation of the Virgin blogsite, we discovered that Branson’s offending simile was in fact a direct quote from that great British hero (renowned for taking action), Winston Churchill. That’s another fact about great entrepreneurs: the media will always delight in having fun with them.