Ajwad Hashim joined Barclays back in 2014, just as the UK started to see digital upstarts like Monzo and Revolut rear their heads. To respond to the emerging competition, Hashim built and led an innovation team within the high street bank.
Starting with just him, the bank eventually put a small amount of funding behind the team’s research in 2016 and ran a proof-of-concept (POC) with Israeli start-up Wave.
“You see just how many start-ups there are operating in a very similar space,” says Hashim
The POC saw Barclays complete one of the world’s first ever trade finance transactions using blockchain technology, a whole year and a half before rival HSBC completed the same feat.
“That really was the spark to the flame, which off the back of that, everyone in the bank wanted to do more POC-type work and suddenly my team received massive amounts of funding to actually do some cool stuff,” Hashim, Barclays’s vice president and head of strategy, innovation and emerging technology, tells FinTech Futures.
One such POC saw the bank build a cryptocurrency in Manchester. Called the ‘Salford City Coin’, it was designed to reward residents for recycling, and inform the council of when bins were full. The council saved on waste management expenditure, local retailers benefited from the rewards which could be spent in their stores, and Barclays benefitted from the payments network it had created.
Another saw Barclaycard – Barclays’ brand for credit cards – sign a deal with American Airlines and launch a Pokemon Go app in JFK Airport. The app hid points around the airport lounge for passengers to find, boosting Barclaycard’s credit card sign-up rate.
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The bank has spun out roughly 15-20 different products since 2016 with start-ups. Asked what he has learnt from being on the buy-side of fintech, Hashim says: “You see just how many start-ups there are operating in a very similar space. And I think a lot of these start-ups tend to focus on the long tail – so the large corporates – and focus on selling to the Barclays and the HSBCs, as opposed to the smaller banks.”
Hashim is taking a similar approach with his own venture, but just in a different sector. His start-up Hotel Manager is looking to create an ecosystem of local vendors, targeting the mid-market hotels which simply do not have the budget or technology teams to build their own apps.
“For us, despite the billions that we have, there’s actually a huge amount of pressure on cost, even for something as small as £10-£15 million,” says Hashim
Asking for a “low-cost” monthly licensing fee, Hashim says the start-up will help connect the dots between hotels and the vendors around them – be that restaurants, retailers, or site-seeing spots – as well as automate processes like check-in and personalise a guest’s trip by capturing data which can inform further stays.
“We’re hoping for revenge travel,” laughs Hashim, acknowledging the current stand-still with regards to travel in many areas of the globe. “Lots of rooms are available from July, so we’re planning towards September as our next hard launch.” Whilst the current crisis has put a pause on the venture, it has helped firm up the start-up’s proposition in a sector which will see now, more than ever before, the need for digital, automated services.
Thinking back to all the start-ups Hashim has been approached by, he says there is a common misconception that going straight to the big banks means “cash windfall”. “For us, despite the billions that we have, there’s actually a huge amount of pressure on cost, even for something as small as £10-£15 million.”
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He also highlights the “double-edged sword” for start-ups approaching big banks like Barclays. “Some of the start-ups and fintechs have done very well out of offering their solution for free for a period, which allows banks to get past that investment barrier and start using the product,” says Hashim.
“But I think it’s also a risk because if a corporate hasn’t paid to do a POC or pilot, they’re less invested in its success. So, it’s kind of a trap. Yes, it gets you in the door faster, but the corporates can turn around and say we don’t really want to do it anymore – even if it’s been successful.”
For big banks, the other persuader besides a free POC is the start-up’s customers
So, start-ups must decide which route they want to take. Hashim advises that those firms whose solutions are “hugely beneficial” will likely progress from a free POC, but those which are only “marginally beneficial” are likely “not enough to inspire people to take it forward” off the back of a free POC. “In that case, it doesn’t work out in favour because you’ve spent money on a POC, and you’ve had no beneficial output in terms of sales,” he explains.
For big banks, the other persuader besides a free POC is the start-up’s customers. If a start-up comes to Barclays with a product that is already used by some of the bank’s customers, then it is more likely to say yes – because the fintech has already done the customer engagement step for the bank.
“It’s an opportunity to build a stronger relationship with that customer, because one of the challenges we have is knowing which of our customers are willing to try a solution that doesn’t perhaps work 100% of the time,” says Hashim.
The VP, who founded a teddy bear start-up at school and then later founded a London marketing firm which he has now sold his stake in, is ready to get back out into the start-up world and exercise the tricks of the trade he has learnt on the buy-side.
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