How to digitise your operational risk
In this episode, Paul Ford, the founder and CEO of Acin, shares his background, starting from his military career to becoming a chief operating officer in banks. He also discusses how he identified the opportunity to start his own business and the journey that led to the creation of Acin. Acin is a platform that helps financial institutions digitise their operational risk.
The key moments in this podcast are:
00:02:06 Changing the business model.
00:04:15 A proud and favourite moment.
00:08:03 The importance of people.
00:11:30 Letting go and empowerment.
00:14:20 Constantly changing startup environment.
00:18:23 Efficiency vs. Risk in Contracts.
00:21:42 Delightful conversation with guest.
Welcome to the Tech Story podcast, a place where we interview founders and interesting people in tech. Today, I'm very excited to welcome Paul Ford on the show. Paul is the founder and CEO of Acin, a platform which helps financial institutions digitize their operational risk. Thank you, Paul, for taking the time to be with us. Would you like to share a little background about yourself and Acin?
Brilliant. Well, thank you very much for having me. It's a pleasure to be on the show. Firstly, a little bit about myself. So I started my career in the military. So I was an army officer and engineer, which meant that I used to build things and blow stuff up. Hopefully, I now build things rather than blow stuff up. And then my career has involved consulting and banking. So I was a chief operating officer in a few banks. And then 13 years ago, I left to set up my own business, which was originally a consulting business. And then in 2017 to 2018, I founded Asyn, which is a risk analytics platform for managing operational risk across some of the world's biggest banks.
And what sort of led to starting the company? Did it just happen through consulting that you identified the opportunity? What did the idea come from?
So I started the first business as a consulting business. And the aim was to work with CROs in banks, so chief operating officers. That's what I've done. And it was really so it was called Antura. And Antura meant bandwidth in Spanish. So it was whatever their agenda was by 2016, 2017, all the work we were doing was in operational risk. And then what actually happened was it was very difficult to run a consulting business. You've got to sell all your work every year. It's getting very competitive. And so I took a look and said, actually, we know this market really well, but let's change the business model. So actually, we created Acin as a data and technology solution to the problem, as opposed to doing it on a consulting basis. So that didn't quite happen overnight. And but through a sort of process of R&D and working it out. And I was very familiar with some other business models and businesses in this sector. So there's one particular one called Coalition Greenwich, and they do revenue benchmarking, cost benchmarking, RWA benchmarking for banks. And I knew the founder, in fact, the former CEO is one of our shareholders and advisors. And we've got a few of their team on board now. So that was the kind of concept. And then really just started building that back up from there. And then today we've got 65 people, some of the world's biggest banks as both shareholders and clients.
Congratulations. And changing the business model is always quite daunting. But can be a transformation for the business. And it seems like you found the right one.
So it's kind of painful. But it's one of these things where you've put a lot of blood, sweat and tears into any business, as I'm sure you know. And then when you get to a point and you realise that that has worked, but is no longer going to work going forwards, and you need to find something else. And I remember having this discussion. I talked to lots of people, but I had this discussion with a kind of an advisor who I knew. And he said, look, Paul, you can either keep throwing yourself at the past, or you can accept and acknowledge the future. And there was this kind of moment of clarity for me that actually, instead of kind of trying to hang on to something that was really almost run its time and to embrace the new. And then I think once you've kind of crossed that chasm, then there was a kind of renewed energy and drive to kind of move on with what we've got. We also changed our business model from a usage-based to a subscription-based model. And I tell you, we're definitely in the chasm of that transition, saying goodbye to some previous clients or onboarding or transitioning clients. And we haven't quite experienced the success that you have yet. But hopefully we will.
Yeah, I'm sure it'll come. And through your journey as an entrepreneur, and I guess founder of Acin, what's been your favorite moment so far?
I think there are lots of little ones. So I always say to the team, look, my greatest joy is when things happen that I've had nothing to do with, positive things happen that I've had nothing to do. Because that means the kind of team and the system is working. But if I had to pick out one thing, it would be, last year we raised the Series B from actually five banks, so JP Morgan City, BNP Parabar, Lloyds & Barclays as a strategic round. And it wasn't the fundraising bill, although that clearly is very important as you grow. It was the endorsement of those five banks, that kind of signal from the market and to the market that Acin was here to stay as part of the infrastructure of the financial system. And so I think that kind of level of endorsement was really my kind of favorite sort of proudest moment. But still on a day to day, the thing that brings me joy is watching little or big things happen that other people have done that I've had no involvement in.
Yeah, well, I guess congratulations on working with the biggest banks. And when you work with the biggest banks, what's next?
More banks. So obviously they're shareholders now, so in our board and all those good things. So we've, you know, in total we work with 15 of the biggest banks. There are 30 globally significant influence banks, the GSIB, so we want to work with the majority of those. We want to work with the next 20 or 30 banks down in terms of size and influence. And then we see that really gives, we become part of the fabric of the industry. We become that infrastructure about operational risk in the way that firms like S&P or Fitch, who's a shareholder, or Moody's are the fabric of credit risk or IHS Marking, are part of S&P, is part of the fabric of market risk or the exchanges. So it's really extending our kind of footprint. And then moving on to things like insurance, and there's no reason why we couldn't do what we do in healthcare or any other regulated industry. It seems like the vision is quite big then beyond just finance. It can be operational risk is something that any business anywhere has. And then I guess it's identifying the company sizes and industries where the operational risk is the greatest. Yeah, so I mean, every business has operational risk. You have it, we have it. You know, this office building has it. And we've started in financial services, actually we've started in investment banking, trading and sales. We now cover corporate investment banking, retail banking. So we can almost do the whole of a big bank. By the end of the year, we will be able to do the whole of a big bank. So we need to focus on execution around that. But the bigger vision is that we can do this across any regulated industry. In fact, a couple of years ago, we did a pilot with some NHS hospitals. They won't ever know we did it. We just found the risk information that was publicly available on their websites. And we aggregated that and did the analytics, which is what we do with the banks today. I found that we saw very similar characteristics and patterns. But it's that balancing the vision with the need to execute. So for us, really, the focus at the moment is on that execution piece. By having the banks invest, we think that we've essentially retired a lot of the market and the product risk in Acin. But we've really got to focus on the execution now. So getting that right, making sure the team's built out and capable of doing all those things.
Your series B was a big success, especially in the current climate. So the company and the product. What did you wish you had known before starting Acin?
So I think having run a consulting business before, which is very overtly a people business, the thing I thought was going to happen is we moved to a kind of product business based on technology and data. I thought the people aspect of it would become less important because the people weren't the product. And actually, the thing that I've realized to my, you know, when I look back on it to my naivety now is that it's really all about the people. I was talking to another entrepreneur the other day who said that if he'd made this I suppose, someone else said that of all the problems that you have in the startup or scale app, he says there are people problems and there are problems that you don't yet realize are people problems. And so I think that's the bit that actually it's bringing together a team of people and getting them to do, to execute extraordinary things against that vision. That's what kind of really matters. The people don't become the product, but they're still no less vital. And so if I could wind back time five years ago, I think I'd put myself straight on the people challenge versus the people as product.
Yeah, I can definitely relate to people being the biggest challenge. We're a much smaller company and now a team of 16, but transitioning from eight to 16 has been really painful because of, even though we've only doubled, but still quite small, the people element is something which is really difficult to nail. So I guess what sort of tips can you give for founders or people officers hiring or growing the team?
I think one of the things that I've seen, this is a sort of advantage of having built and scaled a business and then kind of doing it for the second time, is that it's all about letting go. As a founder, you start and it's kind of you or one or two people. But so you do everything by default. So I kind of sometimes joke that I've done every job that exists from ordering the stationery to selling to whatever else it might be. And it's not quite true now with a technology business. But you start with that and actually what makes you really good is your drive, your kind of energy to kind of bring something into the world that didn't exist before and to tackle a big problem. But over time, that kind of fights against you. You know, actually, you've got to let go. When one of the best advice I ever got as a parent was when my daughter was 13 and I did a parenting course. So it was me and 19 mums on this course. And the psychologist who did it, he said, your sons and daughters are 13 now. And in five years time, they're going to be 18 and they're going to go to university or work or whatever it is. When are you going to let go? Because if you let go too early, they'll crash and burn. If you let go too late, they're not prepared for the big wide world or for that university or life experience. And I think that startups are like that. That you have to learn to let go. If you let go too soon and give up too many things too quickly, then it falls over. But if you don't let go, if you let go too late, the team don't understand how to take that up. And people get very frustrated that you're micromanaging. And I think that learning that balance is one of the most important skills. I'm slightly fortunate in my military experience. People think the army is very hierarchical, which of course it has ranks. But it's all about empowering people to the lowest level, the concept of mission command. So I use that. So I kind of couple my military experience with my parenting experience with the kind of startup experience. But it's all about doing less, empowering more and resisting the urge to interfere. And that's why I say that the greatest joy is when people do things that I've had nothing to do with because that's really the only test that things are working.
Yeah, I'm not a parent yet. So I guess now I'm wishing I had been on a similar course or been through the military because as you find that letting go is something that I find a challenge as a founder. But the other challenge that I have sometimes is I want to let go, but the question is who do I let go to? What if they're really busy and you're resource constrained and you can't necessarily hire? What do you do? Do you just still do it? Yeah, I don't think it's an easy answer. It's a real balance. And I think that people will take on, the right people will take on more than you expect. But I think they look at you to see should they take it. And I've had to do lists and sort of been through overwhelming times. And then actually you just step away from it and then parcel it out to people who will take it willingly and they see that as a growth opportunity and kind of grab that and develop. So I think it's easy to see it from your own lens and actually sharing that with other people and go like how do we do this? The right people will take it. And I think you start to then see those are really the people who are going to drive the company forward. Those that are watching you or allowing you to do that. Perhaps those people who are going to be on the journey. Steve Schwartzman, the founder of Blackstone, has got a great book. And there's an audiobook version of it. He reads himself a few of the chapters. There's a brilliant one on entrepreneurship. And he talks about when you start a company, you are happy to have anyone come with you of quality. But yeah, as you start to develop, you realize that some people just aren't cut out for it. The thing he describes is he says, it's an American football analogy. He said some people are like wide receivers with hands of stone. You just throw the ball, it bounces off. Other people have hands of glue. They catch it. And it's kind of that. You've got to constantly iterate bringing those people of quality in. What he describes is you can give them the difficult tasks to do and they go away and do them versus people who will let you stay up all night with two or three other people doing the work that they really should be doing. And I think it's that you're constantly changing. A startup and a scale-up, what it is today is not what it is in three months. Three months in this environment is like a year or a year and a half in a big company. And I think you've got to be constantly thinking about that cycle of renewal. Someone who was good enough six months ago may not be good enough today. And then it's time for them to go and do something different and for the business to have different people and characteristics in it. Yeah, I can definitely relate. Growing the team, well, with the people that you start with, you're very grateful that they've joined you because ultimately they're taking a bet and a risk on you. But as a company grows, they might not be cut out. How can you grow? It's really tough. I find that it's a tough emotion. And Schwartzman talks about, he says, as a decent person, you think your job is to kind of coach the lower performers, poor performers along. But actually in a small company environment, you don't have the ability to do that. You do in a big company. You can move people and train them and a longer time horizon. You just don't have that. And so it can sound callous or ruthless, but it's not. That's just what it takes. In fact, I think that's the title of his book, What It Takes.
Yeah, I think I'll have to read that book. Yeah. Great piece of advice. And when it comes to operational risk, does legal or contracts fall under that?
So obviously we contract with the banks and there's a lot of risk between us and the banks from handling data to all of those things that we have to do. But yes, for banks, third party supplier management, that risk is a huge risk for banks. They've, and asset managers and others, they've outsourced a lot of things to other organisations and that supply chain has to be looked at. All large organisations can be surprisingly inefficient in these things. I think legal is just one of those domains where it's inefficient by design for risk management purposes sometimes. But I guess that's something that we're trying to… Interestingly, a lot of legal contracts, and I think back to our investment documents, they're all identifying risks and putting controls in. That's what we do operationally. There are risks that founders might hire their friends and pay them lots of money. So you have controls against that in terms of what sort of salaries you can pay and relatives and all those things. Everything is about identifying risks and putting controls in place. That's very analogous to what we do with the banks. They just have a very wide remit of things that they do. Of course, it's then every time something new happens, how does that get shared around? I think in the legal industry, people start to get written into model docs, like the BBCA docs or those sorts of things, or using firms like yours. And so it's that kind of sharing and improving of that balance between managing and mitigating risk, but not stopping people from doing business. And that's a lot of what we do is try to find that balance between risk management and the risk effectiveness and risk efficiency. Yeah, I think ultimately, yeah, efficiency is… Everyone wants efficiency, but it's making sure that the controls that you have ultimately guarantee that the efficiency is the right efficiency. Because too often we see founders sign contracts. It's very efficient, but they don't know what they've signed. And you see, we're dealing with large firms, there's an assumption that they've got everything covered, and then they try to make the process of doing that as cost-effective as possible without realising they've got some big gaping holes. And that's what you see in the industry is periodic, very large risk events for banks have lost billions, and that's indirect losses and fines. But you can also then see the knock-on effects in terms of their share price distraction, regulatory trust is eroded, all of those factors. And so you've got to be able to balance that risk identification and understanding, do I know the risk that I'm taking? And then how do I make that as efficient as possible? Otherwise, it's a little bit of a force economy. You think you're efficient, you just… It's a bit like, I suppose you can buy insurance that you think is cheaper, but if the insurance company is never going to pay out or there's tons of small print, it's not really false comfort.
Yeah, absolutely. And you're on the TechStory podcast. So what is your favourite tech product and it can be hardware or software?
I'm a big Apple fan. So in fact, I don't own a non-Apple device. I've got a couple of iMacs, one in the office, one at home, a MacBook, I've got an iPhone, an iPad, we've got Apple. I reckon somewhere if Apple's got a ranking of their best customers, I've got to be somewhere on it as a number of devices I've had and bought. And I just love the consistency of it. When I… 2010, I left, I was working at Barclays and then left to set up the first business. And one of my teams said to me, they said, look, just buy an Apple Mac. You'll hate it for the first two months as I used to a Windows environment. And then you'll just accept that Steve Jobs was right and you will never look back. And I have to say, so I bought it and it was kind of for a while because, you know, buttons are on different sides and then something switched. And I have to say she was entirely right. And so now I'm an entire Apple nut. And so everyone laughs at me in the office because, you know, people have a variety of things, but I am an Apple aficionado. You don't have an Apple Watch. So that's the only product that I've never gone with. So I bought one when they first came. The problem I have is that, you know, once you get over 40, your eyes start to go. And so I looked at the watch and I couldn't see it. So I was having to put my glasses on to look at the watch. And so I then ended up taking the watch out of my… The phone out of my pocket. So that's the only product I would love to have one for all the sensory type stuff. I just can't see it without my glasses on. And I don't need to wear my glasses for distance work. So it's kind of a… It's a practical thing. And I guess you'll be getting the Vision Pro, potentially. Yeah. Yeah. I think I'll still let the, you know, versions. I'm not a big game or any of that sort of stuff. So yeah.
Great. Well, thank you very much, Paul, for being on the show. And best of luck conquering all the banks in the world.
Yeah, no, what a pleasure. Thank you very much for having me. It's been a delight to chat to you today.
Thank you. Cheers.