Discover the remarkable story of survival and growth in the ever-evolving world of fintech. In this compelling episode of The Money Pot, we sit down with Philippe Morel, the CEO of Railsr, who shares his firsthand experience of steering the company through turbulent waters. You'll learn how the fintech powerhouse bounced back from the brink of collapse, navigating regulatory pressures and funding challenges, to secure new investment and maintain market confidence. Gain insights into the critical decisions and strategic moves that ensured their survival and set the stage for future expansion.
Join hosts Ian Horne and Mickey Tesfaye live from Money 2020 in Amsterdam as they unpack the pivotal moments in Railsr's turnaround. Philippe opens up about the importance of transparent communication within the team and the indispensable role of robust technology in earning and retaining customer trust. With an insider's perspective, the discussion highlights the burgeoning field of B2B embedded finance, providing a behind-the-scenes look at how Railsr managed to maintain strong client relationships despite facing significant internal and external pressures.
As we explore the future landscape of fintech, Philippe sheds light on the transformative potential of embedded finance and the revolution it heralds for financial services. He shares strategies for managing cash burn, leveraging customer feedback, and maintaining a balance between bold aspirations and practical financial management. This episode is packed with valuable lessons for fintech professionals and business leaders alike, emphasizing the crucial role of transparency and the power of a resilient, customer-focused approach in navigating the industry's challenges. Tune in for an inspiring conversation that underscores the strength of strategic rebuilding and the importance of staying attuned to market needs.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Ian Horne (00:04):
Welcome to the Money Pot.
I'm Ian Horne, the EU Head ofContent at Money 2020.
I'm with my colleague, theinimitable Mickey Tesfaye, our
content manager and a great guyall around.
We're broadcasting live fromMoney 2020 at the Rye in
Amsterdam and, wow, it is apleasure to be here.
So much going on, so much lifeon these stages that we've got
going on.
(00:24):
So this show is all aboutpowerful stories and leaving you
with ideas on how to strap arocket to your business and your
professional development, andtoday we have a story that I
think is going to do that, whilecovering some hard truths,
perhaps along the line.
First, mickey, good to have youhere, thank you, Ian how are
you getting on today?
Mickey Tesfaye (00:42):
uh, it's been.
This is how I like to say Iknow I've had a good day,
because my feet hurt a lotalready.
You know that's so true, butit's been brilliant.
Uh, I've just we.
I love coming to the showbecause you meet new people.
You meet people you've known along time, and I think we've
also discovered something reallyimportant at money 2020
(01:04):
recently, which you actuallyhelped me realize, which is that
, if you want to do somethingreally beautiful and stunning,
think about trees, because wecould see the nature stage,
which looks beautiful, stunning,and I think it's a great
analogy for our conversationtoday and our wonderful guest
who is Philip from Railza.
(01:25):
And it's a great analogy because, of course, nothing like nature
is as regenerative, and so Ithink I kind of see where you're
going with this, mickey.
Ian Horne (01:35):
I mean, yeah, let's introduce Philippe, of course.
Philippe, you have a story totell.
Obviously, railza has a storyto tell and you know, you're the
CEO there, and the on-the-rarails puns obviously wrote
themselves.
When Rails appeared to be onthe verge of collapse last year,
you went into bankruptcyprotection, but things have
turned around since.
You managed to achieve funding,and you did so rather
(01:55):
emphatically.
I want to get into that story,but first Philippe, hi, welcome
to the Moneypot.
How are you doing?
Thank you very much, I'm doingfantastic.
Philippe Morel (02:02):
I mean, the level of energy at Money 2020 is
amazing and, as you said,seeing so many colleagues and
clients and suppliers as well isa great opportunity.
I mean, I haven't seen so manyopportunities in just a few days
in one place.
So, I'm a big big supporter.
Ian Horne (02:18):
Yeah, we're going to use that in the marketing for a
little bit.
Philippe Morel (02:22):
I take royalties as well.
Mickey Tesfaye (02:23):
We like to hear that.
Ian Horne (02:25):
Okay.
Well, let's get straight intoyour story.
I could ask you a million andone things, but could you just
provide the background?
So what happened with Railslast year that led to the issues
you found yourself in?
Philippe Morel (02:35):
Yeah.
So look, rails was in afantastic position from a tech
and market perspective, and Ithink to the question you're
going to ask me, why did we getfunding?
It's because the underlyingassets were exceptional
Technology platform isexceptional, customers really
strong, very strong sales teamas well.
Now, unfortunately, thelandscape's changed quite
(02:58):
dramatically in a few years.
The level of investmentrequested in compliance, in
customer support, and it wasjust without any comparison with
what it was only a few monthsbefore, and so I think the
(03:20):
company went ahead of itselfbeen growing very, very fast,
which was a tribute to theinterest in the market, but
wasn't perhaps sufficientlycareful about its cost base and
to what the regulator wasexpecting, and so it all blew up
when the funding market driedup somewhere in 2022 and the
(03:43):
company had to go throughrestructuring, and so my nice
story is I arrived just afterthat fact and I could just pick
up the bits and pieces andrealize that there were actually
a number of very nice bits andpieces that we could work from.
Mickey Tesfaye (03:58):
Let me just come in real quickly there, just to
give a bit of context to folksthat might have not heard of the
story.
Fully, rail rouser is anembedded finance platform.
Right, that is the kind of corebusiness and the core
technology that you guys provideand, um, that is that business
is still the core part of whatyou're doing.
(04:18):
Still, right absolutely.
Philippe Morel (04:20):
We do banking as a service, car as a service.
Uh, we're adding compliance asa service as well, because it's
so important those days.
But the business model and thetarget customers haven't changed
.
What has changed, of course, isthe way we do our business now.
Mickey Tesfaye (04:35):
Great.
So I guess I want to kind oftouch on and I think we're going
to talk a lot about the hereand the now and the future, but
I want us to take a step backand think about what happened,
right?
So you touched on a couple ofpoints.
Um, it sounded like thebusiness was slightly um
overstretched, obviously, um,the dynamics in the market
changed fairly quickly and Ithink rouser is not the only one
(04:57):
.
Actually, a number of huge,huge financial institutions had
issues as a result of that sv,svb, credit Suisse all of these
big financial institutions arebust, but we've also seen
embedded finance in the UShaving a bit of a moment right
now.
How much of that Rouser storyin the past was a
(05:17):
company-specific issue and howmuch of it was industry or
ecosystem issue.
Philippe Morel (05:24):
Well, I think we all went through the same
issues, which was the marketwent from supporting giving free
money, essentially to grow, tooops, not anymore.
Yeah, all at the same time, andso I think Realza was on the
way to become a unicorn 1billion valuation and then
(05:46):
funding dried up.
And when funding dries up andyou're not profitable, then you
run into trouble, which is whathappened to Relza, in addition
to a number of issues that wefound out when we took over.
Ian Horne (05:59):
Yeah, I mean it sounds like classic
overconfidence and actually whenyou were talking before, you
were always saying, oh, we weretoo good, we grew too quickly,
which is a classic CEO answer,and I rate it.
But at the same time, yeah,something was wrong there.
If people are just expectingthat you're going to keep
getting funding, did you havesomething to put right there
when you came in?
Philippe Morel (06:17):
First thing I had to do is put costs under
control.
We had 300 employees.
We now have 150.
I reduced our suppliers' costsby 40%.
So I think putting costs undercontrol was the number one
priority, together withrefocusing our geography
footprint.
I mean, this business was inSingapore, in Australia, in the
(06:40):
US, in Europe, in the UK.
We said, well, let's stop it.
Where is our revenue generatedfrom?
And it in the UK.
We said, well, let's stop it.
Where is the revenue generatedfrom?
And it was the UK.
So we focused on the UK.
So now we have a platform whichI think is solid to grow from.
But the shrinking was drasticand we had to do it in.
You know, just in a few months.
Mickey Tesfaye (06:57):
I mean the way you're explaining it.
I mean, I bet it was a lotstressful than the way you're
explaining it.
And I guess I want to ask you abit more of a personal question
.
For you, right, as a CEO, goinginto this role, how do you
think about what to focus on?
How do you think about yoursignal versus the noise, right
when you're looking at thisecosystem?
Philippe Morel (07:17):
Well, I think the priority has to be well
three things.
One is investors.
They're giving you money.
They are trusting you.
You need to deliver what theywant you to do and you need to
be very transparent and clearabout what you're going to
achieve with that money.
Second thing is the regulator,and I think we've been very,
very lucky in the UK that theregulator decided to support the
(07:40):
business and engage with us ona weekly basis to essentially
take us through the remediationplan we had to go through.
And the third thing is theemployees, because it's a
dramatic show for them.
It's really hard.
I could not promise at any stepof the way that we would go out
on the other side, but Ipromised I would be transparent
(08:03):
and tell them exactly where wewould be at each step of the way
, and I think that was reallyappreciated.
So if you establish thisrelationship of trust with your
regulator, with your investorsand with your employees, I think
you are actually making the jobeasier for yourself later, even
if you've got to bring up badnews.
Mickey Tesfaye (08:21):
Yeah, it sounds like a bit of like a flywheel
effect too.
Right, where you're kind ofyeah.
Ian Horne (08:25):
Yeah, I was going to say one of the tough things that
obviously the layoffs part did.
Do you think the the teambroadly understood why you took
that decision?
Philippe Morel (08:33):
Well, it's really about, um, company
survival.
So the choice is we eithersurvive as a company or we all
go down company or we all godown, yeah.
So I think if you put it in acommon goods almost uh, you know
adam smith's way environment,then people understand that, uh,
you are doing something whichis not personal, it's not
against any one of us.
(08:54):
It's just the right thing to do.
If you want those fantasticassets to continue and we're
also doing it for our customersuh, I think a number of them
been supporting us throughoutthe way continue to us, and the
least you can do is guaranteethat their platform is going to
be available, their funds aregoing to be safeguarded and you
(09:15):
continue being a good providerof embedded finance services for
them.
Mickey Tesfaye (09:21):
I think one of the things that's so important
that you're touching on that'scoming through is that that you
know fintech moves so fast andthere is a lot of learning to be
done within the industry, and Ithink it sounds like there are
times when the companies aretarred with a brush.
That is not truly reflective ofthat business.
I guess.
(09:41):
For you, how are you whenyou're looking at a business
like Rosa, where there's a lothad been negative press but, as
you said, there's a goldmine interms of the product, some of
the business assets?
What are the things that you doas a leader to kind of really
engage your employees and reallylike drive that fire within
them to, you know, to get tothat best position again?
Philippe Morel (10:04):
Well, I guess it's really insist on what's
good in the business and, as Isaid, there are lots of very
strong assets.
Guess it's really insist onwhat's good in the business and,
as I said, there are lots ofvery strong assets.
And it's not just me saying it,it's our customers.
When you ask them, they sayyour technology is fantastic,
your brand's fantastic, yourcustomer service is fantastic.
Even the brand, I say, isfantastic.
Customers realize that, okay,there were a number of mistakes
(10:27):
made on the financial side andon the compliance side, but
overall the business reallybrings strong value versus
larger banks or versus otherembedded finance providers.
And so building on thiscompetitive advantage that we've
been able to maintainthroughout the period, I think
(10:47):
really makes people understandthat we've been able to maintain
throughout the period.
I think really makes peopleunderstand that we're here with
a mission.
We're here to bring value.
We have a role in society whichis making finance available for
all businesses, essentially,and reaching parts that banks
don't necessarily reach.
And I can see it on aday-to-day basis because I'm now
(11:09):
spending a lot of time withcustomers and I'm going to say
the feedbacks are, for most ofthem, fantastic from that
perspective.
We bring them, you know, bankaccount under name their names,
card account under their namesand we do it in a, you know,
effective, flexible manner andthat's a big plus for them that
(11:30):
allows them to do lots of stuffwith their own business.
Mickey Tesfaye (11:33):
Yeah, I mean that's fascinating and I just
want to quickly touch onactually the business of what
you're doing.
So I was a little bit surprised.
I was actually a little bitsurprised today.
I was.
You know, I kind of overheard aconversation, so sorry for
being so gossipy today.
I was, um, you know, I kind ofoverheard a conversation, so
sorry for being so gossipy, butI heard someone explaining, you
know what one of the biggesttrends and um, they they're
(11:54):
seeing this year is, and theymentioned b2b embedded uh,
embedded payment, embeddedfinance.
How much of so?
A couple, two questions, Iguess.
How much of the challengesrails are faced was actually
partly because you are kind ofvery early into that b2B
embedded finance space.
And two, how much is thatembedded finance piece growing
at the moment?
How much are you seeing folksreally realizing the need to
(12:16):
have solutions to start becominga financial service company
themselves?
Philippe Morel (12:23):
We are all B2B finance.
We started ahead of others.
That's very true.
We started, I think, sevenyears ago, so probably a bit
early.
So there's a notion of adoption, if you want.
My observation is the need,exactly as you say, of embedded
finance goes now much beyondfintech, and I'm pleased to
(12:43):
report that, among the two bigcontracts we have negotiated or
are negotiating at the moment,none of them are fintechs,
because they realize that whatwe're bringing them, their banks
can do.
And don't take me wrong, I'm notshooting on banks or saying you
know that's not right.
I think each one of us have aright model and can bring value
(13:04):
to end users.
Those customers are banks'customers, but we can bring
banking account and card accountspecifically designed for their
needs, with functions that abank would not be able to, you
know, effectively deliver in theamount of time and with a
flexibility and the cost thatwe're able to do.
So I think it's all about B2Bembedded finance.
(13:24):
We're just scratching thesurface.
I read somewhere in a reportthat I think our industry
combined must have less than 5%of I think I heard two, but
let's say five of the bankingpayment fees taken as a whole.
I think there's a long, longway to go, and our customers see
it, and more and more customerssee it as we become more famous
(13:48):
, in a sense yeah, because we'refamous.
Ian Horne (13:50):
I think a big part of this conversation is around
communication, isn't it?
Because you've got a growingmarket and a valuable market and
a company with what appears tobe robust fundamentals.
So there's two sides to this.
I want to get into the investorconversations that you've had,
but first the customers I meanyou've just touched upon.
You know working with, you knowgetting big contracts over the
line.
What did people want?
You know were people worriedabout you going bust during all
(14:11):
of this, and how did you reachout to people?
How did you manage that commseffort?
Philippe Morel (14:14):
well, I would say, uh, no customer has been
losing money, so I think it'sreally important.
So, yeah, you know, beensafeguarding, uh, their money in
the uk perfectly, um, so youknow, otherwise, uh, we wouldn't
be here.
And then, um, I guess it's partof the game as well that if
you're a fintech, you'retherefore in a sector which
itself is vulnerable and thiskind of thing happens.
(14:37):
But we took it very seriouslyfrom day one to make sure that
quality of service, quality ofthe platform, quality of
customer service, save adding offunds all this was perfectly in
place, respected and wecontinue to deliver as well.
And I must say this is afantastic credit to the team
I've been working with, becauseyou can imagine going through a
(15:00):
bankruptcy yourself and, at thesame time, being able to deliver
.
This quality of support is quiteextraordinary.
Now, it's true as well that, toyour question on investors,
because of the quality ofsupport is quite extraordinary.
Now, it's true as well that, toyour question on investors,
because of the quality of theassets, we attracted big money
up front and that was one of theconditions.
When I joined, I said I needsufficient money and sufficient
(15:20):
cash flow to go through theremediation which we got, and if
we didn't have this support, Idon't think I'd be here today.
I don't think Razza would behere today.
But the investor's traction was, from day one, based on the
quality of the assets and of thebrand.
Ian Horne (15:41):
Yeah, and I'm going to ask what is the action plan
when you step in day one new CEObusiness in a very, very
difficult moment, looking at theinvestor side of it, what was
your plan of action?
Philippe Morel (15:50):
Well, it all started on the burn.
Cash burn is the only thingwhich matters when you've got
investors and you're not in acash-generating position.
So the question was how toprotect revenue.
So contact customers, explainwhat you're going through, make
sure that you maintain theircustomership and their revenue
flow and, at the same time,drastically act on the cost.
(16:11):
And I think we implemented thecost plan in less than six
months.
We made mistakes, of course wedid, but I think the speed of
execution was absolutelyfundamental so that we could
show to investors that we couldbe in an acceptable position
(16:34):
from a cash burn perspective.
Mickey Tesfaye (16:37):
I mean, I think one of the most important things
you've said to my mind so faris just how much product matters
.
Right Like.
Ultimately, if you do have atop level product, clients are
willing to acknowledge errorsmade and are more understanding.
I guess my question is, lookingto the future a bit more in
(16:59):
terms of embedded financebrowser.
Where are you looking to totake the story next right,
you've had, you've spent thechallenging six months
rebuilding and you've got thisnow lean, start up, flash for
cash, it sounds like, and readyto go.
So where are you thinking?
This is where the greatopportunities are.
(17:20):
Where are you really activelybeing excited by?
Philippe Morel (17:24):
Yeah, well, the first really exciting thing is
what happened to us on Friday,which is the regulator said
you're good to go, so you canonboard customers again.
Mickey Tesfaye (17:33):
So congratulations Thank you.
Philippe Morel (17:34):
I think we're very, very pleased with that and
I say we've been working veryhard overall and with the
regulator to get to this point.
On this basis, look, ifcustomers are coming back and
revenue is coming back, Iwouldn't say it's going to home
run, but it's going to be reallyeasy now in the sense that the
platform is where it should be,the cost base is where it should
(17:55):
be.
Any revenue is going to berelative on the bottom line.
So that's for the UK market.
Almost as soon as I joined, weapplied to a license in France
so that we can passport intoEurope.
I'd say UK and Europe gotogether.
A number of our customers, inparticular post-Brexit, are
really interested in resellingtheir services in Europe.
(18:18):
We're probably three monthsaway from doing that and then
we'll have a perfect platform,completely scalable across the
two geographies.
Now will we go farther, laterMaybe, but the one thing we
won't do is rush to the US orrush to Singapore or rush to
Asia, because we know that we'llbe spreading our resources thin
and we don't want to do that.
Mickey Tesfaye (18:39):
No, I think that makes a lot of sense.
It's interesting that you aregoing Europe, not US, right?
But I do want to ask you justyour thoughts in terms of just
what you're thinking about it.
But banking as a service isgoing through a moment in the US
too.
Right Yesterday actually, wedid an episode here with Jason
Mik, who's been breaking a lotof the stories.
How much of what you're seeingin that space there is, how much
(19:04):
parallels are there with whathappened with Rousa?
There is a lot of CEOs therewho might have been experiencing
what Rousa went through.
Is there any advice you'd givethem too?
Philippe Morel (19:15):
Well, I'd say it's really.
I mean, the US is a huge market.
It's probably 50% of theoverall global market.
Even more, europe in the UK isonly 20% or 30%.
So I think, on the one hand,there's a temptation to say it's
so big there that we can rollout embedded finance quickly.
(19:36):
The reality is, it all takestime.
There are well-entrenchedcompetitors banking platforms,
banks, processors which meansthat unless you really have a
strong winning proposition interms of tech and cash in the
bank, it's going to be reallytough.
It's also a very competitivemarket and so I think that no
(19:59):
real I mean, yes, thetraditional fintech from the
previous fintech revolution haveemerged, so you're also
fighting against a number ofvery strong names.
So, yeah, it's a tough marketto be in.
So I'm not surprised that, eventhough there's a lot of capital
in the US, that the number ofCEOs expressed what they told
you yesterday.
(20:20):
So, overall, I'd say, look, aseverywhere, there won't be many
winners, there'll be many losers, and it's making sure that you
control your cash burn and thequality of your services and the
relationship with your customerto make sure that you're part
of this.
Uh winning, uh swing if you, ifyou yeah no that makes a lot of
(20:43):
sense.
Ian Horne (20:43):
Yeah, I was just gonna say like, obviously, one
of the things we wanted to talkabout today was adopting the,
the hustle mindset, which is,you know, the way, way out of
the, the kind of mess that youfound yourself in.
But it feels like this is aninflection point.
Actually, do you, do you moveon from that kind of approach
now that you're gettingregulated, now that you're
looking to kind of expandcautiously but expand?
Are you still in that hustlemindset, or is it something
(21:05):
different now?
Philippe Morel (21:06):
Well, I'd say there are things we're going to
change and things we will notchange, because we learned.
I think we will continue beingvery cash conscious, very cost
conscious.
We'll continue supporting ourcustomers.
I mean, every single week I'vegot an email to the whole
company how we're doing in termsof customer service.
How many customers are waitingfor an answer?
(21:26):
How many customers are waitingfor you know, support?
How many transactions are beingblocked by you know, some
analysis or whatever, so that wealways deliver the best quality
of service?
The one thing I think we willprobably change is we will
selectively invest more on thefront end and also on the
(21:48):
product side.
I think there's so much morethat we can add to our product
suite.
Embedded Finance is a platform,if you will.
It's a distribution platform.
We can add credit, we can addinsurance, we can add reward, we
can add investment, we can addsavings.
So I've seen the quality of theproducts we can offer to our
(22:09):
customers can be significantlyincreased and we're going to be
going into this direction.
We're starting with FX.
We've developed a fantastic FXproduct this week which we're
going to be going into thisdirection.
We're starting with FX.
We've developed a fantastic FXproduct this week which we're
releasing with NatWest, which isone of our key banks, and that
I think is going to be a gamechanger.
We're launching transactionmonitoring as a service.
(22:30):
So I'd say the goal is reallyto use all the investments we've
made to add services so thatwe've made to add services, so
that we increase the revenuegenerated with customers and the
service we provide them.
Mickey Tesfaye (22:43):
How strategic are you now being in terms of?
Because I think one of thepoints again you touched on
earlier on right was maybe oneof the things you needed to do
when you came in was be a bitmore strategic in terms of where
cash was being spent, be a bitmore proactive and, again,
strategic in terms of where,where you were placing your bets
.
Right now, as you're beginningto roll out products, expand
(23:05):
your suit.
How much has the culture andthe drivers of you know what is
required?
How much of it?
Your product suit is beingdetermined by the customer need
relative to what internally youyou as a team are thinking about
the ecosystem needs.
Philippe Morel (23:23):
You know how much of it is it's a very good
question, I think, uh, we arespending a lot of time with our
customers.
Uh, I'm spending myself a lotof time with customers and I
always have the same series ofquestions for them, which is how
are we performing?
What's the quality of ourservice?
How can we improve?
What products are we notoffering today that you'd like
(23:44):
to see?
And they came back to us andsaid we want FX and we want
Europe.
So we're delivering on thosepromises because they told us,
not because I woke up onemorning and say, oh, I'd love to
have FX as a service or I'dlove to be in Europe.
Mickey Tesfaye (23:59):
Yeah, I think that's so fascinating because I
think one of the big challengesthat fintech has faced, I think,
over recent years is that a lotof it has been on the potential
and making realizing thatpotential is so hard Right, you
know the kind of number ofthings that need to align to
produce on the impact of.
You know, the big trend we'retalking about, or the big
(24:21):
emerging ideas, is very heavyand very things have to come
together really nicely andperfectly for a lot of things to
work out there.
You know, with embedded finance, with all, even with other
emerging technologies, I guessit's interesting now that with
the end of the zero interestrate period, the end of free
(24:43):
capital, I think there's been arealignment in fintech where
actually making money is reallyimportant again within the
ecosystem.
And I think, in a weird andabout way.
You know, your story is areally good story of what's
happened to our industry as awhole and actually what we're
seeing now is probably anindustry that's emerging a lot
more resilient and perhaps a lotless idealistic in terms of
(25:07):
what we can achieve, butidealistic in terms of what we
can aspire to at least.
Philippe Morel (25:11):
Yeah, no, it's very true, and I would say, you
know science.
It's a bit sad because thewhole you know bubble of ideas
and was fantastic and I missthis sense of everything's
possible and we're going todeliver and we're going to
change the world.
At the same time, you know it'sback to reality and we're like
contents are winning exactlywell.
(25:32):
I don't know if the contentsare winning, but it's a finance
team that's not making me money,no, and I think it's important
right yeah, well, absolutely,but I take the point.
Ian Horne (25:42):
What is there anything that's going on right
now that does really excite you,though, in terms of the future,
of embedded finance and alsojust things you might have seen
at this show?
Not that I'm trying toshamelessly plug our show, which
I am doing.
Um, yeah, what are you seeingright now that makes you think,
wow, this is the future?
Philippe Morel (25:55):
well, I think that, uh, most of the crisis is
over now, so you've got thereally strong actors uh staying
here, and I spoke with a numberof our competitors and and and
uh suppliers as well, and we allknow we are pulling in the same
direction, which is makingfinance available to everyone,
uh, through a b2b model.
Yeah, and I think, uh I meanyes there are lots, lots of new
(26:17):
things coming up.
I mean on the QR code.
I think it's interesting forall the acquiring business or
all the A2A relationship, goingbank to bank, not going through
cards.
I think there was an interestingconversation earlier in one of
the shows I attended to.
So I think the technology keepsmoving and that's going to
(26:41):
enrich the platform that werepresent with a number of our
competitors, and I think thedifference between now and
before is we are now in aposition to take advantage of
this technology and make itavailable to our customers.
So we'll keep this flexibility,we'll keep this proximity.
We'll just enrich the offer andproducts that we're making
(27:03):
available for them, and we're ina position to do so and, again,
our market share is 5% 2%.
Mickey Tesfaye (27:11):
A long way to go On that.
I want to ask you a question.
I guess, raoult, you saidaround seven years, so really
very early on embedded finance.
But I think many of us, or manypeople, kind of have the angela
strange com um a16z prisonpresentation.
Right in five years everycompany would be a fintech
company and I think that ismaybe like the kind of anchoring
(27:34):
point for embedded finance andthe opportunity.
So let me put you on the spothow many years until every
company becomes a financialservices company, maybe even
powered by relza?
Philippe Morel (27:44):
I don't know if it's five years or 10 years, but
I won't.
I won't bet on this, but itwill happen.
I think finance is part of aany service any company has to
offer.
They sell products, goods,services and also sell finance.
So I think the revolution isongoing.
I don't bet on when it willland, but it's absolutely moving
(28:05):
on and I think we're part ofthis revolution and that's what
really is exciting.
Mickey Tesfaye (28:08):
That's a big change already in the way the
fintech ecosystem is thinking,Burnt by that commitment to five
years, now like in the futurebut you know're optimistic about
it.
Ian Horne (28:17):
I like that though no , me too, me too.
Well, look, I, we're runningout of time here, I think.
What time for maybe one morequestion?
And I I just want to get backto the core.
You know theme here.
You've gone through this.
You know turbulent moment atrailser.
You've come out the other endof it.
I'm wondering if people arelistening to this that are going
through something similar.
Obviously wouldn't tell you ifthey were, but what advice have
you got, having seen that playout and having gotten out of it,
(28:38):
what would you pass on toanother ceo out there?
Philippe Morel (28:41):
well, I'd say, uh, if you're in this situation,
it's all about cash.
Honestly, it is uh, so it'swhatever it takes to control
your cash, burn and getresources off and then, at the
same time, is maintainconfidence in the market that
you are doing the right thingsand explain what you're doing,
and explain the plan and showthat you're delivering.
(29:01):
And, if anything, I think atthe beginning we did not
communicate enough, and that'sperhaps the one thing I would if
I were to do again, I'd do itdifferently be even more
transparent on what the plan is,so that everybody at the table
would understand it and continueto support it yeah, and what is
the barrier to communicatingenough?
is it time, time, it's just time, it's just, you know days of 24
(29:25):
hours yeah, uh, and, and you,you need to do this whole list
of things that you need to dobecause you know it's mission
critical, and then you forget touh, you know, talk to your bank
, talk to your supplier, talk toto your investor, and yeah, I
think that's a bit the issue.
The other thing is, I would sayI have one key thing which
really helped us is I havereally senior people helping you
(29:49):
out.
We previously had Rikki Sonsweetwho was our chairman, and he's
been bringing us enormously interms of knowledge of the market
and I absolutely cherish myconversations with them when it
was really tough.
Uh, lord hammond is now ourchairman and same thing I'd say.
The level of seniority andunderstanding of the business,
uh is is absolutely fantastic.
So we not everybody's gotaccess to these kind of
(30:11):
characters, but I would say,attracting the right experienced
people at the table, even ifyou feel you're very experienced
yourself, I think is key.
I mean, more brain is alwaysbetter.
Mickey Tesfaye (30:21):
I mean, that's really important advice, and I
think I know FinTech's youngdisruptors.
But hey, there's a reason whyexperience counts, you know.
So it's not just about beingcool, it's about lasting a long
time.
Philippe Morel (30:35):
There's a bit of that right, so you need to have
that right balance.
Ian Horne (30:42):
Good summary being cool, it's about lasting a long
time.
There's a bit of that right.
So you need to have that rightbalance.
Good summary, yeah.
Yeah, I mean for me I'm, Ithink, a lot of us about the
power of your network, right,that's really big.
But also the amount of timesyou mentioned cash burn.
I think mickey called it whenhe said the accountants are
winning.
I think that's a reallyinteresting point that we're at.
But maybe we can start havingcrazy dreams five, six years
from now.
But we'll keep it sensible inthis moment.
Philippe Morel (30:57):
Yeah, be bold, but make sure you've got the
cash.
Mickey Tesfaye (30:59):
Yeah, be bold, but make sure you have the cash.
But also, I think the mostimportant thing for me anyway,
philip, from our conversationand thank you for being so
candid is that I know FinTechhas an ecosystem.
We have lots of players thatare winning, but success is not
linear and actually failure isfailure only if you know you
(31:22):
don't really get learn from it.
And I think what you've saidabout as a leader, about
communicating, acknowledgingwhen mistakes are made, is such
an important uh mindset because,as an industry, one thing
fintech mustn't forget, I thinkand this is my personal view is
that emerging out of like thiswave, emerging out of 2008,
there's so much pressure to betransparent and when we fail to
(31:45):
do so, it becomes significantlyworse.
Ian Horne (31:48):
Yeah, Because that's the expectation we've created,
so thank you so much for, yeah,thank you and we do have to cut
it there.
But Thank you and we do have tocut it there.
But, philippe, thank you forjoining us.
As Mickey was saying, reallycandid interview.
Great to get your perspectiveon Rails and the future as well.
I think what's great about thisis we talked about a difficult
moment, but I think we have abetter understanding of what the
next few years look like too.
So, everyone, thank you forlistening.
(32:09):
This has been the Money Pot.
I've been Ian Horne.
Mickey Testify has been MickeyTestify as
Welcome to the Money Pot.
I'm Ian Horne, the EU Head ofContent at Money 2020.
I'm with my colleague, theinimitable Mickey Tesfaye, our
content manager and a great guyall around.
We're broadcasting live fromMoney 2020 at the Rye in
Amsterdam and, wow, it is apleasure to be here.
So much going on, so much lifeon these stages that we've got
going on.
(00:24):
So this show is all aboutpowerful stories and leaving you
with ideas on how to strap arocket to your business and your
professional development, andtoday we have a story that I
think is going to do that, whilecovering some hard truths,
perhaps along the line.
First, mickey, good to have youhere, thank you, Ian how are
you getting on today?
Mickey Tesfaye (00:42):
uh, it's been.
This is how I like to say Iknow I've had a good day,
because my feet hurt a lotalready.
You know that's so true, butit's been brilliant.
Uh, I've just we.
I love coming to the showbecause you meet new people.
You meet people you've known along time, and I think we've
also discovered something reallyimportant at money 2020
(01:04):
recently, which you actuallyhelped me realize, which is that
, if you want to do somethingreally beautiful and stunning,
think about trees, because wecould see the nature stage,
which looks beautiful, stunning,and I think it's a great
analogy for our conversationtoday and our wonderful guest
who is Philip from Railza.
(01:25):
And it's a great analogy because, of course, nothing like nature
is as regenerative, and so Ithink I kind of see where you're
going with this, mickey.
Ian Horne (01:35):
I mean, yeah, let's introduce Philippe, of course.
Philippe, you have a story totell.
Obviously, railza has a storyto tell and you know, you're the
CEO there, and the on-the-rarails puns obviously wrote
themselves.
When Rails appeared to be onthe verge of collapse last year,
you went into bankruptcyprotection, but things have
turned around since.
You managed to achieve funding,and you did so rather
(01:55):
emphatically.
I want to get into that story,but first Philippe, hi, welcome
to the Moneypot.
How are you doing?
Thank you very much, I'm doingfantastic.
Philippe Morel (02:02):
I mean, the level of energy at Money 2020 is
amazing and, as you said,seeing so many colleagues and
clients and suppliers as well isa great opportunity.
I mean, I haven't seen so manyopportunities in just a few days
in one place.
So, I'm a big big supporter.
Ian Horne (02:18):
Yeah, we're going to use that in the marketing for a
little bit.
Philippe Morel (02:22):
I take royalties as well.
Mickey Tesfaye (02:23):
We like to hear that.
Ian Horne (02:25):
Okay.
Well, let's get straight intoyour story.
I could ask you a million andone things, but could you just
provide the background?
So what happened with Railslast year that led to the issues
you found yourself in?
Philippe Morel (02:35):
Yeah.
So look, rails was in afantastic position from a tech
and market perspective, and Ithink to the question you're
going to ask me, why did we getfunding?
It's because the underlyingassets were exceptional
Technology platform isexceptional, customers really
strong, very strong sales teamas well.
Now, unfortunately, thelandscape's changed quite
(02:58):
dramatically in a few years.
The level of investmentrequested in compliance, in
customer support, and it wasjust without any comparison with
what it was only a few monthsbefore, and so I think the
(03:20):
company went ahead of itselfbeen growing very, very fast,
which was a tribute to theinterest in the market, but
wasn't perhaps sufficientlycareful about its cost base and
to what the regulator wasexpecting, and so it all blew up
when the funding market driedup somewhere in 2022 and the
(03:43):
company had to go throughrestructuring, and so my nice
story is I arrived just afterthat fact and I could just pick
up the bits and pieces andrealize that there were actually
a number of very nice bits andpieces that we could work from.
Mickey Tesfaye (03:58):
Let me just come in real quickly there, just to
give a bit of context to folksthat might have not heard of the
story.
Fully, rail rouser is anembedded finance platform.
Right, that is the kind of corebusiness and the core
technology that you guys provideand, um, that is that business
is still the core part of whatyou're doing.
(04:18):
Still, right absolutely.
Philippe Morel (04:20):
We do banking as a service, car as a service.
Uh, we're adding compliance asa service as well, because it's
so important those days.
But the business model and thetarget customers haven't changed
.
What has changed, of course, isthe way we do our business now.
Mickey Tesfaye (04:35):
Great.
So I guess I want to kind oftouch on and I think we're going
to talk a lot about the hereand the now and the future, but
I want us to take a step backand think about what happened,
right?
So you touched on a couple ofpoints.
Um, it sounded like thebusiness was slightly um
overstretched, obviously, um,the dynamics in the market
changed fairly quickly and Ithink rouser is not the only one
(04:57):
.
Actually, a number of huge,huge financial institutions had
issues as a result of that sv,svb, credit Suisse all of these
big financial institutions arebust, but we've also seen
embedded finance in the UShaving a bit of a moment right
now.
How much of that Rouser storyin the past was a
(05:17):
company-specific issue and howmuch of it was industry or
ecosystem issue.
Philippe Morel (05:24):
Well, I think we all went through the same
issues, which was the marketwent from supporting giving free
money, essentially to grow, tooops, not anymore.
Yeah, all at the same time, andso I think Realza was on the
way to become a unicorn 1billion valuation and then
(05:46):
funding dried up.
And when funding dries up andyou're not profitable, then you
run into trouble, which is whathappened to Relza, in addition
to a number of issues that wefound out when we took over.
Ian Horne (05:59):
Yeah, I mean it sounds like classic
overconfidence and actually whenyou were talking before, you
were always saying, oh, we weretoo good, we grew too quickly,
which is a classic CEO answer,and I rate it.
But at the same time, yeah,something was wrong there.
If people are just expectingthat you're going to keep
getting funding, did you havesomething to put right there
when you came in?
Philippe Morel (06:17):
First thing I had to do is put costs under
control.
We had 300 employees.
We now have 150.
I reduced our suppliers' costsby 40%.
So I think putting costs undercontrol was the number one
priority, together withrefocusing our geography
footprint.
I mean, this business was inSingapore, in Australia, in the
(06:40):
US, in Europe, in the UK.
We said, well, let's stop it.
Where is our revenue generatedfrom?
And it in the UK.
We said, well, let's stop it.
Where is the revenue generatedfrom?
And it was the UK.
So we focused on the UK.
So now we have a platform whichI think is solid to grow from.
But the shrinking was drasticand we had to do it in.
You know, just in a few months.
Mickey Tesfaye (06:57):
I mean the way you're explaining it.
I mean, I bet it was a lotstressful than the way you're
explaining it.
And I guess I want to ask you abit more of a personal question
.
For you, right, as a CEO, goinginto this role, how do you
think about what to focus on?
How do you think about yoursignal versus the noise, right
when you're looking at thisecosystem?
Philippe Morel (07:17):
Well, I think the priority has to be well
three things.
One is investors.
They're giving you money.
They are trusting you.
You need to deliver what theywant you to do and you need to
be very transparent and clearabout what you're going to
achieve with that money.
Second thing is the regulator,and I think we've been very,
very lucky in the UK that theregulator decided to support the
(07:40):
business and engage with us ona weekly basis to essentially
take us through the remediationplan we had to go through.
And the third thing is theemployees, because it's a
dramatic show for them.
It's really hard.
I could not promise at any stepof the way that we would go out
on the other side, but Ipromised I would be transparent
(08:03):
and tell them exactly where wewould be at each step of the way
, and I think that was reallyappreciated.
So if you establish thisrelationship of trust with your
regulator, with your investorsand with your employees, I think
you are actually making the jobeasier for yourself later, even
if you've got to bring up badnews.
Mickey Tesfaye (08:21):
Yeah, it sounds like a bit of like a flywheel
effect too.
Right, where you're kind ofyeah.
Ian Horne (08:25):
Yeah, I was going to say one of the tough things that
obviously the layoffs part did.
Do you think the the teambroadly understood why you took
that decision?
Philippe Morel (08:33):
Well, it's really about, um, company
survival.
So the choice is we eithersurvive as a company or we all
go down company or we all godown, yeah.
So I think if you put it in acommon goods almost uh, you know
adam smith's way environment,then people understand that, uh,
you are doing something whichis not personal, it's not
against any one of us.
(08:54):
It's just the right thing to do.
If you want those fantasticassets to continue and we're
also doing it for our customersuh, I think a number of them
been supporting us throughoutthe way continue to us, and the
least you can do is guaranteethat their platform is going to
be available, their funds aregoing to be safeguarded and you
(09:15):
continue being a good providerof embedded finance services for
them.
Mickey Tesfaye (09:21):
I think one of the things that's so important
that you're touching on that'scoming through is that that you
know fintech moves so fast andthere is a lot of learning to be
done within the industry, and Ithink it sounds like there are
times when the companies aretarred with a brush.
That is not truly reflective ofthat business.
I guess.
(09:41):
For you, how are you whenyou're looking at a business
like Rosa, where there's a lothad been negative press but, as
you said, there's a goldmine interms of the product, some of
the business assets?
What are the things that you doas a leader to kind of really
engage your employees and reallylike drive that fire within
them to, you know, to get tothat best position again?
Philippe Morel (10:04):
Well, I guess it's really insist on what's
good in the business and, as Isaid, there are lots of very
strong assets.
Guess it's really insist onwhat's good in the business and,
as I said, there are lots ofvery strong assets.
And it's not just me saying it,it's our customers.
When you ask them, they sayyour technology is fantastic,
your brand's fantastic, yourcustomer service is fantastic.
Even the brand, I say, isfantastic.
Customers realize that, okay,there were a number of mistakes
(10:27):
made on the financial side andon the compliance side, but
overall the business reallybrings strong value versus
larger banks or versus otherembedded finance providers.
And so building on thiscompetitive advantage that we've
been able to maintainthroughout the period, I think
(10:47):
really makes people understandthat we've been able to maintain
throughout the period.
I think really makes peopleunderstand that we're here with
a mission.
We're here to bring value.
We have a role in society whichis making finance available for
all businesses, essentially,and reaching parts that banks
don't necessarily reach.
And I can see it on aday-to-day basis because I'm now
(11:09):
spending a lot of time withcustomers and I'm going to say
the feedbacks are, for most ofthem, fantastic from that
perspective.
We bring them, you know, bankaccount under name their names,
card account under their namesand we do it in a, you know,
effective, flexible manner andthat's a big plus for them that
(11:30):
allows them to do lots of stuffwith their own business.
Mickey Tesfaye (11:33):
Yeah, I mean that's fascinating and I just
want to quickly touch onactually the business of what
you're doing.
So I was a little bit surprised.
I was actually a little bitsurprised today.
I was.
You know, I kind of overheard aconversation, so sorry for
being so gossipy today.
I was, um, you know, I kind ofoverheard a conversation, so
sorry for being so gossipy, butI heard someone explaining, you
know what one of the biggesttrends and um, they they're
(11:54):
seeing this year is, and theymentioned b2b embedded uh,
embedded payment, embeddedfinance.
How much of so?
A couple, two questions, Iguess.
How much of the challengesrails are faced was actually
partly because you are kind ofvery early into that b2B
embedded finance space.
And two, how much is thatembedded finance piece growing
at the moment?
How much are you seeing folksreally realizing the need to
(12:16):
have solutions to start becominga financial service company
themselves?
Philippe Morel (12:23):
We are all B2B finance.
We started ahead of others.
That's very true.
We started, I think, sevenyears ago, so probably a bit
early.
So there's a notion of adoption, if you want.
My observation is the need,exactly as you say, of embedded
finance goes now much beyondfintech, and I'm pleased to
(12:43):
report that, among the two bigcontracts we have negotiated or
are negotiating at the moment,none of them are fintechs,
because they realize that whatwe're bringing them, their banks
can do.
And don't take me wrong, I'm notshooting on banks or saying you
know that's not right.
I think each one of us have aright model and can bring value
(13:04):
to end users.
Those customers are banks'customers, but we can bring
banking account and card accountspecifically designed for their
needs, with functions that abank would not be able to, you
know, effectively deliver in theamount of time and with a
flexibility and the cost thatwe're able to do.
So I think it's all about B2Bembedded finance.
(13:24):
We're just scratching thesurface.
I read somewhere in a reportthat I think our industry
combined must have less than 5%of I think I heard two, but
let's say five of the bankingpayment fees taken as a whole.
I think there's a long, longway to go, and our customers see
it, and more and more customerssee it as we become more famous
(13:48):
, in a sense yeah, because we'refamous.
Ian Horne (13:50):
I think a big part of this conversation is around
communication, isn't it?
Because you've got a growingmarket and a valuable market and
a company with what appears tobe robust fundamentals.
So there's two sides to this.
I want to get into the investorconversations that you've had,
but first the customers I meanyou've just touched upon.
You know working with, you knowgetting big contracts over the
line.
What did people want?
You know were people worriedabout you going bust during all
(14:11):
of this, and how did you reachout to people?
How did you manage that commseffort?
Philippe Morel (14:14):
well, I would say, uh, no customer has been
losing money, so I think it'sreally important.
So, yeah, you know, beensafeguarding, uh, their money in
the uk perfectly, um, so youknow, otherwise, uh, we wouldn't
be here.
And then, um, I guess it's partof the game as well that if
you're a fintech, you'retherefore in a sector which
itself is vulnerable and thiskind of thing happens.
(14:37):
But we took it very seriouslyfrom day one to make sure that
quality of service, quality ofthe platform, quality of
customer service, save adding offunds all this was perfectly in
place, respected and wecontinue to deliver as well.
And I must say this is afantastic credit to the team
I've been working with, becauseyou can imagine going through a
(15:00):
bankruptcy yourself and, at thesame time, being able to deliver
.
This quality of support is quiteextraordinary.
Now, it's true as well that, toyour question on investors,
because of the quality ofsupport is quite extraordinary.
Now, it's true as well that, toyour question on investors,
because of the quality of theassets, we attracted big money
up front and that was one of theconditions.
When I joined, I said I needsufficient money and sufficient
(15:20):
cash flow to go through theremediation which we got, and if
we didn't have this support, Idon't think I'd be here today.
I don't think Razza would behere today.
But the investor's traction was, from day one, based on the
quality of the assets and of thebrand.
Ian Horne (15:41):
Yeah, and I'm going to ask what is the action plan
when you step in day one new CEObusiness in a very, very
difficult moment, looking at theinvestor side of it, what was
your plan of action?
Philippe Morel (15:50):
Well, it all started on the burn.
Cash burn is the only thingwhich matters when you've got
investors and you're not in acash-generating position.
So the question was how toprotect revenue.
So contact customers, explainwhat you're going through, make
sure that you maintain theircustomership and their revenue
flow and, at the same time,drastically act on the cost.
(16:11):
And I think we implemented thecost plan in less than six
months.
We made mistakes, of course wedid, but I think the speed of
execution was absolutelyfundamental so that we could
show to investors that we couldbe in an acceptable position
(16:34):
from a cash burn perspective.
Mickey Tesfaye (16:37):
I mean, I think one of the most important things
you've said to my mind so faris just how much product matters
.
Right Like.
Ultimately, if you do have atop level product, clients are
willing to acknowledge errorsmade and are more understanding.
I guess my question is, lookingto the future a bit more in
(16:59):
terms of embedded financebrowser.
Where are you looking to totake the story next right,
you've had, you've spent thechallenging six months
rebuilding and you've got thisnow lean, start up, flash for
cash, it sounds like, and readyto go.
So where are you thinking?
This is where the greatopportunities are.
(17:20):
Where are you really activelybeing excited by?
Philippe Morel (17:24):
Yeah, well, the first really exciting thing is
what happened to us on Friday,which is the regulator said
you're good to go, so you canonboard customers again.
Mickey Tesfaye (17:33):
So congratulations Thank you.
Philippe Morel (17:34):
I think we're very, very pleased with that and
I say we've been working veryhard overall and with the
regulator to get to this point.
On this basis, look, ifcustomers are coming back and
revenue is coming back, Iwouldn't say it's going to home
run, but it's going to be reallyeasy now in the sense that the
platform is where it should be,the cost base is where it should
(17:55):
be.
Any revenue is going to berelative on the bottom line.
So that's for the UK market.
Almost as soon as I joined, weapplied to a license in France
so that we can passport intoEurope.
I'd say UK and Europe gotogether.
A number of our customers, inparticular post-Brexit, are
really interested in resellingtheir services in Europe.
(18:18):
We're probably three monthsaway from doing that and then
we'll have a perfect platform,completely scalable across the
two geographies.
Now will we go farther, laterMaybe, but the one thing we
won't do is rush to the US orrush to Singapore or rush to
Asia, because we know that we'llbe spreading our resources thin
and we don't want to do that.
Mickey Tesfaye (18:39):
No, I think that makes a lot of sense.
It's interesting that you aregoing Europe, not US, right?
But I do want to ask you justyour thoughts in terms of just
what you're thinking about it.
But banking as a service isgoing through a moment in the US
too.
Right Yesterday actually, wedid an episode here with Jason
Mik, who's been breaking a lotof the stories.
How much of what you're seeingin that space there is, how much
(19:04):
parallels are there with whathappened with Rousa?
There is a lot of CEOs therewho might have been experiencing
what Rousa went through.
Is there any advice you'd givethem too?
Philippe Morel (19:15):
Well, I'd say it's really.
I mean, the US is a huge market.
It's probably 50% of theoverall global market.
Even more, europe in the UK isonly 20% or 30%.
So I think, on the one hand,there's a temptation to say it's
so big there that we can rollout embedded finance quickly.
(19:36):
The reality is, it all takestime.
There are well-entrenchedcompetitors banking platforms,
banks, processors which meansthat unless you really have a
strong winning proposition interms of tech and cash in the
bank, it's going to be reallytough.
It's also a very competitivemarket and so I think that no
(19:59):
real I mean, yes, thetraditional fintech from the
previous fintech revolution haveemerged, so you're also
fighting against a number ofvery strong names.
So, yeah, it's a tough marketto be in.
So I'm not surprised that, eventhough there's a lot of capital
in the US, that the number ofCEOs expressed what they told
you yesterday.
(20:20):
So, overall, I'd say, look, aseverywhere, there won't be many
winners, there'll be many losers, and it's making sure that you
control your cash burn and thequality of your services and the
relationship with your customerto make sure that you're part
of this.
Uh winning, uh swing if you, ifyou yeah no that makes a lot of
(20:43):
sense.
Ian Horne (20:43):
Yeah, I was just gonna say like, obviously, one
of the things we wanted to talkabout today was adopting the,
the hustle mindset, which is,you know, the way, way out of
the, the kind of mess that youfound yourself in.
But it feels like this is aninflection point.
Actually, do you, do you moveon from that kind of approach
now that you're gettingregulated, now that you're
looking to kind of expandcautiously but expand?
Are you still in that hustlemindset, or is it something
(21:05):
different now?
Philippe Morel (21:06):
Well, I'd say there are things we're going to
change and things we will notchange, because we learned.
I think we will continue beingvery cash conscious, very cost
conscious.
We'll continue supporting ourcustomers.
I mean, every single week I'vegot an email to the whole
company how we're doing in termsof customer service.
How many customers are waitingfor an answer?
(21:26):
How many customers are waitingfor you know, support?
How many transactions are beingblocked by you know, some
analysis or whatever, so that wealways deliver the best quality
of service?
The one thing I think we willprobably change is we will
selectively invest more on thefront end and also on the
(21:48):
product side.
I think there's so much morethat we can add to our product
suite.
Embedded Finance is a platform,if you will.
It's a distribution platform.
We can add credit, we can addinsurance, we can add reward, we
can add investment, we can addsavings.
So I've seen the quality of theproducts we can offer to our
(22:09):
customers can be significantlyincreased and we're going to be
going into this direction.
We're starting with FX.
We've developed a fantastic FXproduct this week which we're
going to be going into thisdirection.
We're starting with FX.
We've developed a fantastic FXproduct this week which we're
releasing with NatWest, which isone of our key banks, and that
I think is going to be a gamechanger.
We're launching transactionmonitoring as a service.
(22:30):
So I'd say the goal is reallyto use all the investments we've
made to add services so thatwe've made to add services, so
that we increase the revenuegenerated with customers and the
service we provide them.
Mickey Tesfaye (22:43):
How strategic are you now being in terms of?
Because I think one of thepoints again you touched on
earlier on right was maybe oneof the things you needed to do
when you came in was be a bitmore strategic in terms of where
cash was being spent, be a bitmore proactive and, again,
strategic in terms of where,where you were placing your bets
.
Right now, as you're beginningto roll out products, expand
(23:05):
your suit.
How much has the culture andthe drivers of you know what is
required?
How much of it?
Your product suit is beingdetermined by the customer need
relative to what internally youyou as a team are thinking about
the ecosystem needs.
Philippe Morel (23:23):
You know how much of it is it's a very good
question, I think, uh, we arespending a lot of time with our
customers.
Uh, I'm spending myself a lotof time with customers and I
always have the same series ofquestions for them, which is how
are we performing?
What's the quality of ourservice?
How can we improve?
What products are we notoffering today that you'd like
(23:44):
to see?
And they came back to us andsaid we want FX and we want
Europe.
So we're delivering on thosepromises because they told us,
not because I woke up onemorning and say, oh, I'd love to
have FX as a service or I'dlove to be in Europe.
Mickey Tesfaye (23:59):
Yeah, I think that's so fascinating because I
think one of the big challengesthat fintech has faced, I think,
over recent years is that a lotof it has been on the potential
and making realizing thatpotential is so hard Right, you
know the kind of number ofthings that need to align to
produce on the impact of.
You know, the big trend we'retalking about, or the big
(24:21):
emerging ideas, is very heavyand very things have to come
together really nicely andperfectly for a lot of things to
work out there.
You know, with embedded finance, with all, even with other
emerging technologies, I guessit's interesting now that with
the end of the zero interestrate period, the end of free
(24:43):
capital, I think there's been arealignment in fintech where
actually making money is reallyimportant again within the
ecosystem.
And I think, in a weird andabout way.
You know, your story is areally good story of what's
happened to our industry as awhole and actually what we're
seeing now is probably anindustry that's emerging a lot
more resilient and perhaps a lotless idealistic in terms of
(25:07):
what we can achieve, butidealistic in terms of what we
can aspire to at least.
Philippe Morel (25:11):
Yeah, no, it's very true, and I would say, you
know science.
It's a bit sad because thewhole you know bubble of ideas
and was fantastic and I missthis sense of everything's
possible and we're going todeliver and we're going to
change the world.
At the same time, you know it'sback to reality and we're like
contents are winning exactlywell.
(25:32):
I don't know if the contentsare winning, but it's a finance
team that's not making me money,no, and I think it's important
right yeah, well, absolutely,but I take the point.
Ian Horne (25:42):
What is there anything that's going on right
now that does really excite you,though, in terms of the future,
of embedded finance and alsojust things you might have seen
at this show?
Not that I'm trying toshamelessly plug our show, which
I am doing.
Um, yeah, what are you seeingright now that makes you think,
wow, this is the future?
Philippe Morel (25:55):
well, I think that, uh, most of the crisis is
over now, so you've got thereally strong actors uh staying
here, and I spoke with a numberof our competitors and and and
uh suppliers as well, and we allknow we are pulling in the same
direction, which is makingfinance available to everyone,
uh, through a b2b model.
Yeah, and I think, uh I meanyes there are lots, lots of new
(26:17):
things coming up.
I mean on the QR code.
I think it's interesting forall the acquiring business or
all the A2A relationship, goingbank to bank, not going through
cards.
I think there was an interestingconversation earlier in one of
the shows I attended to.
So I think the technology keepsmoving and that's going to
(26:41):
enrich the platform that werepresent with a number of our
competitors, and I think thedifference between now and
before is we are now in aposition to take advantage of
this technology and make itavailable to our customers.
So we'll keep this flexibility,we'll keep this proximity.
We'll just enrich the offer andproducts that we're making
(27:03):
available for them, and we're ina position to do so and, again,
our market share is 5% 2%.
Mickey Tesfaye (27:11):
A long way to go On that.
I want to ask you a question.
I guess, raoult, you saidaround seven years, so really
very early on embedded finance.
But I think many of us, or manypeople, kind of have the angela
strange com um a16z prisonpresentation.
Right in five years everycompany would be a fintech
company and I think that ismaybe like the kind of anchoring
(27:34):
point for embedded finance andthe opportunity.
So let me put you on the spothow many years until every
company becomes a financialservices company, maybe even
powered by relza?
Philippe Morel (27:44):
I don't know if it's five years or 10 years, but
I won't.
I won't bet on this, but itwill happen.
I think finance is part of aany service any company has to
offer.
They sell products, goods,services and also sell finance.
So I think the revolution isongoing.
I don't bet on when it willland, but it's absolutely moving
(28:05):
on and I think we're part ofthis revolution and that's what
really is exciting.
Mickey Tesfaye (28:08):
That's a big change already in the way the
fintech ecosystem is thinking,Burnt by that commitment to five
years, now like in the futurebut you know're optimistic about
it.
Ian Horne (28:17):
I like that though no , me too, me too.
Well, look, I, we're runningout of time here, I think.
What time for maybe one morequestion?
And I I just want to get backto the core.
You know theme here.
You've gone through this.
You know turbulent moment atrailser.
You've come out the other endof it.
I'm wondering if people arelistening to this that are going
through something similar.
Obviously wouldn't tell you ifthey were, but what advice have
you got, having seen that playout and having gotten out of it,
(28:38):
what would you pass on toanother ceo out there?
Philippe Morel (28:41):
well, I'd say, uh, if you're in this situation,
it's all about cash.
Honestly, it is uh, so it'swhatever it takes to control
your cash, burn and getresources off and then, at the
same time, is maintainconfidence in the market that
you are doing the right thingsand explain what you're doing,
and explain the plan and showthat you're delivering.
(29:01):
And, if anything, I think atthe beginning we did not
communicate enough, and that'sperhaps the one thing I would if
I were to do again, I'd do itdifferently be even more
transparent on what the plan is,so that everybody at the table
would understand it and continueto support it yeah, and what is
the barrier to communicatingenough?
is it time, time, it's just time, it's just, you know days of 24
(29:25):
hours yeah, uh, and, and you,you need to do this whole list
of things that you need to dobecause you know it's mission
critical, and then you forget touh, you know, talk to your bank
, talk to your supplier, talk toto your investor, and yeah, I
think that's a bit the issue.
The other thing is, I would sayI have one key thing which
really helped us is I havereally senior people helping you
(29:49):
out.
We previously had Rikki Sonsweetwho was our chairman, and he's
been bringing us enormously interms of knowledge of the market
and I absolutely cherish myconversations with them when it
was really tough.
Uh, lord hammond is now ourchairman and same thing I'd say.
The level of seniority andunderstanding of the business,
uh is is absolutely fantastic.
So we not everybody's gotaccess to these kind of
(30:11):
characters, but I would say,attracting the right experienced
people at the table, even ifyou feel you're very experienced
yourself, I think is key.
I mean, more brain is alwaysbetter.
Mickey Tesfaye (30:21):
I mean, that's really important advice, and I
think I know FinTech's youngdisruptors.
But hey, there's a reason whyexperience counts, you know.
So it's not just about beingcool, it's about lasting a long
time.
Philippe Morel (30:35):
There's a bit of that right, so you need to have
that right balance.
Ian Horne (30:42):
Good summary being cool, it's about lasting a long
time.
There's a bit of that right.
So you need to have that rightbalance.
Good summary, yeah.
Yeah, I mean for me I'm, Ithink, a lot of us about the
power of your network, right,that's really big.
But also the amount of timesyou mentioned cash burn.
I think mickey called it whenhe said the accountants are
winning.
I think that's a reallyinteresting point that we're at.
But maybe we can start havingcrazy dreams five, six years
from now.
But we'll keep it sensible inthis moment.
Philippe Morel (30:57):
Yeah, be bold, but make sure you've got the
cash.
Mickey Tesfaye (30:59):
Yeah, be bold, but make sure you have the cash.
But also, I think the mostimportant thing for me anyway,
philip, from our conversationand thank you for being so
candid is that I know FinTechhas an ecosystem.
We have lots of players thatare winning, but success is not
linear and actually failure isfailure only if you know you
(31:22):
don't really get learn from it.
And I think what you've saidabout as a leader, about
communicating, acknowledgingwhen mistakes are made, is such
an important uh mindset because,as an industry, one thing
fintech mustn't forget, I thinkand this is my personal view is
that emerging out of like thiswave, emerging out of 2008,
there's so much pressure to betransparent and when we fail to
(31:45):
do so, it becomes significantlyworse.
Ian Horne (31:48):
Yeah, Because that's the expectation we've created,
so thank you so much for, yeah,thank you and we do have to cut
it there.
But Thank you and we do have tocut it there.
But, philippe, thank you forjoining us.
As Mickey was saying, reallycandid interview.
Great to get your perspectiveon Rails and the future as well.
I think what's great about thisis we talked about a difficult
moment, but I think we have abetter understanding of what the
next few years look like too.
So, everyone, thank you forlistening.
(32:09):
This has been the Money Pot.
I've been Ian Horne.
Mickey Testify has been MickeyTestify as
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