Leadership Journey: From Legacy Bank to Fintech Foundry

Jim Marous (00:00):

Hello, and welcome to Banking Transformed, the top podcast in retail banking. I'm your host, Jim Marous, owner and CEO of the Digital Banking Report and co-publisher of The Financial Brand.

Jim Marous (00:22):

I'm thrilled to be joined today by Rakefet Russak-Aminoach, a true trailblazer in digital banking innovation. Rakefet led the transformation of Bank Leumi into Israel's most profitable and forward-thinking bank before becoming a managing partner at Team8, a Fintech foundry.

Jim Marous (00:42):

We explore her transition from traditional bank to Team8 and delve in the unique foundry model that drives its mission of innovation and growth.

Jim Marous (00:52):

Throughout the conversation, Rakefet sheds light on the strategies that enable FinTech firms to navigate the changing funding dynamics and the balance between innovation and stability. Her insights offer a profound perspective on the intersection of established banking wisdom and the nimbleness of startups.

Jim Marous (01:13):

Additionally, Rakefet's dedication to diversity and empowerment takes center stage, as we discussed through our contributions to fostering a more inclusive FinTech industry.

Jim Marous (01:24):

So, welcome to the show, Rakefet. The last time we saw each other we were at Money20/20 in Amsterdam, and you're on stage with several other women talking about startups and the power, the advantages, the disadvantages, challenges of women in finance.

Jim Marous (01:42):

And you really have quite a history where you were at not only the biggest and most successful bank in Israel, but then you made the transformation to being at the organization you are now.

Jim Marous (01:54):

So, can you share a little bit about yourself and your firm?

Rakefet Russak-Aminoach (01:59):

A little bit about myself. So, let's start. I started as an accountant.

Jim Marous (02:04):

Oh, wow.

Rakefet Russak-Aminoach (02:05):

I was an accountant for nine years. I was a partner in KPMG in Israel, and then I was the CEO of the firm. But the truth is that I never liked accounting.

Rakefet Russak-Aminoach (02:16):

So, at a certain point, I was looking for something which will make me happier. And I thought that banking is the thing, and credit was my passion.

Rakefet Russak-Aminoach (02:28):

And I moved to Bank Leumi, became after a very short period, the chief credit officer of the bank. But unfortunately, I joined in 2004, in 2008 when I was chief credit officer of the group, the credit crunch hit. So, actually, it was very interesting and challenging, but not very easy.

Rakefet Russak-Aminoach (02:56):

In 2012, I started my tenure as the CEO of the bank, and things changed dramatically because the situation of the bank was challenging.

Rakefet Russak-Aminoach (03:10):

Revenues were very nice, but stable for many, many years, and expenses were going up because of regulation and IT. And I was looking for a solution to a very challenging situation.

Rakefet Russak-Aminoach (03:23):

And this is where I discovered the magic of technology. And actually, this was a turning point for me because suddenly I realized that with technology, you can do everything.

Rakefet Russak-Aminoach (03:39):

So, we started a very aggressive digital transformation, some will say digital turnaround, I don't know. We started 2012 with 14,000 people. When I ended, we were 9,000 people. We started with 300 brick and mortar branches. When I ended, we had 200, we had lots of subsidiaries that we merged into the banks. So, no subsidiaries, much less divisions.

Rakefet Russak-Aminoach (04:14):

So, a very aggressive transformation, the change, the whole thing. And Leumi slowly but surely became at the end, the largest company (not a bank) in Israel market cap wise. So, this was like the process, how I fell in love with technology.

Rakefet Russak-Aminoach (04:38):

Parallel to this, I realized that when you take a very old incumbent like Leumi … and I don't know if you know that, but Leumi celebrated last year, 120 years. Leumi was born in London in 1902 as part of Herzl's vision to be the bank for the Jewish diaspora. And then it became Leumi Israel.

Rakefet Russak-Aminoach (05:12):

So, Leumi, when I started to run it, it was 110. The state of Israel was 65 back then. And the infrastructure was very convoluted in any way you can think about it. So, everything we did digitally was actually a digital skin on a non-digital body. And that's why I didn't think it's enough.

Rakefet Russak-Aminoach (05:37):

So, while transforming the existing activity of the bank, we decided to build in addition from scratch, a neobank.

Jim Marous (05:48):

Pepper.

Rakefet Russak-Aminoach (05:49):

Pepper. Back then, we didn't even know the word neobank. I don't think the term neobank was really a thing.

Rakefet Russak-Aminoach (05:58):

But we knew that we wanted something which will be a startup within an incumbent. Unlike the bank that is a digital skin on a non-digital body, this will be digital native, all digital. And then we can make it really personalized, really relevant for millennials. So, this is in natural, the story of my tenure in Leumi.

Rakefet Russak-Aminoach (06:31):

But then 2019, the bank reached a peak of market share back then, and that was very profitable and was very innovative. And I felt that this is the time to step down and to pursue my passion for technology.

Rakefet Russak-Aminoach (06:55):

Or I can say differently that I decided to turn around my own career just like I did to the bank. Because I didn't have any technology background. Actually, I should say differently, I don't have any technology background. I never did because I never studied anything in technology.

Rakefet Russak-Aminoach (07:15):

I had lots of years in university, accounting, economics. I did my MBA and then I went to law school. 10 years of academia when I studied. And I was also a teacher, professor in the university. But nothing close to technology, not computer science, no engineering, nothing.

Rakefet Russak-Aminoach (07:36):

And I was very concerned that this part is missing. And I had connections with a friend. He's my dear partner today. His name is Nadav Zafrir. I met him in 2014 while I had a cyber event in the bank, a ransom event. I was introduced to Nadav by my husband. They knew from the army.

Rakefet Russak-Aminoach (08:08):

Nadav was the commander, the former commander of 8200. And he left the army in 2013 and decided to build a foundry in cyber. So, you'd ask, what is foundry?

Rakefet Russak-Aminoach (08:21):

So, foundry is where you raise money from investors, but not in order to invest in other people's companies, but in order to invest and build companies with entrepreneurs, like co-found the companies with them.

Rakefet Russak-Aminoach (08:37):

So, this was his idea, a very different idea. And he started to do it in cyber. And then we met, and I called him, and I said, "Okay, I'm the CEO of Bank Leumi, and I am in deep trouble. So, can you help?"

Rakefet Russak-Aminoach (08:55):

And they were amazing. They came to the bank with all these genius people that he brought with him, the tech people. And after maybe 48 hours within all this very bad event of 16 days, they found where it clicked from.

Rakefet Russak-Aminoach (09:12):

That it was not from the bank, but it was from the credit card company. So, they were very helpful and very nice.

Rakefet Russak-Aminoach (09:18):

And what happened after that. For them, it was an amazing opportunity because they're so smart. So, they left the bank and they said, "So, what happened here? Rakefet called us and we helped her. And it was an incident response story. So, let's build an incident response company."

Rakefet Russak-Aminoach (09:41):

And they decided to build this company, called the company Sygnia and invested a few millions. And after three and a half years, if I recall, they sold it to Temasek for $250 million. So, this was the story for them. Wow.

Rakefet Russak-Aminoach (10:02):

For me, Nadav and myself, we stayed very good friends. And then he introduced me to his first and most important investor. He's also a very dear partner of ours today. His name is Yuval Shachar. He was a partner in innovation endeavors with Eric Schmidt. And the three of us became friends.

Rakefet Russak-Aminoach (10:24):

And when I decided to step down, Nadav was talking to me and said, "What are you going to do?" And I said, "What do you mean? Fintech. I'm in love with technology and I don't understand cyber of course, but I would do FinTech."

Rakefet Russak-Aminoach (10:44):

And then we discussed it and discussed this, and the idea was, why don't we take what they did in cyber and just copy paste it to FinTech.

Rakefet Russak-Aminoach (10:54):

So, I stepped down from the bank, it was the end of 2019, and it was just before COVID. Everybody thinks I was just preparing myself to leave before COVID, but as you understand, it's not really the case.

Rakefet Russak-Aminoach (11:10):

Anyway, I left, and they joined them. Raised money from amazing investors, mainly in the US, Europe, and a bit in Singapore, and brought amazing partners.

Rakefet Russak-Aminoach (11:28):

I have Ronen Assia, who is the co-founder of eToro, that joined us for the FinTech and Galia Beer-Gabel from PayPal and some others. And we have today, a team of dozens of people in FinTech.

Rakefet Russak-Aminoach (11:43):

And we are now building the fourth company, and we are investing maybe in the sixth. So, we have around 10 companies in FinTech in the group.

Rakefet Russak-Aminoach (11:57):

And the group is becoming bigger and bigger every year. I can tell you that at the beginning of last year in '22, we said, "Well, if we can copy paste it to FinTech, we can do it to digital health as well." And there are so many intersections in between digital health and FinTech, digital health and cyber, and cyber and FinTech. So, brings a lot of opportunities.

Rakefet Russak-Aminoach (12:24):

So, today, if I have to describe what we are, we are very unique venture group that is specialized in enterprise tech, mainly cyber, FinTech, and digital health. And we have two asset classes. We have the company building, which is the main infrastructure, everything we do.

Rakefet Russak-Aminoach (12:48):

But we invest, we have also a regular VC and we invest in companies in each and every domain that we have expertise in. So, this is in a nutshell my story, Team8's story. I don’t know, I will pose here.

Jim Marous (13:03):

Well, what's interesting, because it's all logical. I mean, it's interesting because you started in the finance area of Leumi and you moved up, because of your love for tech.

Jim Marous (13:14):

And then you built Pepper, which was at the time, the most innovative and the first digital bank in Israel, but also, an extraordinarily important endeavor because it really was, as you said, you built something outside of a core that was so very old and antiquated, but it served its customers very well.

Jim Marous (13:34):

So, you both had the legacy bank and the neo bank, and then your transition, your love for tech actually basically pushed you into what you're doing today and something that you love.

Jim Marous (13:46):

And it's interesting because as you mentioned, Team8 is really very different than a traditional FinTech startup VC company. It's a foundry model, as you mentioned. So, how does a foundry model differentiate itself in the FinTech space?

Jim Marous (14:08):

So, when you're meeting with a FinTech startup, you're building from scratch as opposed to buying into something that's already started. How does that really differ from the perspective of what you see in the marketplace?

Rakefet Russak-Aminoach (14:22):

Okay. It's very easy for me to compare and explain the differences. Because actually we have both foundry and fund.

Rakefet Russak-Aminoach (14:30):

So, in our regular fund, what we do, just like any other fund, we meet entrepreneurs that have idea. And sometimes they already raised money, sometimes they didn't. But they have an idea. They come with their deck. They bring all the story they want to tell. And sometimes they already have some validation.

Rakefet Russak-Aminoach (14:57):

In a certain point along their journey, they come to you and you decide if you want to invest in them. This is a regular fund and the way we also work.

Rakefet Russak-Aminoach (15:08):

We have the foundry model, which is very different because within the foundry, we don't wait for entrepreneurs to bring ideas. And it doesn't mean that we don't have many entrepreneurs that come and say, "We have a great idea, let's build a company together within the foundry."

Rakefet Russak-Aminoach (15:27):

But to begin with, some of our companies were built out of the ideas of the foundry. So, we have a team that research and gets into FinTech trends and problems and looking for some huge issues to solve.

Rakefet Russak-Aminoach (15:45):

And when we find a big problem, a big challenge that we have passion to ... because the passion is the most important thing. Sometimes there is an idea that comes up, but we look at each other and we say, "Who wants to deal with it on a daily basis?" And it's very quiet in the room because no one wants.

Rakefet Russak-Aminoach (16:12):

And then I say, "Well, so, we are not going to build it because it doesn't make sense." The only way you can make it and succeed ... and I don't need Team8 for this. I know it from Leumi, I know it from KPMG. We both know it. If you don't have passion for something, just don't do that.

Rakefet Russak-Aminoach (16:26):

So, we ideate, we find ideas that we like, or I mean, challenges and problems where we like the space then we start validating it.

Rakefet Russak-Aminoach (16:51):

Parallel to ideating, we are on a constant search for founders because as I said, you need the passion, yes, but there is no way you can build a company without entrepreneurs that get up every morning and will do everything in order to build this company. So, we need the two.

Rakefet Russak-Aminoach (17:15):

Sometimes the idea comes before the founders. Sometimes the founders are there and we are looking for idea together.

Rakefet Russak-Aminoach (17:22):

And we had a case like this a year ago. We met founders, we really liked them. They came with an idea around credit. As I told you, I have a lot of background in credit. And I didn't like the idea.

Rakefet Russak-Aminoach (17:39):

However, we told them, "Let's work on it together. Either you convince us that this is an amazing idea and then we'll build it together, or you will change your mind and we will show you that it's not."

Rakefet Russak-Aminoach (17:55):

Anyway, they decided to drop it. They didn't want it at the end. And they took one of our ideas from our ideation process.

Rakefet Russak-Aminoach (18:04):

So, in a nutshell, the foundry is where we are much more involved. As a co-founder, at the end of the day, the company belongs to the entrepreneurs. There is no way to build a startup without this perception.

Rakefet Russak-Aminoach (18:26):

Because, for example, if they get an acquisition offer and they want to sell, it's done. It'll be sold even if we don't want to sell. Because if they don't want to get up in the morning and continue building it, it's done.

Jim Marous (18:38):

It doesn't make any sense. Yeah.

Rakefet Russak-Aminoach (18:40):

So, the company is theirs, but unlike a regular investor that is only bringing the ... it's not only because most investors help as much as they can, but unlike regular investor that does it but not as part of his job, we are there. They sit with us. We have a building in Tel Aviv. We have a floor in New York. We are with them on a daily basis.

Rakefet Russak-Aminoach (19:10):

Our platform, not just for FinTech, but for everything we do, is almost 100 people. We have tech research, we have business research, we have biz dev, finance, HR, we have everything.

Rakefet Russak-Aminoach (19:25):

So, they come to us, and we are like, “Give them the whole thing.” Like it's an umbrella that provides them a very good start.

Rakefet Russak-Aminoach (19:37):

And take into account that within Team8, we have partners and people from different perspectives with different backgrounds, with different network. And they can have all of it.

Rakefet Russak-Aminoach (19:52):

If someone is building a cyber company, okay, not in FinTech, and he needs a connection to a certain bank because they want to sell them the cyber services, I'll do my best to connect. So, this is a very diverse group with a lot of opportunities to get help.

Jim Marous (20:15):

So, when you look at founders and you mentioned the need for passion, but they've also have to have passion for what your idea is.

Jim Marous (20:24):

One of the things that you talked about at Money20, and one of the things that is really key to who you are, because you are a female, is the real gender inequity in the founder space, in the investor space, and in the finance space.

Jim Marous (20:42):

Now, you battled some of those battles in a very, very traditional bank environment, which by itself is a challenge in any industry where you have a woman who's the leader in the organization.

Jim Marous (20:55):

But as you got into the FinTech space, and the founder space, and the VC space, it's even a bigger issue. Because when we look at the numbers, they tell a story that there aren't enough female founders, female leaders in the innovation, in the startup space.

Jim Marous (21:13):

Number one, what do you think causes that? And number two, how do we solve for that?

Rakefet Russak-Aminoach (21:23):

First of all, I would just say that I don't think it's more an issue today than it was in banking. It was all the time the same.

Rakefet Russak-Aminoach (21:34):

I can share with you that when I was the CEO of Leumi, I was part of an amazing group of CEOs. It calls IMC, International Monetary Conference that meet once a year with the CEOs of the largest and most significant banks in the world.

Rakefet Russak-Aminoach (21:57):

We were a group of 62, if I recall the number, but maybe I'm not accurate. But you know what I know for sure, there were only two women there. Ana Botin from Santander and Rakefet from Israel. That's all.

Rakefet Russak-Aminoach (22:15):

At a certain point at the beginning, I think there was one CEO from India, which was a woman, but then she was replaced. And that's it.

Rakefet Russak-Aminoach (22:25):

So, it was unbelievably ... it was very extreme, even in banking. Now, if I talk about, we have at Team8 around 30 companies. Half of them are companies that were built in the foundry and half of them companies that we invested in.

Rakefet Russak-Aminoach (22:48):

And I can say that we don't have female founders, which is unbelievable. So, first of all, this is where you reach the top, it's CEOs of banks, entrepreneurs that build companies from scratch. You rarely see women. And then the question is why? And the question is how do we fix it?

Rakefet Russak-Aminoach (23:21):

I can tell you first of all that with the entrepreneurs, it's easier for me to understand the phenomenon. Because being an entrepreneur usually happens to you or you start a company, usually when you are young. Most of our entrepreneurs are the age of 30 to 40.

Rakefet Russak-Aminoach (23:46):

This is the toughest time for a woman, because if you want to have a family, this is when you have babies. Sometimes they don't sleep at night. So, being an entrepreneur, which is one of the toughest things, because like once in a few days, sometimes even more, you hit the wall because that's building a startup.

Rakefet Russak-Aminoach (24:13):

Now, think about hitting the wall when you have few babies. And some of them don't sleep at night, and one is sick. Very difficult.

Rakefet Russak-Aminoach (24:22):

So, it's not really surprising that we don't have many female entrepreneurs, because it's difficult. And at the end of the day, even though it's not the same in between men and women today, wife and husband, you can see that the sharing is much better. At the end, the mother is a mother. So, this is about entrepreneurs.

Rakefet Russak-Aminoach (24:51):

About CEOs, it's more surprising because when kids grow up and you look at the CEOs of banks in the world, I would say that probably the age was close to 60 average. A woman could do that just like a man. So, I don't know.

Jim Marous (25:16):

Yeah. So, as you're looking at founders for new companies, do you personally try to put extra emphasis on trying to find females? Or is that one of those things that, as you said, it's a challenge to begin with because if you're looking for somebody in their 30s, they have other responsibilities as well.

Jim Marous (25:37):

How do you help to foster diversity and try to empower not just women, but other minorities within the FinTech space? How do you think we have to do that as a community?

Rakefet Russak-Aminoach (25:48):

First of all, I'll tell you that I like working with women. At Leumi, top management was 14 people and 40%, four zero, was women. And I'm telling you that I never chose someone because she was a female, never. Just because I thought she's better.

Rakefet Russak-Aminoach (26:15):

So, there are great women and I think that a room with men and women together is a better room because it's more diverse. And probably, I could say it about other minorities as well. As when you get a room which is diverse, it's much, much better. You get a better result.

Rakefet Russak-Aminoach (26:36):

So, first of all, yes, I think we should make it happen. I can tell you that personally, I'm a very integral part of a amazing program that meta Facebook started in Israel maybe five or six years ago.

Rakefet Russak-Aminoach (26:58):

The name of the program is SHESHE. She established women with she young women. Usually, it's women like me with younger, the one in between 35 to 40. And this is an amazing program that they choose I think it's 40 or 50 a year now. And we have a mentorship relationship along a full year.

Rakefet Russak-Aminoach (27:30):

And when they started it five years ago, probably they chose those mentees and we worked with them. But today, in order to choose these 40, 50, they have 1,000 or 2,000 candidates. It just shows you how much it's needed, how much mentorship women need in order to find their way around.

Rakefet Russak-Aminoach (27:57):

So, I do whatever I can in mentorship, in letting women be part of the workspace of Team8 and before at Leumi. But this is a challenge. It's not going to be solved with this small project. I'm aware of this.

Jim Marous (28:16):

So, let's take a short break here and recognize the sponsors of this podcast.

[Music Playing]

Jim Marous (28:23):

So, welcome back. Today, we're joined by Rakefet Russak-Aminoach, the managing partner of Team8. A Team8 is a foundry that helps FinTechs actually get established and solve problems in the financial services industry.

Jim Marous (28:38):

We've been talking about not only the startup industry, but the challenges of women founders in finding more women in the FinTech space to guide the future of innovation and FinTech in banking.

Jim Marous (28:52):

So, Rakefet, as we look at FinTech companies today, it's an interesting time. It's hard to get funding, there's a lot of investors that are more tentative than they used to be.

Jim Marous (29:05):

But as you're building FinTech companies, how do you strike the balance between innovation and stability? Because more than ever, I think we can both assure ourselves that today, these startups really have to be good business models, first and foremost. Because getting funding is more difficult than ever.

Jim Marous (29:28):

So, how do you ensure that the companies that you are starting up not only have the innovative spirit, but the ability to act like a business as opposed to simply looking for more funds?

Rakefet Russak-Aminoach (29:41):

First of all, you are very right that these days startups are being tested not just by volumes and innovation also and much more, but unit economics because this is a different period. So, I agree.

Rakefet Russak-Aminoach (30:00):

When we start a company, we look for an amazing, innovative product. However, we ask ourselves if there is a product market fit, meaning that these products can be part of the financial ecosystem.

Rakefet Russak-Aminoach (30:24):

And maybe I will elaborate a bit how do we see the financial ecosystem. And within it, what companies do we build in order to fit in?

Rakefet Russak-Aminoach (30:35):

So, when you look at the financial playground, 10 years ago or 20 years ago, we had one group of players. This was what we call today, the incumbents. They're banks, the insurance companies, all those. So, today, they are only one group.

Rakefet Russak-Aminoach (30:54):

There are three groups today on this playground. So, this is the incumbents, which is one group, and then there are the FinTechs, second group. And there is a third group that we shouldn't ignore, which is the non-financial players. Now, let's analyze it.

Rakefet Russak-Aminoach (31:16):

The incumbents, they have an amazing asset, and this asset is the customer base. And they have to innovate. Innovating from within is very difficult. And I can talk about it for hours because this is exactly what I did for seven and a half years. And believe me, it wasn't easy.

Rakefet Russak-Aminoach (31:41):

I can even tell you that when I was not in the room, they were like saying, "Ah, let's talk about Pepper, Rakefet's toy." Like Rakefet's toy, the CEO's toy. So, innovating from within brings a lot of issues of internal resistance. It's very difficult.

Rakefet Russak-Aminoach (31:59):

Back then when I started the transformation and Pepper, FinTech was much less developed than today. Today, there are many FinTech companies that can be embedded within the activity of the incumbents.

Rakefet Russak-Aminoach (32:19):

So, if you want to be transformative, if you want to be innovative, and to take your bank forward, to make it much more efficient, to make your service much more innovative, and smart, and user experience much better, you have so many FinTechs you can work with.

Rakefet Russak-Aminoach (32:41):

Now, to your question, we are trying to build most FinTechs that will accelerate digital transformation of incumbents, that will accelerate the desire of incumbents to improve their customer experience. So, this is the relationship.

Rakefet Russak-Aminoach (33:02):

Now, I would add the third group, which is the non-financial ones that became very relevant because many companies who are not part of the financial world, like Shopify, like UpHill, like many others that we can mention, the thing that they have, they have a huge customer base.

Rakefet Russak-Aminoach (33:24):

Now, what they do in the last few years, or starting to do, they embed FinTech within. They say, "Well, we have lots of customers, let's give them money. Let's give them payment services. Let's give them loan."

Rakefet Russak-Aminoach (33:41):

So, if you look at Shopify for example, you will see that a very major part of their business profits, revenues is from FinTech services. What do they do with this? Actually, what they do is increasing revenues and increasing stickiness at the same time.

Rakefet Russak-Aminoach (34:00):

So, embed FinTech within became an amazing trend. And here again, we at Team8 trying to build companies that can embed FinTech within.

Rakefet Russak-Aminoach (34:13):

Give you an example. We have a company called 40Seas. This is a company that gives you credit in the trade finance corridor, US, China, UK, India, whatever. Now, we work as a design partner and investor and credit facility provider with ZIM, which is one of the largest carriers in the world.

Rakefet Russak-Aminoach (34:42):

So, suddenly they are in FinTech. What do they do? They embed FinTech within, they have the shipment, and they actually sell to their customers 40Seas. So, they get some participation in revenues with us. They get more stickiness because suddenly the customer can get credit within their platform.

Rakefet Russak-Aminoach (35:06):

So, this whole mixture is a totally different story, nothing like. And if you ask me what do I think will be the next thing in FinTech, I would say 100% embedded FinTech. And I will tell you why I'm so sure about that.

Rakefet Russak-Aminoach (35:25):

If you look in the last few years at neobanks like Pepper and others. In the US, Chime, Varo. Monzo in England, whatever, we can name them many amazing startups that were built. And you see they got to fantastic valuations.

Rakefet Russak-Aminoach (35:48):

Having said that, their customer acquisition cost is enormous and it's very difficult to build a business case for this customer acquisition cost. So, what do they do now? They bring FinTech solution and they embed FinTech solutions within.

Rakefet Russak-Aminoach (36:11):

Now, what we are saying today, why should we build companies, FinTechs for the end customer? It's very costly because in financial services, the cost of migrating a customer is huge.

Rakefet Russak-Aminoach (36:28):

Instead of building FinTechs, which are B2C like we did, like I did with Pepper and others as well. Instead of building these B2C companies, let's build B2B2C companies. Let's embed the FinTech where the customer is instead of trying to bring the customer to the FinTech.

Rakefet Russak-Aminoach (36:55):

So, here's what I'm saying, because maybe it was not clear enough.

Jim Marous (36:58):

No, it's clear. Yes.

Rakefet Russak-Aminoach (37:00):

Okay. Instead of moving the customer, migrating the customer to the FinTech service, let's migrate the FinTech service where the customers are. So, if I look at the future of financial services, what I see is a vision of hubs of customers.

Rakefet Russak-Aminoach (37:17):

Either incumbents that come from financial services originally, like JPMorgan Chase or Citi, or I don't know whom, but on the side, Apple, or Amazon, or Walmart, or Shopify or all others, hubs of customers who embed FinTechs within.

Rakefet Russak-Aminoach (37:40):

And because this is the future, in my opinion, what we do is we build companies that can be embedded within those hubs. This is what we do.

Jim Marous (37:54):

So, that being said, are you looking for new skill sets among your FinTech founders, your FinTech leaders that you're building that not only had the innovative spirit, the ability to really think beyond what's there today.

Jim Marous (38:14):

But they also, have to have strong business skills because you're going to have to collaborate with either a traditional financial company or as you mentioned, with an embedded non-financial company. But to do so, that takes different skill sets than it does to build a brand-new company.

Jim Marous (38:35):

Is this a completely different leader that you're looking at now with new build skill sets that include accounting, finance, interactive skills, as well as those disruptive, innovative skills that you're looking for in the past in FinTechs?

Rakefet Russak-Aminoach (38:50):

So, the answer is absolutely yes. What we need in order to, unlike when you build an enterprise tech company, a cyber company, and you need a lot of tech skills, which will be amazing. Here, you need the tech skills as well, but you also need the FinTech skills. It's not even FinTech, it's business skills.

Rakefet Russak-Aminoach (39:17):

I'll give you an example of a company that we build for the US. The company is called April. April is a company that actually prepare for you as the end customer, your tax report. That's why we call it April, because April 15 is the end of the tax season.

Rakefet Russak-Aminoach (39:41):

As I told you, we don't sell B2C. We don't come and put signs and the advertisements in the streets selling April. We sell April via partners. So, we sell April via Chime, or via Varo, via banks that offer their customers the app.

Rakefet Russak-Aminoach (40:04):

This is an unbelievably technology smart company. It's built on gen AI and it started with this two and a half years ago. And the CTO of the company in Israel, was the CTO of Waze.

Rakefet Russak-Aminoach (40:19):

However, the CEO of the company, he lives in New York. He comes from FinTech background and he was part of Deloitte before. And he was working with Team8 before.

Rakefet Russak-Aminoach (40:33):

So, what do you have here? You have a tech-minded, smartest person in the world that was part of Waze, or was CTO of Waze. And now, he can invent a gen AI solution in technology.

Rakefet Russak-Aminoach (40:51):

But side by side, we have a CEO who is a business person that understands how you can sell products to companies. Totally different. And you need the mixture because without the mixture, you will not make it.

Jim Marous (41:09):

So, finally, as you reflect upon your career and your growth and what you've gone through through the years, and from what we've talked about, the building of Pepper would not built like Peppers would be built today if you had to build it again, because of the whole need to build an embedded solution even within the traditional financial company.

Jim Marous (41:30):

What advice do you give people that want to start up a company? And what advice do you give them with regard to what they need to have in place? Because just two years ago, you could start virtually anything and you get funding. That's no longer the case.

Jim Marous (41:51):

What do you give as advice to organizations or people that are really looking to do a startup?

Rakefet Russak-Aminoach (41:59):

First of all, I believe that during this time, we build the best companies, not we Team8. I mean, of course, I hope that Team8 builds the best companies, but I mean, the high-tech sector globally builds the best companies. Because now, as you said, it's not that you can raise money for everything.

Rakefet Russak-Aminoach (42:19):

Now, you really need to show that you have the technology skills, you have the right mind to build product, market fit, et cetera.

Rakefet Russak-Aminoach (42:31):

So, what is my advice? First of all, you need to build a fantastic team around you. And I know it, it's not just about startups. I couldn't do in the bank what I did without a brilliant management like I had.

Rakefet Russak-Aminoach (42:51):

So, first of all, you need the best people around you. If you are a tech person, you need a business person, you need marketing. You need to build the right group that will be a team that is built for success. This is one.

Rakefet Russak-Aminoach (43:08):

Second, if you are not determined and you're not optimistic and you're not courageous, so don't even start. Just don't even start because this is going to be tough. That's the way it is. And it's not only about building a startup, I can tell you that being the CEO of Leumi was tough. It was difficult.

Rakefet Russak-Aminoach (43:27):

Because you know how it works. Every morning you get a phone call, what doesn't work? Because the thing that works, they don't need you. So, from morning till night, you are dealing with challenges and huge challenges. That's the way it is.

Rakefet Russak-Aminoach (43:46):

And in startups, you have to deal with these hardships sometimes by yourself. And this is part of the Team8 model that we are there. The next room.

Rakefet Russak-Aminoach (43:59):

You can get in my room and tell if you have a problem, and we can think together. There is something about being part of this ecosystem that makes it a bit better. But it's still very hard.

Jim Marous (44:13):

Thank you so much for being on the show. You have a very interesting story. Certainly, an interesting background. We didn't even get into the entire startup in innovative marketplace of Israel because it's an amazing place to start companies and it's really come into its own in a unique way.

Jim Marous (44:29):

But it'll be interesting to see how this whole transformation in the industry goes because we're going through a challenging time for the FinTech space, but you're actually at the cutting edge of helping to found and fund startups where people really are the major difference, they're the differentiator.

Jim Marous (44:51):

Because you said very early, and we've learned on this podcast, it takes a leader in a traditional bank or a FinTech startup or being a leader in any company to be successful today. It's a completely different mindset and you mentioned it, it does take passion.

Jim Marous (45:10):

So, thank you again for being on the show. I really appreciate it.

Rakefet Russak-Aminoach (45:14):

Thank you so much, Jim. Thank you for having me.

[Music Playing]

Jim Marous (45:18):

Thanks for listening to Banking Transformed, the winner of three international awards for podcast excellence. If you enjoy what we're doing, please take 30 to 45 seconds to show some love in the form of a review. It really helps us to continue to get such great guests.

Jim Marous (45:32):

Finally, be sure to catch my articles in The Financial Brand and the research we're doing for the Digital Banking Report.

Jim Marous (45:38):

This has been a production of Evergreen Podcasts. A special thank you to our senior producer, Leah Haslage; audio engineer, Chris Fafalios; and video producer, Will Pritts.

Jim Marous (45:48):

I'm your host, Jim Marous. Until next time, remember, never underestimate women leaders driving change, who emphasize the importance of authenticity, empathy, and envisioning a better future.

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