Oliver Hughes – The Secret FinTech Giant – [Founder’s Field Guide, EP.16]

**Patrick O'Shaughnessy** (0:00)
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Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Founder's Field Guide. Founder's Field Guide is a series of conversations with founders, CEOs and operators building great businesses.
I believe we are all builders in our own way and this series is dedicated to stories and lessons from builders of all types. You can find more episodes at investorfieldguide.com.

**SPEAKER_2** (1:46)
Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.
Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (2:11)
My guest today is Oliver Hughes, the CEO of Tinkoff, the leading online commercial bank based in Russia. I found this conversation fascinating and think it will be essential for anyone who wants to understand online financial services or the next generation of fintech. Our conversation touches on how Tinkoff used direct mail campaigns to become the largest online banking provider in Russia, their last mile delivery platform that combines couriers with door-to-door salesmen, and how they built profitability into every aspect of their business. I hope you enjoy my conversation with Oliver Hughes.
So Oliver, I was thinking about an interesting place to begin this conversation. And because people probably have less context around Tinkoff than they normally would with a business that they recognize here in the US, I'd love you to begin by just telling its origin stories, what it does, how it began.

**Oliver Hughes** (2:58)
We started commercial operations back in 2007
Well, there's actually a story to Tinkoff or at least a Tinkoff brand, which is named after Russia's leading entrepreneur, Oleg Tinkoff, so he's a person. If you think Richard Branson in Russia, then that's something akin to Oleg Tinkoff. He's a serial entrepreneur and he had several companies. Immediately prior to the bank, he had a beer business and a restaurant business also called Tinkoff, which he sold. And the process of that sale went in starting what was initially a credit card monoline. So in 2006, 2007, he put the initial team together. We launched in early 2007 So I've been with the organization ever since the beginning, as I've basically just about all of the senior management team, the whole 14, 15 year journey.
We started as a credit card monoline, acquiring customers through direct mail with zero branches, always a cloud-based digital player before the idea of neo banks came along. We built up a business and broke even just before the financial crisis, the global financial crisis in 2008, 2009, weathered that crisis nicely and learned a few things along the way. And then went into rapid growth and actually a little bit of diversification until the Russian crisis, our second crisis in 2014, 2015 So we'd already become quite a large player in credit cards but we'd also started taking deposits online and we'd move all of our business to digital channels and online servicing.
The Russian crisis comes along 2014, 2015
And we also weathered that very nicely remained profitable all the way through. There was a big banking system cleanup and shakeup in Russia and we embarked on a process of diversification. So we realized that we had a large inflow of customers, of applicants. We could generate acquisition flows anywhere in Russia using our online model and offline distribution through our smart career platform which will probably come onto a little bit later. And we decided to go into other product lines. We started building other financial service products such as an SME transactional business, a brokerage business, an online acquiring business, lots of other lending businesses. And then we went beyond finance and into what we call lifestyle services. So some of these lifestyle services we built ourselves. These are beyond the financial services. So we built a virtual mobile operator, an online travel agent, lots of content provision and then started partnering with other service providers who gave us e-commerce. They gave us ticketing and tons of other stuff, which we now make available to our existing customers. We have a large customer base of now 12 million customers in Russia. We make available to them tons of different digital services, including these partner services. In our super app, you can order flowers, book a restaurant table, order a taxi, open a credit card, a debit card, book an airline ticket, whatever. So across virtually the whole digital spectrum of services.