That's very true and an accurate observation. There is a threat that well financed start ups will have access to the best talent. Nonetheless on the bright side is that nowadays in the current ecosystem you can focus on your small niche and utilise best of breed third party software to support your business. In the example of Oak North, their mission was to build world class credit decisioning software and it made sense to get the best data scientists. For another neobank, maybe their focus will be on customer engagement and thus they need to build software for customer engagement and rely on third party software for their other services. Essentially nowadays the model seems to be that you should only build the software that is adding value to your business model rather than building everything from scratch.
Got it! Makes sense that a combination of financing + target audience drives this decision. Although this may be a common feature in many sectors, the interesting bit here seems to be the relative ease of access to good enough infrastructure to get your business going...find your niche, and you're off to a good start.
Great post! Like you, I’m no techie, but I’m intrigued by the interactions between suggestions (2) build tech. from first principles; (3) rely on existing technology; and (5) build proprietary tech. for sale to other institutions.
What distinguishes companies that can (and want to) build the tech. from scratch from those that buy proprietary tech. produced elsewhere?
For example, you mention OakNorth recruiting from some of the world’s leading tech. Does innovation in this sector (e.g., “going to first principles”) typically require the highest levels of expertise? I worry that this may only be viable for the larger incumbents in traditional sectors or for well-financed start-ups.
That's very true and an accurate observation. There is a threat that well financed start ups will have access to the best talent. Nonetheless on the bright side is that nowadays in the current ecosystem you can focus on your small niche and utilise best of breed third party software to support your business. In the example of Oak North, their mission was to build world class credit decisioning software and it made sense to get the best data scientists. For another neobank, maybe their focus will be on customer engagement and thus they need to build software for customer engagement and rely on third party software for their other services. Essentially nowadays the model seems to be that you should only build the software that is adding value to your business model rather than building everything from scratch.
Got it! Makes sense that a combination of financing + target audience drives this decision. Although this may be a common feature in many sectors, the interesting bit here seems to be the relative ease of access to good enough infrastructure to get your business going...find your niche, and you're off to a good start.
Great post! Like you, I’m no techie, but I’m intrigued by the interactions between suggestions (2) build tech. from first principles; (3) rely on existing technology; and (5) build proprietary tech. for sale to other institutions.
What distinguishes companies that can (and want to) build the tech. from scratch from those that buy proprietary tech. produced elsewhere?
For example, you mention OakNorth recruiting from some of the world’s leading tech. Does innovation in this sector (e.g., “going to first principles”) typically require the highest levels of expertise? I worry that this may only be viable for the larger incumbents in traditional sectors or for well-financed start-ups.