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I sit down with Oliver Hughes, CEO of Russia’s Tinkoff Bank (LSE: TCS), one of the best fintech companies around the world. Tinkoff went public in the London Stock Exchange in 2013 and has since grown to a $22B market cap with close to 20 million clients. It has also inspired a generation of fintech founders, including David Velez from Nubank.
In this episode, we explore:
Story behind Tinkoff, challenges that led them to pivot, and how they’ve managed to thrive despite three financial crises since inception
“The idea was to build a credit card business in Russia, and then sell after three years. So that was back in 2006/2007. But the world changed just a tad in 2007/2008 due to the global financial crisis. And the long queue of foreign banks who wanted to buy banking assets in Russia, just became a little bit shorter. So we changed our model.”
Tinkoff’s internal innovation machine and a deep dive of Oliver’s thought process to making big decisions and rolling out new products
Global lessons. Tinkoff might be a Russian company, but they are very outward-looking and the management team spends a lot of time analyzing other markets and connecting and learning from fintech and tech leaders all over the world.
Recruit the best. Their strategy is to hire smart people as young as possible before they get anywhere else and get “tainted” with a different corporate culture.
Build a deliberate culture. Oliver is proud of Tinkoff’s flat organization with an entrepreneurial and innovative culture, where employees are encouraged to take small, measurable, and controlled risks that allow them to constantly play around with new products and ideas.
Listen to the client. By analyzing client behavior on the Tinkoff app from 17 million clients, they are able to use the data to drive insights. Additionally, the team spends an awful lot of time analyzing and finding ways to improve customer service.
Focus on the numbers! Not only is Tinkoff a fast-growing company, but they are also very profitable with a 2020 Return on Equity (ROE) of over 40% (for comparison, the US industry average is ~11%). These enviable numbers are the result of tremendous discipline for rolling out new initiatives, where any new product at Tinkoff must meet a 30% ROE hurdle rate to even be considered.
Exciting recent developments and what drove them to expand internationally to Southeast Asia
“We are literally only just starting with tons of growth to come in Russia… but we decided the time is right to start laying the foundations for international expansion. So we want to start in the Philippines... There's all sorts of things that we like about it, we like the consumer, we like the infrastructure, we like the stage of development, we like the competitive environment, and we like the regulatory framework.”
Oliver’s take on the future of fintech.
“A.I. Banking - that's where you are much more intuitive with banking recommendations based on each client’s behavioral profile… move your boring stuff, financial transactions, regular transfers, bill payments into the background, so you don't have to think about it... And then the stuff that drives your endorphins moves out into the forefront of your life. So it's recommendations for travel, what to do with the kids, tips for making the most of your finances, cash backs from partners, loyalty, entertainment, sport, whatever we know you like... that's where we see the next few years.”
And a lot more…
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Full interview --> Spotify | Apple
Emerging Fintech Leaders
Three early-stage fintech companies doing amazing things
Pasito’s ultimate mission is to empower new parents on their financial planning journeys. Parenthood is a huge, life changing transition that requires support, education, and guidance, but too often its financial implications go overlooked. Pasito builds benefits specifically for new parent employees to ensure inclusivity and better equip firms to serve their people. The company will seek to raise its first institutional capital this year and launch its MVP in select US cities. To learn more and see open positions, visit their website!
Founders: Pauline Roteta and Julie Scotland
The Pakistani marketplace and digital ledger behind the country’s largest ever ($30 million) Series A round is capitalizing on the recent success of its South Asian fintech neighbors. Bazaar’s digital B2B design connects merchants with a much wider swath of inventories than they’ve previously had access to. Being a first mover in a highly populous country with plenty of room for technological advancement has positioned the company strategically to command a large share of Pakistan’s lucrative retail market. With seasoned investors like Defy.VC and Acrew Capital backing them, it’s no surprise that Bazaar is waking many up to the potential of the South Asian market. And, they’re hiring!
Founders: Hamza Jawaid and Saad Jangda
Nigeria’s first SEC license went to this rocketship of an investment platform! Chaka is all about lowering barriers to entry and giving Nigerians borderless access to foreign-denominated assets, while also allowing outsiders to invest into Nigerian capital markets. Their uber-accessible platform is bringing droves of new investors to market, so much so that Chaka is in the process of expanding to Ghana and other West African nations. With an SEC license and pre-seed capital in hand, the company is emerging as a power player in the African fintech ecosystem.
Founder: Tosin Osibodu
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-Thank you for reading!
Miguel Armaza is Host of the 21 Leaders Podcast, Author of the Fintech Leaders Newsletter, and Co-Founder of Gilgamesh Ventures, a seed-stage investment fund focused on fintech in the Americas.
Oliver Hughes, CEO of Russia’s Tinkoff Bank – Scaling to 17 Million Clients, The Future of Banking, and Building a Culture that Encourages Risk-Taking