If you’re considering building a new bank, would it be advantageous to be already part of a much bigger established big bank, or might that actually hamper your progress? Having access to the resources of a major institution may seem like a gift but the reality is a bit more complex. For a number of years, Jeremy Takle worked at Barclays and led the building banks in Scandinavia, South East Asia, and the US. More recently, he stepped away from Barclays to co-found his own digital bank, Pennyworth. So what can he share from his experiences of both building banks within large organizations, and outside of them?
“I was lucky enough that Barclays was global and the skillsets and knowledge around building banks, distribution channels, and new platforms were all there inside the organization. You could pick that up. So I got a career where I learned how to plant new flags in new markets and build retail & commercial banking businesses across the world.” – Jeremy Takle
However, being part of Barclays did not only bring advantages such as banking licenses and distribution channels, it also came with some major drawbacks according to Jeremy:
“The challenge then of course was to convince: First, internally within the organization, to take what had been a credit card monoline and turn it into a consumer banking business. Hence getting buy-in from the Group Executive. You still had the same challenges that come with having a big parent with siloed structures. You would have to actually walk around and convince every single function to bring themselves to bear on this problem, even though you had a Group Executive mandate. Can we have the technology partners and engineers that we need to develop this? Can we have the credit risk mandates and staff to help us do this? Can we have the marketing and brand permissions to build this?” – Jeremy Takle
Going through this same process over and over again with every bank launch sparked Jeremy’s mission to create a new digital bank. He’s now the co-founder of a new independent start-up, Pennyworth, which believes it can offer better terms to its clients. And, this time the team wanted to shake off all the shackles that come with being tied to a financial megalith. Pennyworth’s aims and target market have been clearly defined from the outset. The bank will focus on UK ‘aspiring affluent’ customers with annual incomes in excess of £40k or liquid assets of over £40k. Jeremy explains why Pennyworth focuses on this specific demographic:
“Most people we spoke to felt that they weren’t getting the most out of their money. And they weren’t sure what to change to make. And particularly the personalization element they were getting from the existing bank simply wasn’t there. And so there’s inherent demand. So what we wanted to do was provide a solution – where we’d help people focus on the goals they’re trying to achieve. Buying things… or preparing to! Buying a car, or saving up for a big event like a wedding, or to buy a property or retire.” – Jeremy Takle
Jeremy believes that in terms of getting the right business model, the key to success isn’t trying to fight a battle that is very hard to win:
“It’s about not trying to win that battle for the current account. With such low switching numbers, what you end up with is a large number of customers not moving their salary mandate, not moving their actual banking, but actually just using it as a prepaid card, a payment vehicle. Therefore you end up with a lot of low-value customers. But for loans, time deposits, instant savings, we can actually price at very attractive rates for the customer: A product that actually once we book it is profitable on a unitary basis because we’re taking a spread between our savings and loans. It’s a much smaller spread than you would get if you were a traditional big bank.” – Jeremy Takle
To find out more about establishing banks within big corporations versus outside of them, listen to our new Banking on Air podcast episode featuring Jeremy Takle od Pennyworth – Available on Apple Podcasts, Breaker, Google Podcasts, Overcast, Pocket Casts, Spotify or here:
Here’s a rundown of this episode:
- 01:40 Jeremy’s background in Barclays
- 05:40 Challenges of building new banks within Barclays
- 13:00 What is Pennyworth & who does it serve?
- 22:30 Jeremy’s experience of changing big corporation career
Jeremy Takle, Co-Founder and CEO of Pennyworth. After building banks all over the world, Jeremy left a career at Barclays to found Pennyworth, a start-up that aims to be the UK’s first digital bank for the aspiring affluent.
‘Banking on Air’ is the official Vacuumlabs podcast covering the challenges, opportunities, perspectives and opinions that matter to you and to our community. In this podcast, we are looking under the hood of the changing face of tech: the acceleration in all things digital, the impact of regulation (and disruption), the need for genuine collaboration – and the specter of competitors old and new as it plays out in fintech and financial services around the world.
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