Fintech Merits the Hype: Azimo CEO on the Quest to Change the Face of Consumer Financial Services
By Laura Tiebert
There’s nothing quite as satisfying as being in an industry that is not only the flavour of the month, but flavour of the year.
That’s how Michael Kent, CEO of London-based online money transfer company Azimo, describes the increasingly high profile of the Fintech industry.
“We get a lot of attention as an industry,” he says, adding that he believes that the excitement around Fintech is much more than hype.
“What happened to retail with ecommerce, what happened to travel with Kayak or Expedia, has been much slower to reach the financial services sector,” he says, adding that change that would create better outcomes via technical solutions in the consumer-facing part of the financial services sector has been especially slow. “Fundamentally, it’s right that people are excited about it (Fintech),” he says.
Azimo, which serves both consumers and businesses, launched in 2012, but the company isn’t Kent’s first foray into the industry. In 2004, he launched Small World Financial Services Group, a consumer financial services business. Kent grew the multi-billion-dollar company to become Europe’s largest offline money transfer provider and a top-ten player globally.
While running Small World Financial Services, the company’s research unearthed a stunning fact: More than 30 percent of people say they are scared of money.
“There’s a lot of stuff around money that’s stressful,” Kent says. “While tech can’t solve all of it, giving people more control and cheaper, more suitable financial services is pretty interesting. If you can use technology to make less people scared of money, that’s an exciting place to be.”
The idea for Azimo was born when Kent and his team noticed a marked difference in customer behaviour as smartphones took off in popularity. They observed people retail money transfer locations sending money home while simultaneously using their smartphones to Skype to let family or friends know money was on the way. Kent was aware that digital players like Xoom were starting to do well. He and his team spotted the great Fintech revolution of the New Millennium at its genesis, and decided to take the plunge.
Thus it was that Azimo, a word that means “to lend a hand” in Swahili, was created. With the launch of Azimo, they found themselves swimming in an environment that was equal parts fascinating and difficult.
“Our business lives at the intersection of money and family,” Kent says. “Think back to your own life – it seems like any time you had an argument, it was about one or two of these things. Most customers are sending to family members and it’s a loaded transaction. Our goal became to make that transaction easy, fast and transparent.”
Although money transfer can be a business fraught with emotion, it’s surprising to hear what Kent calls the toughest part of starting Azimo.
“Every day is tough,” he acknowledges, “but the hard bit was transitioning from a traditional business to a technology business. I didn’t know how to build great consumer tech.”
Software has evolved rapidly over the past ten years, Kent says, and it took a while to assemble the right team that could build great software. Even though Azimo’s headquarters is in London, a Fintech hotspot that attracts a good amount of talent, hiring people was challenging. Kent says Azimo was competing with the likes of Google, Facebook, Amazon and Netflix – huge companies that are able to pay software engineers high salaries and provide top-of-the-line perks. So, Kent turned to the strategy of capturing the imagination of potential employees with the prospect of being part of a historic effort to revolutionise financial services, which he calls “the great Fintech revolution.” It worked, and in the process of hiring a team, he noticed that technology had turned traditional corporate hierarchy on its nose.
“Usually, the person in the room that knows the most is the oldest one,” Kent says of company meetings. “The interesting thing about technology is that the youngest person in the organisation often knows the most.”
In the year after founding Azimo, while still working to hire a team, Kent faced a crisis that put the company’s existence in jeopardy. The partner organisation that Azimo had contracted with to do all of their termination globally decided to end the contract, with three months’ notice.
“Those guys became worried we were going to cannibalise their business,” Kent remembers. “I began flying around world signing partners, and I brought a couple tech guys with me, who would plug in the new partners.” On the last day of the three-month period, Kent’s team integrated the final payor hours after the connection was cut by the original partner.
That crisis averted, the business began to grow. Kent says he avoided falling victim to the common syndrome known as “founderitis” (a tongue-in-cheek term for the inability of a company’s founder to let go of the myriad tasks involved in running a company, as it grows) by taking on a second role outside of Azimo. He began to found and invest in consumer-focused banks and financial services businesses, including CorporatePay, Curve, YoYo Wallet and ClarityFX.
“I push people hard and have high standards but I’ve had to learn to trust people,” Kent says. “I now have a management team who does everything better than I do. Azimo takes up 90 percent of my brain space but through my investment portfolio, I can get fresh ideas and see other people and how they’re scaling a business from small to very large.”
In 2017, Kent watched with pride as Azimo’s newly launched customer referral program “exploded,” he says, adding, “Today, 30 percent of our new customers every month are invited by friends, giving us a net promoter score of 60, much ahead of most other financial services brands.”
With that net promoter score, Kent knew he’d created a product that people really liked and were willing to share with others. The company had created not only customers, but fans.
Today, Azimo is a unique player in the industry, executing transactions from $1 million in size, down to $5.
“We don’t have a typical customer,” Kent says. “When you have a retail location, as in a traditional business like Moneygram, that dictates what you’re selling and who you’re selling to.”
But when you have a digital experience like Azimo does, you can market to anyone, he asserts. Kent says he views Western Union as his competitor in emerging markets, and the competitors for the transactions he calls “north-to-north,” (for example, from the U.K. to the U.S.) are the banks.
Banking as an industry isn’t going anywhere, Kent says, “but there will be winners and losers in digitisation.”
He cites ING Bank as one that has been successful implementing app-based banking, with high customer acquisition and satisfaction scores. But others haven’t made it easy for consumers, and to make matters worse, the financial crisis of 2008, which was caused by the financial services industry, turned public opinion against banks.
“It’s a perfect storm of people not liking banks and banks being slow to invest and not being good at making consumer-focused technology. They are protective of revenue streams and content with the status quo,” Kent says. The term “supernormal profits,” comes to mind, he says, meaning a situation when people are making to make more money than they deserve to make.
“The great hope is that technology will allow people to compete harder and that will enable customer outcomes to be better,” he says.
As Kent reflects on the ten years he’s spent in the Fintech industry, he cites his peers as one of the reasons he enjoys his work.
“One of the reasons I’ve enjoyed working in this industry is most of the people running these companies are pretty nice guys and girls,” he says. “They are fun people to be with – they’re building businesses in a difficult sector but enjoying it. They are from all over the world, and they are very generous with experience, time and stories. We keep in touch – we fight hard competitively, but I have lots of friends in the industry.”
Contact with industry practitioners is one reason Kent is involved with IAMTN. It’s not an easy industry, Kent says, and it can be maligned due to the issues of money laundering and the level of risk, so “it’s important for us to tell positive stories about the impact of what we do in emerging markets,” he says, something that IAMTN plays a key role in doing.
“IAMTN is a forum of people who get together and talk about the challenges and the great things and how we tackle them,” he says. “I always look forward to their events.”