David Lee raps with the ‘paranoid’ disruptors behind the wrap platform offering brilliant outcomes for financial services advisors.
Nucleus Financial is now 13 years old and as it moves into those difficult teenage years, it faces a conundrum: how can it retain the challenging, problem-solving and open culture of a start-up now that it is a maturing business listed on the Alternative Investment Market (AIM) with a platform managing £14.8 billion in funds?
It’s not a question which has escaped Nucleus founder and chief executive David Ferguson, also Chair of FinTech Scotland and one of the sector’s elder statesmen.
He cites a famous quote by Andy Grove, former CEO of Intel, about the need to constantly evolve and improve: “Grove said ‘Success breeds complacency. Complacency breeds failure. Only the paranoid survive.’ That’s why we live in a permanent state of paranoia at Nucleus!”
Andrew Smith, chief technology officer at the firm, makes a similar point: “We have to re-imagine ourselves. We have to have our own disruption and challenges, and to be able – on an ongoing basis – to disrupt ourselves.”
So how does Nucleus – a “wrap platform, supporting financial advisors in creating brilliant client outcomes” – evolve and retain a fresh and forward-looking culture?
Data science is core to our business and as the industry becomes more about data and less about traditional financial services, we need lots more data scientists,Andrew Smith
“It’s about recruiting new people and allowing them to shape the culture of the organisation from the bottom up,” says Ferguson. “We are – in a sense – an established company, but we want our younger people to create a culture for themselves.
“One recent arrival has really shaken up her team – in a very good way – and we have developed a very strong data science team. Data is so crucial to our business and the team is the go-to place for anyone in Nucleus who wants to know anything about data.”
Smith adds that this is part of a “non-departmental” culture where business people work with tech staff to “mix it up”. The 200 or so people employed by Nucleus fill more than 100 specific jobs and the focus is very much on creating an environment that stimulates new ideas, with an emphasis on what benefits the customer.
“We are trying – and so is FinTech Scotland – to get a whole new generation excited about financial services,” says Ferguson. “Younger people are more interested because of the technology aspect and we recruit now from a much wider base than financial services has done.
“However, while we might be seen as a more exciting place to work in terms of technology than traditional companies, it’s harder to attract tech talent against the likes of Skyscanner, FanDuel and Rockstar North. We can’t say ‘Do you want to work on Grand Theft Auto or sell pension products’?”
But it is not just the lure of apparently ‘sexier’ businesses that makes recruitment tough; attracting tech talent is a problem across Scotland, and Nucleus is no exception.
“It is still a struggle and has got worse with Brexit,” says Ferguson. “Our tech team is the most geographically and ethnically diverse in the business, and we have recruited lots of people from continental Europe. You cannot solve that problem overnight.”
Rather than hand-wringing, there has been considerable strategic long-term thinking about recruitment for Scotland’s jobs of the future.
One notable example is the University of Edinburgh’s ambition to produce tens of thousands of new data scientists over the next ten to 15 years.
“Data science is core to our business and as the industry becomes more about data and less about traditional financial services, we need lots more data scientists,” says Smith.
With the Edinburgh and South East Scotland City Deal putting data at the heart of its mission, Ferguson is optimistic for the fintech sector as a whole.
“Data can provide a real competitive advantage for fintech in Edinburgh and Scotland,” he insists. “We have the private and public sector working very well together, but we also have the academic lens on fintech, providing that third leg.”
However, as data flows like the new oil, another conundrum emerges. Ferguson explains: “As data becomes more important and jobs change, you are competing for data scientists against lots of different industries – not just across financial services.”
Despite the range of challenges, Nucleus has recruited – and retained – staff well and is constantly described as an excellent place to work. Why?
“When people join us, they usually cite the culture at Nucleus,” says Ferguson. “They want to work here to solve problems, find solutions and make things better for the customer.
“We stress that we do not know it all at senior level and we encourage challenge. We give people freedom and autonomy, but that can be double-edged – one person’s freedom is another person’s lack of a safety net.”
In some ways, Nucleus has had to become a little more conventional, as a result of the regulatory and reporting requirements of its AIM listing, which happened last July. Statutory quarterly reporting means that the firm’s staff are not updated as regularly as they used to be on the figures.
However, when they have been brought up to date, the news has been positive; 2018 numbers show that earnings were up 33 per cent to £8.3 million, and profits rose 15.7 per cent to £4.8m. The tally of active participants on the platform saw a 6 per cent increase to 1,396 users, covering 93,715 clients – a rise of 7 per cent.
Ferguson is sanguine about the need to comply with tighter rules now that Nucleus is on AIM. He says: “If you are looking after nearly £15 billion of people’s money, you cannot screw that up. We are working hard to balance regulatory and commercial responsibility with being an agile business that is always open to new ideas.
“Listing on the AIM has maybe made us think in more detail about prioritisation, but lots of the governance aspects were already in place. We have always had an institutional shareholder and a traditional, strong board structure.
“The main thing was retaining our core purpose and we have done that. I want Nucleus to be as successful as it can be without compromising our principles and I’m confident we have done that – I feel we have opened the door to the next ten years.”
Smith is equally positive and still feels the company has retained the excitement and passion of a start-up. He concludes: “I think we are still at the early stages of our journey; I’m more invigorated about where we are now, as we try to scale the business, than at any stage of our development.”