Fintech's future

Ready to explore the extraordinary world of tech? Welcome to the XTech podcast, where we connect you with the sharpest minds and leading voices in the global tech community. Join us as we cut through the complexity to give you a clear picture of the ideas, innovations, and insight that are shaping our future.

Hello and welcome to XTech. I’m Debbie Forster MBE. I’m the CEO at Tech Talent Charter, and an advocate and campaigner for diversity, inclusion and innovation in the tech industry. I’m delighted to be working with Fox Agency as the host of the all new XTech podcast and as a curator for the XTech community.

Now today I’m really excited. I’ve been joined by Jason Maude, Chief Technology Advocate for Starling Bank. Welcome, Jason.

Very nice to be here. Thank you for having me.

Jason, I love with the guests to try and understand, because there’s all these different journeys into tech. Some of us born and bred, other of us sort of have a windy road to get there. How did you get into tech and how did you end up at Starling Bank?

I came into the world with a keyboard in my hand. My journey into tech started very young. I’m rather unusual in that my father was a software engineer as well, which is somewhat unusual for people of my generation. So I was sitting down at the old Apple Mac, age five, and are were pictures of me playing around with it and so on.

Fantastic.

A little while after that I started programming and started writing code. So yeah, I’ve been writing code and becoming a software engineer since a very early age. And then when I left university, having studied engineering at university, I then went into financial software, and that’s where my journey has, my career has built, is writing software for various different financial products, financial situations. And so I find myself at Starling Bank.

Now interestingly, if I remember correctly, you got into banking and finance at a really exciting time. Let’s call it exciting, shall we. What happened there?

You are absolutely right. So when I started working, it was September 2007. And so I turn up, my first job in the City, and then a week later Northern Rock collapses. And then a little while after that we have pictures of graduates, such as myself, turning up for their job at big financial firms and being told, “Your job no longer exists. Sorry, goodbye. You’re out. You’re gone. This company can’t afford you anymore,” because this was the start of the financial crisis, the credit crunch. All of these firms were laying off workers left, right, and center. So it was a very exciting time to start working in finance in the City.

But I think a lot of the churn around that was where Starling Bank came from and what it drew a lot of its inspiration from, was this turmoil that the world went through when the financial systems collapsed in the late noughties. And trying to get banking back on its feet and bring it back to its original purpose, say, it’s more customer-focused purpose, where it could look at what customers actually needed out of banking, was the driving mission behind why Anne Boden, who founded Starling, why she founded her own bank. She wanted to, as she put it, make banking better. And that has become the unofficial motto and phrase behind Starling Bank ever since.

I think it’s really interesting, that journey, because we know all the different stories about disruption. And there’s a lot of people who come in to disrupt for its own sake or to make some cool money on this. Starling had as its core mission something very different with Anne and it drove a lot of decisions. You were one of the first big challenger banks. Are there certain decisions beyond that core mission that were different, that you think distinguished you from the very start?

Yeah, absolutely. I think that a lot of those were in tech. A lot of those were in the way we approached technology, the way we designed and wrote our technology, which I think was a lot of the wisdom and experience that was brought to Starling Bank in the early days was about how technology had failed previously. A lot of the early engineers had been around for quite some time, had seen a lot of technology change, and were well aware of what went wrong with technology if you don’t do it correctly.

We started out with this idea that we didn’t want to run our technology in the sort of traditional project format, where you sit down with specifications and design things and get them signed off and go through umpteen different testing stages. And then eventually, after all that happens, then you can release it into production, maybe months or even years after you’ve actually first coded it. And we wanted to break this cycle. We wanted to have something where we could create code and release it in very quick cycles.

Part of the benefit of that is to make sure that you can get stuff out to the customer quickly. There is a lot of customer benefit in doing that. But there’s also an element of risk aversion in that as well, because a lot of the problems, when you study these big banking IT failures, or IT failures in other places like government, you find that a lot of the problems occur, not because you haven’t done enough checks, you’ve done huge numbers of checks, but because the amount of code you’re releasing all at once is so large that no amount of checks can possibly catch all the problems. And when something inevitably goes wrong, it’s really difficult to correctly recover from it. And that’s the big problem.

So at Starling we said, “No, let, let’s release early and often. Let’s release little and often.” Doing a lot of little jumps and hops and so on so that we can make sure that every individual change is not likely to cause a disaster. And even if it is a problem, it’s very easy to reverse it. It’s very easy to go back to where we were. And that’s what makes us resilient in our technology.

But I think also what’s interesting about the way that you did that is you’re bringing, yes, the agile tech approach in that quick release and pivots, but you didn’t fall into the trap. That sometimes happens when we get a room full of engineers of, “Let’s find the latest framework. Let’s use the latest language to do that.” You took some very different decisions. Can you walk me through that for a minute?

Sure. A lot of what we are driven by, in addition to this release quickly, release often cycle, is we’re driven by an intense pragmatism within the organization about the tech that we use. You’re right that there is a tendency for engineers to go for the shiniest tools in the box and that sort of thing, whereas we at Starling Bank, we’re using things like Java to code our back end.

Going back to first principles in that way. Yeah.

Indeed. Java is a language that has been around for umpteen years. It’s now an old language, a venerable language and so on. And we’re using it because it works. It’s good, it’s solid. There’s a lot of information about how it works online. It’s really easy to get answers to it. It’s really easy to hire people who know how to code it, so it’s reliable in that sense.

It also helps us reduce accidental complexity. There’s this idea in software engineering that you have two types of complexity, you have essential complexity and accidental complexity. Essential complexity is you can … I am always imagine it as the drawing on the whiteboard. You’ve got your whiteboard and you’re drawing the lines and boxes and circles and so on to show how your architecture is going to work. And we can imagine in the far future that that discussion happens, and then there’s a button by the whiteboard that someone presses and a computer just takes what’s on the whiteboard, codes it, writes tests for it, writes monitoring for it, deploys it into production if it’s good to go, and then just handles all of that from there.

My God, how much would we pay for that button beside the whiteboard. To the person who could perfect that little button by the whiteboard, I want to invest in that.

Indeed, yeah. Well, I mean, that button would put huge numbers of software engineers out of work, I think.

The essential complexity is in the initial design, the initial representation of the problem space, which you can’t get away from, we’ll never be able to remove that complexity. Everything else is stuff that we theoretically could remove. For example, memory management. Older languages force you to engage with memory management, and where I need to allocate some memory to store this variable and then release the memory and dah-dah-dah-dah-dah.

Whereas Java has gone beyond that. Memory management is regarded as accidental complexity, and we’ve managed to create something that removes us from having to think about that and does it for us, by and large. You can remove accidental complexity, but you can also add it. And this is where the shiny tools problem comes in, that by using lots of shiny tools which aren’t necessarily the best tools for the job, you end up adding a load of accidental complexity that you don’t need. These expensive, shiny tools need a lot of maintenance. And if you don’t need to do that maintenance, why are you investing in them?

So I think a lot of our decisions that take us away from where a lot of the other fintechs have gone, has been to be very pragmatic, very definitive about what tools we use.

And I think the other thing, and what I love about what you do at Starling is that combination of the hungry startup, the agile, but some good old-fashioned, venerable ideas. Because you also have talked a lot about standardization, and that’s not something you hear about a lot in startups. But if you’re talking about something as important and complex as you’re talking about fintech, that standardization is crucial, isn’t it?

Yeah, absolutely. You need to have a standard way of doing things. That really helps because it ensures that you don’t get siloed. If you bring in lots of different engineering groups and you give them complete freedom and say, “Go away and choose whatever language you like, whatever frameworks you like, whatever way of working you like,” that is great because they can make their own decisions and forge their own path.

But it means that when you want to transfer someone from one group to another, it’s really difficult. So you end up with these siloed groups who are working on their thing and no one else can look in and work out what they’re doing. And it becomes really difficult to hire. It becomes really difficult to scale, because if one group suddenly starts moving much faster and their process starts growing much bigger, then you need to scale that group and you need to put more people in it. But if you can’t move people around easily, if you are going, “Well, in order to move to group B you are going to need to have a three-week training course in all of their frameworks and languages,” it becomes much harder.

Whereas we can easily transfer people around, makes it much easier to train people. We, at Starling, when a new engineer comes in, we like to get them committing code-to-production in their first week of joining. We really want get them in at the ground and make them understand that, “What you are going do here is going have an impact immediately. It’s not going year, six months, whatever, before your code get to production.” It really is going to have an impact now.

And that’s the power of the way you’ve done this. You began like a startup but you were thinking big from the earlier stages. And I like also the way you’ve segued really beautifully into the other [inaudible 00:12:25] of you’ve done, because so much of what happens in startups or companies when they’re thinking about innovation is about tools and cool tools, and not the people. And you’ve looked into people. And I think as well as your dev investment, you, as Starling, made some investments that weren’t about tools and just processes, but people and customer services. Talk to me about what influenced that choice and how you’ve benefited from that.

There’s the old principle whose name I can’t remember, but the principle that your software architecture and how your organizational structure will always end up matching each other. We can extend this principle out and say that effectively software ends up being an expression of how your organization works and communicates with itself. Really, what’s at the heart of all this, is people, it is culture. A lot of firms and organizations say they get held back by legacy technology, but actually that’s not the case. They’re getting held back by their legacy culture and their technology is an expression of that. It’s not the technology holding the culture back, it’s the other way around.

So we really came into this thinking about how we could best serve customers. How are we going to do that? What’s the best way of serving customers the fastest? How are we going to best organize our engineers? It was a lot of engineers at the start and then more and more other groups and so on. How we are best going to organize the people of the bank to serve those customers, and so on. And start from there and those thoughts and then the tech will follow on from that. And it’s obviously worked. We obviously have that as a big thing because we’re regularly at the top-

Absolutely.

… of customer service charts and that sort of thing, because we know that serving customers is the important thing, it’s why we are here. And it’s constantly the focus of what we do. And I’m really glad that we’ve managed to, even through a meteoric growth, we’ve managed to retain that and not just fall into the trap of going, “How do we get quarterly earnings up? How do we get costs down?” And that sort of thing. And really say, “No, no, no, what do customers need and what do they want?”

And that’s allowed us to do some really quick pivoting sometimes. Like when we went into the pandemic for example, and we realized that in order to serve our business customers correctly we had to become a participant of these loan schemes, these CBILs and BBLS and government bank loan schemes that were there to help SMEs out. And in order to be an SME bank we really had to have those, so we very quickly developed the capability of delivering those automatically. And the other problem was of course, that all the other banks were set up to do these sort of loans in branch, but with the pandemic, it’s really difficult to do these things in branch. So we had to set up a way of offering these loans out in an automatic manner. And we were able to pivot very quickly towards that because we didn’t have this mindset of everything has to be planned out years in advance.

But also, I think again, because when we talk about fintech and challenges and disruption, I don’t hear enough discussion around customer services. Yes, we’re designing for a customer, yes, we’re designing for a user, but are we really thinking through what is the infrastructure we need to maintain the trust, the understanding, the buy-in from our customers, to make that technology work? And you’ve reaped the benefits. You’re winning awards against big established high-street banks. So that’s not a typical thing for startups.

No, no. And a lot of the problem with startups is that they end up focusing too much on growth. It’s all about growing the customer numbers. “How do we get those customer numbers up and up and up,” and they don’t start asking questions like, “How are we going to do this for the long term?”

We really came in here going, “No, no, we’re forming a bank.” If you look at the challenges, what’s interesting about them is you’ve got challenger banks and other financial apps. You’ve got things like TransferWise and Monzo, Revolut and so on and so on. And then Starling Bank, we’re the only one who has bank in our name because we wanted to be a bank, we wanted to be around for the long term. Again, another reason for using Java because it’s a language that has been around for the long term, so we want to be around for quite a while. So we had that mindset immediately of going, “Right, we’re designing something now which is going to be in use for 20, 30, 40, however many years.” It’s not just a flash in the pan.

And that means that you start thinking about how you can build a sustainable organization, not only in terms of how do we best serve customers and keep responding to their ever-changing needs and make sure that they are satisfied with us in the long term, not just as a quick, “Oh, I’ll use this while I’m on holiday and then not at all later.” But it also means that you start asking questions like, “How do we make money? How do we make a profit from this?” And I think Starling Bank is also unusual in that it’s a challenger bank which makes a profit, which is very unusual.

And makes a considerable profit and gets awards for doing that. Exactly, yes.

This goes back to the financial crisis. A lot of fintech, I think there is a reluctance to ask the question, “How does this make a profit?” And the reason there’s a reluctance to ask that question is because a lot of fintech came out of the financial crisis, a lot of the people who were working fintech were inspired by the financial crisis in the negative way of going, “Well, we don’t want to do that. That’s bad.”

And a lot of the financial crisis was caused by banks hyper-focusing on profits. “How can we get profits up? Oh, I know will sell mortgages to people who can’t afford to pay them back. And then we’ll do some financial trickery in order to pretend that those are good loans,” which it turned out was financial trickery that got unwound when people started asking too many questions and then collapsed the entire system. So a lot of people had this aversion to profit making because they see that as the bad old ways of doing things. But eventually, in order to be a sustainable business, you have to make a profit. The VCs aren’t going to be around forever.

Exactly. And this is, I think, sometimes where we’re trying to understand that it is, are we trying to build a business or a product, or are we trying to make VCs happy? Are we trying to disrupt, which is just an action, but what are you trying to be? What’s the end product? And I think that mind shift, like anything in tech, there’s that risk to fetishize things. You’ve got your entrepreneurs, which are business people, you’ve got your disruptors. And in fact, it’s when it’s actually about how are we creating great products, great businesses, great services in that respect.

Now I love looking at tech titles too. And for something that has been more traditional in than that you are a bank, I can’t say I’ve come across many chief technology advocates. Now that wasn’t your original title, this is something that’s evolved or you and for Starling. Why, why do I need that, why does Starling need that?

Yeah, you’re right. Originally I came in as a software engineer, senior software engineer, creating software. The first thing I was told when I entered the bank is, “We don’t have a direct debit system. Please, could you write one.”

“By Tuesday, if possible, would be jolly great.”

So I’m sitting there, writing the software, leading the software teams. But increasingly, what became obvious is that Starling Bank is a very unusual proposition for customers, for the industry, for the regulator. It’s a bank that has no branches, has no physical presence on the high street, is entirely online, and is entirely in the cloud as well.

Our COO tells this story about when he went and talked to the regulator one of the first times, and he was asked the question, “Who has the keys to the server room?” And his response was, “Not only do I not know who has the keys to the server room, I don’t know where the server room is,” because physically we had abstracted that problem away to the cloud. So this complication of tech is difficult because it makes people raise eyebrows, it makes people mistrust the bank if they don’t really understand it. They’re suspicious.

And trust is everything for a bank. A bank needs trust in order to operate. If your bank doesn’t have trust, then you get Northern Rock. You get everyone lining up, trying to take their money out. That’s what happens if you lose that trust. So you really need trust. And in order to trust Starling, you really need to trust the technology. And in order to trust the technology, you need to understand it. Not completely, not in its maybe nitty-gritty detail, but you need to understand overall what’s going on.

And that’s therefore my job. We need someone to advocate for the technology, talk about the technology, go out there and really communicate why it is that we do things in the way we do them technologically. And how our culture of technology and the way we’ve designed it contributes to building a resilient, trustworthy bank that you should feel happy to deposit your money into and borrow money from.

And it’s interesting, because you do, we both know there’s lots of futurologists roles and there are a lot of leading figures in tech that they’re not pulling back the curtain and revealing the workings. That in fact, we know of some rather high-ranking news stories about tech people who have mystified, sold a bill of goods. You’re going about that very differently in terms of Starling, you’re demystifying and opening those doors, aren’t you?

Absolutely. And I think that’s what’s needed for trust. I mean, I think that the age in which you could obfuscate and hand-wave away things, in technology terms, is rapidly disappearing. And that’s partly a generational thing. The millennials, my generation, are now getting to the age where we’re more in charge of things, more running things and so on. That’s moving on. So there are fewer and fewer people left who can be wowed by big whizzy tech words.

There’s the famous scene that took place in the US Senate where Mark Zuckerberg was asked by Senator Orrin Hatch, “How do you make money?” And he goes, “Oh, Senator, we sell ads,” with a sort of slight smirk on his face. And you are sitting there going, “Maybe that fools someone who doesn’t really understand tech.” But increasingly, people do understand tech, not just the younger generation, but older generations as well, understand tech. And understand that companies like Facebook are not just selling ads, they’re doing a whole load of technical stuff around in the background that is very complicated, and they want to know the details about how it works and how does it work.

So I think increasingly, companies that use advanced technologies, software technologies and so on, and increasingly advanced things like AI, machine learning, blockchain and so on, are going to have to be able to explain in clear and simple terms what it is they do. And they’re not just going to be able to say, “Blockchain,” and then have everyone clap and throw money at them. That’s going to increasingly become less and less plausible as a business [inaudible 00:23:54].

And there’s going to be a cost, there’s going to be a backlash against those sorts of things. I think, particularly when we’re talking about explainable AI, that’s going to become a prerequisite if we’re going to fight some of the real polarizing feelings people are having about things like AI.

Thinking for Starling, what are your next big challenges? You’ve had a really successful start to the year, some great announcements, really solid. Not just personal banking, you’ve solid footprint into SME, et cetera. What’s next, what are your big challenges?

The next challenge is really quite an interesting one for Starling, which is that we’ve built this amazing banking platform. We’ve spent a lot of hard effort and work has gone into building and maintaining a solid core banking platform which can perform all of this retail banking.

And we’re now going out and trying to sell that. So we’re taking that banking platform and selling it to other companies who may not necessarily have the tech competency to want to build their own banking platform, but have the banking competency to run one. We’ve called this Engine because it’s the engine that underlies the bank. And we are going out and selling this Engine and looking for buyers who want to start up a bank and start it up with a pre-made banking platform.

And that’s very much the zeitgeist, isn’t it, of banking as a service. That that world is changing. And so for you to be in that supply is exciting, so something definitely to watch.

What I also try and do when we have our guests is to get a sense of, you get to look outside your own silo, outside your business, et cetera. A little bit of future gazing. If I said, looking at the future, what’s on the horizon? What’s annoying you or worrying you at the moment?

I guess effectively we’ve discussed this a bit, but the attempt to obfuscate or hide or use technology in a way that is either designed to trick people, or to a lesser extent, just hype. Things like blockchain and cryptocurrency for example. There’s a lot of hype around that. A lot of, “Oh, we’re going to the moon with this. You’ve got to hold on. You’ve got to just believe it hard enough and it’ll work,” and that sort of thing. And I’m sitting there going, “I don’t understand what this is for or why this is being used and why it’s being created.” And there are several big news stories about how it hasn’t quite worked and people haven’t been using it correctly and that sort of thing.

And what I don’t want to happen is that for those to tarnish the name of fintech, software technology in general. I don’t want these to be tarred with the brush of like, “Oh, you’re just all like these weird crypto sites,” and that sort of thing.

And it’s important, isn’t it, for us as a sector to look at that because, one, there is like, as you say, there could could be good intentions but bad outcomes, but there are some bad actors out there as well. And as a sector, if we are not leaning into these debates, if we are not doing what’s hard, to out, to address the bad actors in this space, regulators are going to come in, others are going to come in, and everybody’s going to suffer at that, aren’t they?

Absolutely. And bad actors is the key thing. If you go all the way back to the beginnings of where the internet boom comes from, you can find the story of Napster. And Napster, for those of you who don’t remember, which was a-

For the babies on the call. So sit back and hear about the old days.

Hear about the old days. What’s Napster? Right. Napster, it wasn’t an app because this was before the days of smartphones. It was a piece of software that you could download onto your machine that would allow you to share files. So you would point your Napster software a particular folder on your PC and say, “Allow any file in this folder to be shared with all of the internet.” And obviously anyone else who had Napster and was online, you could download files from them as well, so you could file-share.

And inevitably what this started being used for is people started going, “Great, I’ll go and get the latest piece of music from Metallica or Britney Spears,” to date when this was around.

Contextualize the time, yes.

Yeah, yeah, indeed. You upload that, the MP3, onto your machine, and then you point Napster at it and then someone else can download it. And when the record companies heard about this, they went mad and went, “You are violating copyright on a massive scale with this Napster.” Napster was brought into court by the record companies, brought up in front of the judge, and their argument was, “Well, we don’t have any music. We’re not violating copyrights. If you come to Napster’s offices and look at our servers, there’s not a hint of music to be found. All we are doing is providing a network for people to share files with one another.”

And the judge responded with, “Very well, I accept your argument that all you are doing is allowing people to share files with one another. But there are bad actors on the system who are using your network to maliciously share files with each other and do the wrong thing. So you are going to have to go and remove all those bad actors.” And Napster went away and came back a few months later and went, “There’s no way we can remove the bad actors because 99% of the traffic is file-sharing of music.” And so Napster gets shut down.

But this argument of, “We are not responsible for blah, we are just a network,” has been used by everyone. It’s an argument that has gained traction and is now the standard point made by any big internet business. Uber is not a taxi firm, it is a network for connecting people who want to buy or sell taxi services. Airbnb is not a hotel chain. Facebook and Twitter are not publishers. They all use these arguments to try and say, “Well, it’s not our responsibility,” and so on. And the constant response back is, “But there are bad actors using your network for bad things. How are you getting rid of them?”

And I think that this argument is becoming less and less avoidable. We can’t avoid it. We can’t say, “Oh, it’s fine, we just run a network here. We don’t need to look for bad actors.” Regulator isn’t going to accept that. So I think this argument is very quickly going to get shut down and people are going to be forced to track down the bad actors.

And I think we’re hearing it, because it’s not just regulators shouting for this now. Again, you’re talking about a more educated populace who are beginning to ask that and the backlash is coming. But trying to end on a more positive note, what interests you in a positive way? What are you excited about when you look at the horizon?

I am really excited about the prospects of new technologies like machine learning, which will develop into AI. AI is thrown around a bit too much as a term, but the sort of machine learning stuff that we’re getting, if we get it right, can have a real impact. It can have a real impact on doing things like finding the bad actors in the network. Because it’s very good at being trained to spot things like unusual activity, which is not something that a regular automated process can do because, who knows.

But if it’s used and is explainable and is we’ve got the bias problem solved and that sort of thing, we can really create systems that will do a lot of amazing things. And that is now starting to become more and more mainstream, more and more usual and understood. And I think it has a lot of prospects to not take over from humans, but enhance humans’ abilities to really do things that would otherwise be impossible given the volume of data involved.

Listen, Jason, it’s been fantastic talking to you. I’ve become a huge fan of Starling Bank. I’m already moving my personal bank, my company accounts across, so love what you’re doing there. We’ll probably have you coming back to the show. Thank you for making the time for joining us here at Xtech.

Thank you very much for inviting me.

We’d love to get your comments, your thoughts on what you’ve heard today, and you can share them with us at fox.agency/xtech. If you’d like to appear as a guest on the show, don’t waste a moment, we’d love to hear from you. Email us now at xtech@fox.agency.

The people that make this show possible are Zoey Woodward, our executive producer, Hannah Teasdale, our podcast producer, and our whole team of tech experts at Fox Agency. I’m Debbie Forster and you’ve been listening to XTech.

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