FinTech Bytes by CMS is a podcast which gives listeners a ‘bite-sized’ overview of topics affecting the FinTech market and provides insights into some of the latest tech, regulatory, market trends and issues affecting innovation in financial services and how they are relevant to FinTechs.
In the podcast's 20th episode, NextWave Consulting Founder and CEO Tony Clark is interviewed by Reeve Boyd, an associate in CMS's Finance Disputes team. Tony and Reeve delve into the significance of digitalisation in driving strategic competitive advantage for fintech companies. They also provide a detailed guide on the steps to take to succeed in a constantly evolving digital landscape.
Listen to the podcast below, or at the CMS website:
Podcast Transcript:
RB: Hello, welcome to all of our wonderful listeners of the CMS FinTech podcast series. My name is Reeve Boyd and I'm an associate in the CMS FinTech Practice Group, and today I'm delighted to say we have a special bumper episode as we are joined by Tony Clark, the founder and CEO of Next Wave, a digital acceleration consultancy in financial services.
Tony has a unique blend of big firm consultancy, startup and enterprise experience across the business, digital and technology sectors within financial services, ESL consulting roles and leading financial institutions and leadership positions at Big Four Boutique and Scale-Up firms, leading to two successful exits and is now building NextWave as a future-focused challenger consultancy in the world of FinTech. Welcome, Tony. Thank you for joining us.
TC: Thanks, Reeve, it's great to be here.
RB: Great. Well in this podcast we'll be discussing how to leverage FinTech exploring topics, including automation, AI data, and I cannot wait to get started. To kick us off, Tony, can you tell me a bit about yourself or what Next Wave does?
TC: Thanks, Reeve, well, as you said, I do have a background in consultancy. I sometimes tell people on our team that I'm the career consultant. I had nine years with Accenture at the very start, I also helped build and sell two successful boutique consultancies.
And, really, I've been going on that transformation and modernisation journey with my clients. All of them have been in financial services and I've been in the sector for 30 years.
What NextWave does is we're working with financial institutions to modernise their businesses through technology, principally. What we mean by that is automation, AI, and data. We're partnered with over 20 FinTech platform technology firms, and we use those solutions to build solutions with our clients.
NextWave is a relatively young company. We launched in January 29, straight into the pandemic, but that was never by design. Ir actually made the first year and a half, first couple of years, very hard – very hard in the real world, very hard for us in starting a micro company during a pandemic and not having access to clients and doing all the things that you need to do when you are building a fledgling business. I'm very pleased to say that we've traded through successfully through those early years, and we're now in four offices. We're in London, we're in Amsterdam, we're in New York, and we're in Milan now. We've got about 80 people, there are 25 clients or so that Next Wave is working with, and we've got nine of the world's largest banks. We have some insurance companies, we have wealth and asset management clients, and we've got some out and out FinTech firms that we work for as well.
We've successfully completed over a hundred projects, so we're making some progress. You know, next Wave is a little unusual as a consulting firm in that our leadership team are practitioners from the front line of major financial institutions – so, typically MD, sometimes C-Suite, with the depth of domain experience. So we've not just got consultants at every grade, we've got folks who can have a peer conversation and have walked in the same shoes as our clients, and I think that's really important.
And the last thing I'd say about Next Wave is really that we're also very proud of the work that we are doing with our One4One programme. So when we designed the business, when I was business planning for this back in late 2019, we put some social enterprise into the model at the beginning and created something called One4One. We created a career start internship for a diverse set of youngsters in tandem with each new client that we take on, and we've put 34 people through that program so far. I met up with some of the alumni quite recently, and they've gone on to great careers at firms like BlackRock and Société Générale, and we've actually hired a couple of them here at NextWave as well.
So there's a bit of recognition coming in the market. We're a Sunday Times 100 company, we're a Best Place to Work, and we've picked up a few other award along the way as well.
So lots going on.
RB: Yeah, definitely lots going on. Right, so as I usually do here, we talked about leveraging to build future-facing businesses. So perhaps tell me, you could tell us a bit about what you see as the digitisation opportunity for financial institutions.
TC: Yes, thank you. Well, every business that we've worked with has a growth and efficiency and a risk and control agenda. It just, the proportions of those goals and objectives vary a little bit depending where they are in their business cycle, which business we're looking at, but fundamentally, it's those three things. And we're operating in a digital world, an increasingly digital world. We've all got used to business to consumer, to app based banking and all the things that we can do on the phones that are in our pockets.
But, digitisation of the enterprise and the corporate, there's still a great opportunity for firms to drive competitive advantage through agility, pace, and efficiency in their own businesses by taking advantage of technology. And we see a huge opportunity for that – the market dynamics that we're in at the moment for those who really get on board with leveraging some of the technology capabilities that are out there.
On the positive side, if you're able to take advantage of a globally networked customer base, and you're able to build business platforms that are driven by data and are automated, you can do things very quickly and you can make connections, see the value in your data, and then you can drive up customer service, productivity, and take new products to market at an unprecedented rate. On the other side of it, in the challenge category if you like, um, we've certainly put regulation, operational resilience, cybersecurity, and now of course, ethical and safe ai.
All of these things I think are challenges that firms really need to focus on and think about. The flip side of the connected marketplace, of course, is that if something goes wrong, the world knows about it almost instantly, and the risk of reputational damage or regulatory censorship is enormous in the connected environment that we're all working with.
So great opportunity, some real risks out there, and also some challenge: How do I get started? How do I navigate? Our plans are also still very much focusing on 'how do I navigate the opportunities'? Which platforms, which technologies should I leverage? What's my strategy? What should be my plan to digitise and where do I get the talent from as well? So finding the right people and the right skills to help them on that journey is a real challenge as well.
It's a rapidly accelerating marketplace. In my 30 years in consulting, I've not seen a pace of evolution quite as rapid as we now have and there are huge opportunities for firms that are on the front foot and I think some real threats for those who aren't paying attention.
RB: Yeah, absolutely. I agree. So, to help your clients frame their opportunity approach, am I correct in saying you've developed a digital acceleration framework? I guess, if so, can you tell us a bit about that?
TC: Yeah, well, we looked across our clients and our market experience at the focus areas and the enablers for successful digitisation, and it was clear that there's a number of common components that are interconnected elements of a framework that any folks should focus on if they want to modernise effectively and build a future facing business. And really that's what we talk to our clients about.
We are building businesses for the next generation – that's Next Wave's mission– and the NextWave five foundation model is designed to provide the framework to enable our clients to do the same thing.
RB: Sure. Well, I guess let's take the SPEED framework from the top then, and let's talk about strategy. Presumably, I guess this is where it all starts. So can you elaborate on this and how strategy sets the direction for businesses?
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TC: Yeah, so our premise with SPEED is that firms should be investing in all five segments. So if you only work in four of those and leave one out then you're not going to get the benefits, but the place you start is strategy. So actually it doesn't matter in what order you do your work on the other four factors – we would advocate that you work on all of them in parallel, but strategy... what is that? You know, definitions vary, but in very simple terms it's a plan to create value. The definition that we like is that it is "a set of coordinated, creative and sustainable actions", so that's your plan to overcome one on more core challenges to create value. And so, that definition actually, and I think when you follow that approach, it drives one to look at the core challenges that are holding a business back from its ultimate vision to win in the market and to reach the target state that business wants to achieve. And, once you start to work back from the core challenges, it becomes relatively straightforward and logical to pull out the actions that will get you there. So that's what we work with our clients on in the strategy domain. It's really about understanding and aligning around it as a single vision of mission and the set of objectives, the principles under underpin that, and then drawing out a target model and a roadmap to get there.
So if you think about mission and a vision, you know, "put a man on the moon" or "a man on Mars" if you follow Elon Musk, that's sort of where it starts, and the business needs to polarise around that mission statement. And then the rest follows. NextWave doesn't always work on the strategy stage. Many of our clients are already have their strategies set. When we get involved, it's probably 20% of the work that we do, but when we are engaged to work on strategy, it's usually to help clients analyse their core challenges and to define their operating plan or their roadmap, if you will. That often involves writing a data strategy or automation strategy, designing an operating model, or perhaps working on the implementation roadmap.
RB: Sure. And I guess, do you have any examples of when NextWave has done any of those?
TC: Well, really, we've delivered all of the things I just said for various clients, but that's, just to pick off one – we've got a reinsurance client who's objectives are to create a scalable business. So, as their business scales, they don't have to layer additional cost and overhead into the operation, and their strategy to get there has been automation. So, we worked with them on their data strategy and on their automation strategy. I'm very pleased to say we're now following through with building some of those automation solutions for the business, taking complex processes off of spreadsheets, off of manual processes, putting them on the system, running them much, much faster. So we can talk about some of that – I know we're gonna talk about platforms and solutioning, but it starts with that clear direction strategy.
RB: Brilliant. And I, I guess you've just headed me off there, but I guess that the second stage on the front – can you tell us a bit about Platforms?
TC: Yes. So, the P in SPEED is Platforms. What do we mean by that? What do we mean by applications? We mean engineering, we mean the systems, the technology that the business is built on – and that's a pretty broad domain space. So some of the enabling technologies that we are looking at, we're working with, include low-code, business, workflow automation platforms, process mining.
We work with platforms like Appian in this space. It, of course, means cloud technology, where much of business is now being conducted, but the migration to cloud – that's a continuing journey for the corporate sector. It's all about data and data platforms. In the data space, we focus on data lineage and we focus on data quality, but we also focus on data analytics and data manipulation.
We use a very powerful data platform called Alteryx for many of the data manipulation analytics engagements, and we also work on decision intelligence. We see decision intelligence with the ability to connect multiple data sources to resolve a single view of activity or risk.
So you can make critical business decisions on those indicators as a really powerful approach. Our technology partner in that space is Quantexa. They, I believe, were the only British tech unicorn in first half of 2023 and they are on a very interesting trajectory. A super powerful tool for entity of data. And then lastly, in the platform space, and definitely not least, AI of course, which comes up in almost every client conversation and every client's initiative that we're now looking at, and the statistics there have sort of gone through the roof clearly since Open AI released ChatGPT, and everything that's happened since. There's some sort of, as I understand it, 70 or 80 AI startups a month.
You know, the mentions on corporate earning calls have increased a hundred fold – you know, there are hundreds of use cases across financial, so it has potential use cases and this is an area where some of them are now in experimentation and analysis mode, and we're working on those with a number of our clients. But AI is everywhere.
RB: Yeah. Thanks, Tony. That's really interesting. I completely agree. Let's turn to the first 'E' in the SPEED framework there. So what do you mean by the "ecosystem dimension"?
TC: So, once you've focused on your applications and the enabling technologies, well, where does the real power live in a connected network marketplace? We're joining them together. So this is where the ecosystem dimension comes in. It's really only from connecting digital services, and digital data sources and processes to drive through end-to-end value chains, to drive through a whole use case end-to-end that the value comes. So that's really what we mean by the ecosystem dimension. And we have it, you know, in our own model. Someone called us a connected consultancy because we have a whole statement of technology alliances, and we actually have some transformational alliances with other consultancies as well. And it's through leveraging the power of that network that we're most able to provide value to our clients. And, in the same way, you'll see that the InsureTechs, the digital wealth managers, the neobanks, they've built their technology stacks, they've built their processes through the power of connection.
If you're onboarded to one of the digital banks, you are very likely to be going through KYC and identity checks that have been insourced from a rate tech or FinTech platform that's been plugged in. You know, we've seen digital lenders who in startup mode actually would've been seen to be in competition with major banks, but they've ended up working as distribution arms for them because they've got access to clients in the market that's actually complimentary to the balance sheet of the major lenders.
So, you see, surprising partnerships and connections, with which, when leveraged, create value for all the players involved.
RB: Great. Well, let's move quickly onto engagement then. I assume that this covers people, but please tell me if I'm wrong.
TC: It does indeed cover people, but it is a lot more than just choosing your team. The engagement dimension includes skills, it includes leadership, it includes culture, and it's crucial for successfully growing and operating any business. And in fact, the rollouts, the communication, the adoption of effective solutions, so the things we were talking about on the platforms, and under ecosystems, the effective rollouts, the business is fundamentally all about positive engagement from the team. So there's an awful lot in the people dimension that is so, so important for firms to focus on. It's also about resilience and effectiveness, and we've all seen coming through Covid and the new hybrid working environments and the pressures we now have in the cost of living environment and the pressures from business –they're on with businesses from all angles, that it's actually resilience in the workplace that is super important. So, in this piece of the model, we also include the coaching, the performance, the resilience strategies that firms might look at, in order to get the best out of their teams, and also to focus on wellness and looking after everyone. The NextWave of values spell PACIFIC.
The 'F' in the middle of Pacific is all about fun, and I actually think it's so important to remember that. And, whilst we're all working very hard and focused on meeting the firm's objectives and goals, we also need to look after the people, have some fun and make sure that people stay well and stay and stay safe. I think that dimension is really what we mean by engagement. And, as it's often overlooked as well, I've noticed that the research houses have actually started writing about digital acceleration now. So, if you look at, Gartner's recent FSS modernisation framework, digital acceleration actually appears in that model. But the model itself really focuses on platform components, and it doesn't actually call out the people dimension, which is an interesting observation. We very much do focus on the people, and there's lots of examples of projects and programmes that we've worked on with clients, which fundamentally would've failed without the focus on the effective engagement of the team.
RB: Yeah. Thanks, Tony. I mean, I, I echo all of that. And, turning to the final letter in SPEED framework, I assume this is an obvious answer, but how important do you think data is, and I guess will be from FinTech firms going forward?
Yeah, well, data is critical. It's the fuel of business processes – sourcing that data, governing that data, enhancing that data and leveraging it to drive intelligence decision making and business value.
So, the things we were talking about a few minutes ago, that decision intelligence, those data driven processes, obviously, data is a vital ingredient. It's only become more important, of course, in the last year because of the opportunity for scale AI in the enterprise, and as we've all been coming up the curve, the learning curve on AI in the last year or so. If you're going to start using the language models and the opportunities for machine learning and AI, then the data has to be available to train the models, has to be available to drive the models.
Those firms who've invested early in building accessible data sources, in building and capturing, as one of my clients used to call it, the 'data exhaust' that comes out of their business processes and leveraging that, making that available now to drive their AI applications and operations. Those firms are the ones who, who are gonna be able to stay at the front of the pack. I think it's no longer just about data compliance in the regulatory space, you know, regulations like PCBS 10 years ago started putting critical data elements as a thing on the board agenda, and some had execs talking about data elements, which I think was something that we didn't really see before that. But winding forward, I think now data and that fabric of that data across the enterprise is in everyone's lexicon, it's in everyone's agenda, and we see it pulling through into all the solutions and applications that firms are now investing in and building.
RB: Yeah, I completely agree. So I guess we've covered a lot today just looking at just the speed framework alone. So, thank you Tony for that. I guess, moving slightly away from the framework for a second, and the final question from you. I wanted to take the opportunity to ask you, in your opinion, what is or will be the biggest challenge for UK financial institutions over the next couple of years?
TC: Yeah, thank you. That's an interesting one. There's a lot to consider. We would always say find some trusted advisors to help you navigate all of this, because there's lots of different parts that businesses can take to drive their competitive advantage in the space, and there's lots of, right back to the top of the conversation, lots of core challenges that we all need to plan for and navigate.
But, I'd say probably the biggest challenge is how to leverage AI to stay relevant and compete in a safe and a responsible way. You know, it does feel somewhat different to previous hype cycles – AI's here and AI's here to stay. I mean, we've all had sort of various analogies. I quite like the one that it's gonna be like electricity for everyone going forward, you know, if we switch and there it is, and we're already starting to see AI, I mean, in these meetings, these calls, we're already seeing AI bots that can do transcriptions, and we've got synthetic avatars on the NextWave website that present some of our content. There are little niche applications finding their way into business as usual on every level, and now, larger solutions coming to market as well (e.g. AI driven, anti-money laundering solutions, AI driven surveillance). It's gonna be short hop before we're running large parts of operations on AI driven processes. How do you do that so that you can compete against the firms that are rolling out those sort those sort of features and capabilities, and how do you do it in a safe and responsible way? And it's a different conversation. There's a whole thesis around where the machines are going to go and how smart they're going to get and who they're learning from and whether they're going to behave in a responsible way. But those guide rails and risks, for the business, are something that we're all really going to have to focus on.
RB: Yeah, absolutely. No, I agree and, and just thank you, Tony. I think this episode has been really insightful, certainly for me, and I hope for our listeners also. So, I guess to wrap up, let's try to put everything we've discussed in simpler terms.
From what I view, for financial institutions, the rule book is evolving and it's crucial to play by the new digital rules while keeping a close eye on regulation. And Tony, what you'd be describing as the framework, I've be thinking of a simple analogy to help your business. Apologies if I botch it for everyone listening, but, picture this, like driving through changing terrains.
You need a clear map, which is your strategy, a reliable vehicle, which is your platforms. You have connections with fellow travellers or your ecosystems, a positive vibe among your road trip buddies, which is your engagement. And ,most importantly, you need a well-maintained GPS across, which can be data to see correctly. You've gotta pay attention to the road signs, which is your regulations skill at your driving squad, and get ready for a smoother ride. Remember, it's not just about reaching the destination, but it's about enjoying the journey while staying on the right side of the road.
Tony, how do you think that did?
TC: I love that one. I've not heard that one before, but I really like the analogy. So, we're, we're enjoying the ride. I'm very pleased to be collaborating with CMS on the show today and we are here to help our clients have a successful journey as well.
RB: Brilliant. Thank you very much, Tony. It was a pleasure to have you with us and thanks everybody for listening. We hope you enjoyed our interview with Tony Clark from NextWave. If you want any further details around this topic or any other points we've discussed specifically in this podcast, then you can reach out to the guest speakers or contact me, and my details are linked below. We also frequently publish thought leadership on this area, or, alternatively, you can visit our FinTech webpage and Twitter page, which is in the link below. Thanks everybody for listening and take care.
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