Industry Insights: Fintech

With Natasha Malhotra COO at Cofndrs.

In the latest instalment of our Industry Insights series, we spoke to Natasha Malhotra, COO at the purpose-led fintech platform — Cofndrs, about their journey so far, financing in the sustainability and green economy space, why competition is positive and her recent introduction to the world of gin!

Rupert: To kick things off, can you please introduce yourself?

Natasha: My name is Natasha Malhotra and I’m a co-founder of a purpose-led platform company called Cofndrs. Before starting Cofndrs, my business partner and I had worked together for over ten years, both in the financial services sector. My particular focus was on regulation and emerging technologies which entailed exploring artificial intelligence in the finance sector. My role now at Cofndrs involves overseeing the operations of the company, which for me is implementing strategy, being responsible for the governance of the business and effectively growing the business. I tend to be a jack of all trades!

Rupert: So you wear the most hats in the business?

Natasha: I do wear the most hats! *laughs*

We’re still a fairly small business, we launched 3 years ago and for the first 24 months we’ve been focused on building the platform, back-end technology and really understanding and refining our proposition.

Rupert: And you come under the sector umbrella of Fintech?

Natasha: Yes, although our platform is a real innovation because we enable brands not only to raise financing but also to accelerate their customer engagement and acquisition, enhance their branding, and also enable innovative marketing, sales and new product development. But yes, fundamentally we are a fintech platform.

Rupert: Great, so what kind of tools do you use in your role? (I’m aware this may be a long answer considering the breadth of your role)

Natasha: We use quite a few off the shelf tools, which we then customise to best suit our business objectives.

Although we have a vision and are innovating with new technology and a new platform, I would say that in terms of how we do our deployment work and running the business from day to day, we always focus the tools around the key financial milestones that we want to achieve. So daily we use Slack, Microsoft Teams, Trello, Miro, Confluence, G-Suite. I would say G-Suite is the one I can’t live without, it’s brilliant, it has so many different functions and it’s so easy to share and collaborate. This is something that has been so key to use over the last 10–12 months of business due to Covid and remote working.

Rupert: So when you spoke about key financial milestones, are you referring to the revenue of the business or fundraising, or..?

Natasha: So the first phase was really about raising the initial seed investment, and now that key milestone has been achieved. Now it is ensuring that the platform meets our client's needs and helps them to achieve their business objectives, which will ultimately be measured by our revenue performance. Coming out from the finance sector, having worked with large corporates, what we didn’t want to do was spend lots of resources and money trying to build a platform that wasn’t going to be what our customer and target audience wanted. We’ve always managed that process against what we think the marketplace is and how much impact we think we can achieve as a business.

A lot of the time in the beginning when we were trying to innovate the technology, it was really understanding what our clients would want and what would be successful. Quite often I find with technology businesses the tech innovation is looking for a problem to solve. We’ve structured it in a slightly different manner, it’s more client and commercially focused.

Rupert: And when you’re talking about your clients, you’re talking about the businesses looking to raise finance on your platform?

Natasha: Exactly, yes.

Rupert: So how important is strategy, technology and design to the success of the business, and how do you balance those three things?

Natasha: I would say they’re all equally important. You need to be agile with your strategy, and you need to be constantly weighing up all these things — technology, strategy, design and operational aspects. There are certain moments when you could be taking the innovation/technology in one direction and there could be real constraints within that which then change the direction of the strategy. I would always say nothing is set in stone and never be fearful of pivoting. For us, certainly from an ops point of view, I am always trying to balance all 3 of those drivers and making sure that they’re working in harmony. It doesn’t work out that way all the time, but if there are constraints in the technology that will always impact the strategy of the business.

For us over the last 3 years, those moments of failure whether they are in the technology or the strategy, rather than being a hindrance have actually helped strengthen the business. At the end of the day, it focuses us and makes sure the product we’re creating is right for the area we’re launching the business in.

For us over the last 3 years, those moments of failure whether they are in the technology or the strategy, rather than being a hindrance have actually helped strengthen the business.

Rupert: Yes I think failing occasionally can be beneficial in the longer term. I’ve read numerous articles about how important it is to learn from failure and to build back up to success from these experiences.

Natasha: Yes, and the financial rigour behind that has been really important for us as a business. So really managing the financing against revenue targets that we think we can reach. It’s also been important to balance this, often you can get really excited about a technology but you really have to weigh this up with the cost of sales and the revenue you can generate for a company.

I think that has also helped us as a business keep the budgets lean, so when there is a failure it hasn’t resulted in huge amounts of financial loss for us as a business, which I think is one of the major challenges many start-ups face. This again is why you have to constantly reassess those aspects of your business.

Rupert: From my knowledge of your business over the last couple of years, you’ve been very astute at bringing the right people on at the right time.

Natasha: Yes I think that’s from years in working in the banking sector, you’d see innovation departments go on a frenzy of hiring people and then 6–8 months later realise they’ve made a mistake. And that’s just because they haven’t really tested the proposition, it will be off the back of an idea or a vision. So that’s something we’ve been really conservative about.

I think coming from a risk and regulatory environment has made my approach to these three disciplines very risk-averse. So that’s why there is always a financial balancing act against the strategy and the tech innovation.

Rupert: That makes sense! Especially when you see other businesses not succeeding, having your foundations properly laid in that respect definitely increases your chances of success.

So would you say that your competitors have a similar approach?

Natasha: We’ve done quite a lot of analysis of the market and we don’t actually have direct competitors, we have some very small businesses like us that are doing an element of what we do and then we have much larger global brands that do aspects of what we do.

In all honesty, I think we looked at all of those, regardless of their standing, to try and learn the lessons from them. We’ve found that the key is being adaptable and being able to pivot, we’re not always going to get those choices right, but we will stay true to our purpose and values.

We’re not always going to get those choices right, but we will stay true to our purpose and values.

There are some great case studies out there from much larger businesses about their failures and the problems that can cascade from those failures. We work in a hub with other small startups, all doing completely different things to what we do. Watching, learning and understanding their challenges and where perhaps they got their strategy slightly wrong or spent slightly too much on technology and how they’re managing that is really helpful. I don’t think you can mitigate everything, all businesses and start-ups will get something wrong, but we tend to look at our competitors from that perspective.

Rupert: Yes, I think one of the strengths of you guys is where you play. Because you’re looking to help clients with very specific types of projects which, to put it simply, is massively important for humanity!

Natasha: Yes I mean what we’re trying to do is really inspiring, and that was always the main driver of the business, it wasn’t profit, it was seeing that the green economy and sustainability is an underfinanced market. And there are reasons for that, it’s not that people don’t believe in it or because there isn’t that appetite for change. I think it’s because it’s so new and therefore high risk. The way those businesses operate it’s really difficult for traditional models to understand that and how to support those businesses with growth.

I think also there is a marked change in consumer behaviour and how they weigh up brands and businesses and what they want to support, which makes it an exciting space for us. It enables us to really create something unique.

Rupert: Also the hope is that you’ll be ahead of the curve and no one else will be doing exactly what you’re doing — which is great!

Natasha: As a business, we don’t see all of our competitors as direct competitors, we look to partner with them. Trying to build a solution in-house that does everything and directly challenges all the competitors we come into contact with would cost millions. We look at them and ask — could they complement what we’re trying to do? Or could we complement what they’re doing?

We know that eventually there will be direct competitors but we actually see that as a positive thing because it means the marketplace is growing. And for us, being known as a market setter and market leader in the future is success in our eyes. That is one of the key goals we’re trying to achieve.

Rupert: You touched on innovation earlier. One thing I’d like to know, is how easy it is in your business to innovate in a new area?

I’d say Cofndrs has been born out of innovation and I think it’s one of the core strengths of the business.

Natasha: I’d say Cofndrs has been born out of innovation and I think it’s one of the core strengths of the business. I think this could also be a challenge for us in the future if the business becomes successful then you also have to strike a balance with developing what works for the business, but not constantly innovating and changing to its detriment.

Rupert: Yes, you don’t want to dilute your proposition or your brand. I would assume you don’t have intentions to be the next Virgin? *laughs*

Natasha: Exactly!

I think we’re very firm in that we don’t want to do everything and be everything. So I think that will be a challenge for us but in terms of innovation that has been the business and its grassroots. We kind of like to look at the big picture and then break it down into clear achievable objectives. There are some very practical problems and solutions that we’re trying to resolve at the moment. But right now, at the size that we are, it’s very easy to innovate. Open Source code and technology has really enabled us as a business to become quite innovative. If we were trying to do this 10 or 15 years ago I don’t think it would be anywhere as easy. I think the way technology works now it’s easy for companies like us to be quite agile and innovate swiftly.

Rupert: Yes it would have been much more expensive and would have taken a lot more time!

Natasha: Exactly! We can do that with a low-cost base quite quickly.

Rupert: In relation to the agility of the business, it sounds like because of the way technology has advanced, it’s not actually just a benefit to you, but of benefit to your whole sector to be agile and able to change direction rapidly when required.

History has always shown that in moments of crisis, especially global and economic crises that the biggest innovations happen.

Natasha: Absolutely, and I think it’s actually across all sectors, which is the exciting thing about innovation, especially in the current environment. History has always shown that in moments of crisis, especially global and economic crises that the biggest innovations happen.

I think with the development of technology and how it’s used and implemented, this has certainly fuelled innovation in the last 4–5 years and it’s a benefit to all businesses and sectors.

Rupert: Yes, there are extremes of innovation aren’t there. I mean when it comes to R&D there are huge companies that invest huge amounts into it, and on the other side, there are individuals who just come up with great ideas!

In relation to Fintech and financial services, where do you see that sector going in the next few years, or if you’d prefer more the funding sub-category within that?

Natasha: I’ll break it down into two areas if I may, one is the financing but also what’s happening in the consumer world and how this is impacting the market space that we’re in.

So on the financing side, at the moment interest rates globally are extremely low and it’s cheap to get financing. But it’s not as easy when you really get down to grassroots, whether it is a small or medium to large size company, actually accessing that financing is not particularly straightforward at the moment. That is, I suspect, to do with legacy models, and regulation and how that is measured — the fact that businesses now have to adapt, they’re operating in very different environments and sales models have changed. If I take that into the consumer markets, we can see the movement in so many social initiatives, a classic example is the Black Lives Matter movement and how people are now weighing up brands and using their voting rights, choosing where they want to spend their money. But also that digital connection.

I think financing is going to be quite difficult for small and medium businesses for the next 4–5 years and I think they’re looking for alternative methods to raise money. But when you get into it, financing really needs to be looked at coupled with the changing behaviour of consumers. So how you bring those two different behaviours together, to make that work for businesses is also important. It’s all very well raising finance but you need the customer to grow your business, you need the transactions to happen, and that’s a specific problem we’re trying to resolve on the platform.

It’s all very well raising finance but you need the customer to grow your business, you need the transactions to happen, and that’s a specific problem we’re trying to resolve on the platform.

Rupert: Do you think the biggest changes in the sector will come from changes in legislation, self-regulation, changes in consumer behaviour, or all of the above?

Natasha: I don’t think there is going to be regulation change, if that happens I can’t see it happening for another decade. I think where the disconnect is now is with what technology is available today and how that can be harnessed.

For more traditional financial institutions that do provide financing, it’s really quite difficult. Whilst they’re adopting technology they have legacy systems, it will take 10–15 years to recalibrate their systems and how they work. The way it works is not the issue and the measures in place are right, but I think one of the things that we’ve done is worked with regulators when building the platform to understand how technology can be used efficiently to resolve some of those issues. So I think what the regulators like about our platform is the very definite paper trail, so if any nefarious activities were happening on our platform it’s very easy to identify those patterns of behaviour and there are lots of measures that can be done to stop it. This is one of the challenges for financial institutions, how can you use that technology in a very large environment.

Also in the sustainability and green economy, there is so much innovation, how these businesses operate does not sit in the same manner as to how it would in financial institutions. These businesses can take a very long time to start paying dividends on revenue, the environments can be quite risky from a technology perspective. But we know that consumers want them, they want to see the change and they want to support these businesses, they look at things from a very different lens to how traditional financial institutions may.

Also — not every business can be giving away equity, which tends to be a traditional way of giving financing but that is not appropriate for every business all the time and this is one of the key challenges that we’re trying to address through our platform.

Rupert: You’ve touched on it in what you’ve said, but more specifically what new initiatives and drivers are coming from your customers and competitors?

Natasha: For consumer-based businesses, they need to be digitally connected to their consumers. You could see before, but Covid-19 has accelerated that need for businesses — you can see the impact in terms of the high street and certain brands that struggled to adapt to that. One of the key trends that consumer-based businesses need to adapt to quite quickly is the need for more personal and direct relationships with consumers, I almost take this back to the Victorian times. The UK was one of the leaders in retail, consumerism and spending and at that time there were only a handful of leading department stores, and they really knew your customer’s preferences and wants. There is so much social media now and digital interaction that there is not that personalisation and I think customers are becoming almost fatigued by that. It’s more the brands that consumers feel like they can co-collaborate with, support and have a more active role in their product innovation, I think this is going to be the trend that we’re going to see. This is certainly something we’re trying to resolve on our platform going forward…There are some good examples, brands that have done it very well and have grown immensely because they have that personal connection with their consumers.

Rupert: Yes I agree, I think personalisation is such an obvious thing to do and it can’t be that difficult.

Natasha: Exactly, Amazon does it very well, it knows your preferences and what you want. This is different to pushing products they think you like, to really having a more personal relationship with your customer. It’s not just preferences but knowing your customers on a deeper level.

Going back to my Victorian example — retailers would know that Miss Smith would come in every Thursday and buy a particular item, they’d also know details about her life and her family. It’s being able to have that more private communication channel. What we’re trying to do is build in those aspects but using technology, and in a much wiser manner. That’s where I think we’re creating that sea change and trying to push the innovation button. We do recognise that people really do support brands that they believe in, that appeal to their values and ethical beliefs. It’s how do you have that more personal relationship rather than just knowing your consumer data and profile — which is what Amazon do really well but do they understand your values, beliefs and why you’re passionate about that company. Businesses would be much more successful if consumers were guiding them to understand the type of products or services that they want. But it’s how you get that interaction with your customers.

Rupert: So I’ve got to ask the typical Covid question — so what impact has Covid had on your business and industry,? And do you see any opportunities coming out at the end of it?

Natasha: Covid has created a lot of volatility in consumer markets, which has affected our client base and the needs of our businesses. For us, becoming more digital active is what we’ve seen for our business and our clients. But also the changing behaviours of their consumers. I think more ethically minded brands, Covid has really shone a light on consumer thought behaviours, before where it may have been the price or quality that impact consumer decisions, it’s now evident that consumers are looking for a lot more out of the brands they want to support.

Rupert: Great. So I’ve got another question for you, which is — what do you like about working with Conjure?

Natasha: Well we’ve had a relationship for about 3 years now, or almost that now and you’ve kind of seen us from inception to taking that through and physically building the platform.

For us it’s been fantastic working with you and having that long term relationship, we’ve kept in contact from just being an idea to this exciting phase of actually delivering on the concept. What we do like is your approach, and it’s different it’s working in that supportive manner. You haven’t seen us as just a commercial business, you’ve taken a real deep interest in what we’re trying to do. Also, we’ve learnt things from you along the way and that’s been really inspiring. We’ve enjoyed the professional engagement, you’ve almost treated us like (and this may seem a bit cheesy) a family member.

Rupert: Like a Co-founder?!

Natasha: Yes like a Co-founder *laughs*. Rather than a business you just like for their concept and idea. So for us, that has been phenomenal and we’ve really enjoyed partnering with you. It nicely plays into our ethos where we see businesses as partners, even our clients and competitors we like to see as partners. We can see that you also have that shared synergy as a driver in your business.

Rupert: Yes we like to see our business relationships as long term, it’s much more effective.

Now I’m going to ask you a couple of ludicrous questions. So firstly, what’s your favourite alcoholic beverage?

Natasha: I’m really into gin at the moment. I had quite an immature palette when it comes to alcohol for a long time, this is quite embarrassing — but I did for a long time enjoy a Malibu and Coke. But I recently got introduced to the world of Gin, so I’m starting to learn the difference between botanical and floral Gins. I’m going through a bit of a discovery phase with it at the moment.

Rupert: Yes, what I really like about Gin is the diversity of it.

By pure coincidence, I was having a discussion with my neighbour yesterday who had been given a bottle of Malibu for a Christmas party cocktail making thing and she literally couldn’t give it away!

The only other thing I was going to ask is, what would be your last meal on earth?

Natasha: I should be this sophisticated person, but I just pulled out Malibu and coke and now I’m going to admit that my last meal would be bangers and mash with a great gravy!

Rupert: That is one of my favourites! And I’d add beans just to be extra classy.

Natasha: *laughs* Exactly! It’s just one of those school dinner type foods with which you just associate comfort.

Rupert: Yes and there are levels to bangers and mash too because if I remember rightly mine at schools was powdered!

Well, Natasha, thank you very much for that, I appreciate your time today.

Natasha: Thank you for having me!