These two twenty-somethings convinced HSBC to work with their startup — here's how

Fintech startup Bud has signed a deal with HSBC and raised £1.5 million from Investec and Sabadell Bank.
CEO says Bud is in talks with 42 other banks around the world about possible deals.
The two-year-old startup helps banks build new products and services in partnership with outside companies — something they will need to do under new "open banking" rules.

LONDON — Fintech startup Bud is just two years old and has just 23 staff but has managed to sign a deal with HSBC, one of the world's biggest banks.

Bud also recently raised £1.5 million from backers including investment bank Investec and Spain's Sabadell Bank. Bud's founder and CEO Ed Maslaveckas, 28, says the company is in talks with a further 42 banks around the world about possible partnerships.

How has a startup run by two twenty-somethings managed to get the ear of so many big, established banks?

"It's a lot of sleepless nights," Maslaveckas joked when he spoke to Business Insider this week.

"Ultimately, large organisations are very hierarchical," he said. "If you can make someone in a bank look good to their boss, you can continue that up the chain and eventually you get somewhere near the top. When you get in the room you're having some quite interesting conversations about interesting concepts and you figure out a way to work together. That's the process we've worked out now."

A playground for banks to build in

Bud has built a platform for banks to build products on that use other company's services. To understand what it does, you have to get your head around a concept called APIs. APIs are technical plug-ins that let you use a service provided by another company.

bud For example, if you're a bank that wants to let your customers transfer money internationally, you might want to partner with TransferWise. Rather than striking a complex deal, TransferWise just hand you the API kit and you can set it up yourself within your app.

If you imagine APIs a little like Lego building blocks, then Bud provides the Lego base plate. It provides a secure environment for banks to build on.

Raman Bhatia, HSBC's head of digital in the UK and Europe, said Bud's platform allows the bank to "test, learn and develop" new ideas and products.

Bud's cofounder and chief technical officer George Dunning, 27, said: "On the tech side, what did us a lot of favours was the fact that we built everything from the ground up.

"We have a completely full understanding of the end-to-end journey of every user, we can control that journey and we can tailor it however we see fit. When we were talking to the banks and they had a challenging technical question, we were prepared. If you get into those conversations and there's ever a question that you can't fully answer, then you've lost."

Maslaveckas said: "We're talking to people who've got a lot of compliance, a lot of people to go around. You've got to be very strategic and tactical."

Open banking: 'A seismic shift' for banks

Still, why would a bank the size of HSBC want to offer competitor's products? Surely it has its own suite of services?

The answer lies in something called "open banking." Regulators in the UK and Europe are pushing through new rules that require banks to share all the data they hold on customers with competitors if the customer wants them to. The idea is that this should help customers get the best deals.

Devin Kohli, Investec's cohead of Emerging Companies, said in a release announcing the investment in Bud that open banking represents "a seismic shift" for banking that Bud is helping corporates capitalise on.

We're trying to change the banking app from the place where you do your banking to the place where you get things done in your life

Maslaveckas admits that the open banking push, which comes into force in the UK in January, has helped Bud's pitching. But he says the appeal of Bud's product for big banks is greater than just that.

"With these big banks, OK, there are all the fintech players and that's interesting, but what they're more worried about is these big tech players coming into their market and stealing away their customers," he said.

"What is the thing they can do to create a defensive play? They already have access to financial data - how can you build on that? Connect that with some decision making process and then connect that with some other APIs to create these really nice experiences that haven't been built before. That's what our platform does."

HSBC, for example, is using Bud to build an app for its subsidiary First Direct that will trawl databases for the best broadband and energy deals, personalised for each customer.

"We're trying to change the banking app from the place where you do your banking to the place where you get things done in your life," Maslaveckas said.

Rather than just going to the bank when you need a mortgage, Bud could help banks build an app that lets customers search for houses, sell their own property, and get a mortgage all in one space, for example.

"We want to create one seamless experience," Maslaveckas said.

Dunning said: "We don't want to vie for people's attention — we believe the banking app is already somewhere that makes sense for the user to get things done. It's just lining things up properly."

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