Passion

Diversity is the heart of what we do; diversity in terms of thought, experience, gender and geography,” says Nadeem Shaikh, the founder and CEO of Anthemis — an innovative financial services company that invests in innovation and creates sustainable long-term ecosystems that enable ideas to flourish. Anthemis advises, transforms and invests in businesses that are building better ways to design, produce, consume and distribute financial services in the information economy.

Anthemis is disrupting financial services by challenging the conservative and very traditional industry to open its eyes to the risks posed by rapid technological advances and ever-evolving consumer needs. The challenge is to turn these risks and unfolding dynamics into untapped business opportunities, which Nadeem believes are key to maintaining relevance in the 21st century’s digital landscape.

Anthemis was founded in 2010 in Luxembourg. Today the firm has offices in Geneva, London and New York. It boasts a diversified portfolio of investments in over 40 high-potential digital-native financial services companies based around the world, highlighting Anthemis’ global reach and commitment to diversity. The firm believes in not just providing clients with the financial resources to elevate their businesses, but also upskilling and empowering them with key Fintech (financial technology) insights and strategic solutions.

Pakistan-born Nadeem has lived in over 10 countries, including Malta, Jordan and the US but currently calls England home. He is a computer science and finance graduate from the State University of New York (SUNY) at Albany and completed his MBA with the London Business School in 1995.

He has over 20 years’ experience in financial services and information technology, having held various strategic senior management positions, including heading up a global entity that was responsible for over 6,000 employees in 20 countries and with an annual revenue exceeding USD 1 billion. It is this wealth of knowledge and global experience that motivates him to explore somewhat unconventional opportunities, with some of Anthemis’ investments supporting the confluence of silo industries such as healthcare, insurance, education and finance.

He is excited about redefining financial services and being a part of how this field re-invents itself. “The idea of being able to create something that I could influence; pursue the vision and passion that I felt; create the cultural dynamics, long-term visions and objectives in line with the long-term industry impact that I wanted to make” are what drove Nadeem to explore entrepreneurship and establish his own company.

Nadeem’s passion for making a meaningful impact is also seen in his involvement with charitable organizations such as Citizens Foundations, CARE and Prospero World. CARE is Pakistan’s oldest NGO and aims “to provide quality and marketable education to all.” It currently runs over 750 schools representing 325,000 learners across primary and secondary levels.

Nadeem has been involved with the organization since 2010. He sits on the board of advisors for the organization’s UK chapter and is keenly involved in fundraising initiatives to support CARE’s pioneer work in Pakistan. Education is close to his heart, as he believes that “educating the next generation is key to society’s long-term transformation.”

In 2015, Nadeem was asked to join Prospero World’s board of advisors. He accepted the offer after being impressed by the passion displayed by the organization’s founders in executing their work. Prospero World is “committed to promoting social change through community-based activity and public education,” using in-depth research to provide bespoke philanthropic advice to companies, foundations and individuals needing assistance with how to structure their initiatives. Nadeem’s work with Prospero World means he is involved in the development of and funding of NGOs around the world and works on various international projects. On working with the organization, he says: “I really enjoy working with the team… helping them to create a sustainable focus with a business-like approach while specializing on the arts and creative industries as a means to create social change.”

When not dedicating time to running Anthemis and serving on various boards, Nadeem enjoys spending time with his wife and three children. The avid cricket fan and Manchester United supporter believes that life should be kept simple and be thought of as a collection of moments. “I try to make each moment as memorable as possible,” he reflects.

Nadeem is a strong proponent of living life with purpose and passion: “You have to do what you are passionate about. I am a firm believer in manufactured serendipity, faith and good karma. If you approach life with this mindset and these values, you find yourself surrounded by amazing people who are making a tremendous difference in whatever it is they are doing.”

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Plan for the Next 50 Years, Not the Next Five

Despite rapid innovations in data processing and machine learning, many businesses have yet to make the leap from the Industrial Age to the information age, and the gap between technological and organizational progress is widening. Closing this gap requires much more than short-term fixes, like adopting new technologies. Businesses need to organize around long-term strategies for growth and partnership in a sustainable way. The consequences for not doing so can be dire.

Eastman Kodak is the textbook case for failing to prioritize an innovation agenda; business schools around the world study the ramifications of the company’s ill-fated decision to ignore the digital photography market until it was too late. It’s far from the only case of a failure to embrace a more digital approach; the larger shift to digital is changing the way every industry operates. Some industries, like photography and media, were impacted earlier. Others, like financial services, are only now experiencing this change in earnest. The common thread in each instance is that a failure to recognize signals and prioritize innovation over short-term profits before it’s too late can have existential ramifications and cause negative ripples throughout broader capital markets.

THE FUTURE OF FINANCIAL SERVICES

The financial services industry, a traditional laggard in technology adoption, is just now entering the digital phase. Signals abound: Fintech companies are launching at unprecedented rates, with improved user experiences and more-transparent practices. Banks are feeling the crunch; according to McKinsey, legacy financial institutions will see profits decline 20%–60% by 2025 if they fail to evolve digitally. Startups alone won’t fill that vacuum: Stewards must emerge from the old guard of financial services.

The current innovation model in the finance sector is designed to generate the highest possible short-term returns. But investors and entrepreneurs in financial services will need to rethink those timelines if they want to be successful going forward; it’s unrealistic to expect the same hockey-stick growth as startups such as Slack or Airbnb. Vanguard might be a runaway success in the market, with 20 million investors, but its success has been more than 40 years in the making. Taking a long-term view — planning for a viable business in the next decade, rather than the most profitable one in the next quarter — is the only way forward for financial services businesses. The industry involves such scale, regulatory intricacy, and organizational inertia that making substantive change will take time.

CEOs will need to shift their mindset now if they want to avoid their own “Kodak moment.” Embracing innovation requires unconventional capital allocations that won’t always yield short-term profit but that can lead to exponential growth in the long run. It may not be a popular platform to adopt in the boardroom, but it’s imperative for the future of financial services firms.

Recent actions by certain financial services firms — notably Goldman Sachs — give reason for hope. Beyond simply launching an “innovation lab” or investing untold sums in established startups, Goldman Sachs is prioritizing an innovation agenda over short-term growth. Its recent launch of Marcus, an online retail bank, is a particularly promising signal. While Marcus is far from profitability, Goldman has acknowledged its intention to stick with this model, recognizing that its existing playbook is not going to sustain another century of growth.

TECHNOLOGY ≠ INNOVATION

Keep in mind that financial technology is a commodity. Anyone can acquire new technology. The true differentiator in financial services will come from having the vision and ability to execute change in this new landscape. Financial institutions need more technically adept, visionary talent if they are to survive the shift to the digital age and take the kind of risks necessary for long-term success. But instead of recruiting new talent, many of these institutions are losing peopleto the tech industry. Ninety-five percent of the banks surveyed by law firm White & Case said they will buy or invest in emerging technology companies in the next 18 months. But many are doing so for the wrong reasons, purchasing technology when they should be focusing on real innovation.

The institutions that successfully cross the digital divide will invest in leaders who are building companies for the next 50 years, rather than for the next three to five years. This focus on people is key. For example, PayPal’s acquisition of Braintreedidn’t just help the company modernize its online payment portal; Bill Ready (who was formerly CEO of Braintree) is now actively leading change and positioning PayPal for the future as the company’s COO.

Similarly, an incumbent doesn’t need to acquire an up-and-coming startup due to vastly superior technology or impressive growth numbers, both of which it can likely replicate with the requisite investment of time and capital. Rather, it should look to make such an acquisition for the dynamic leader at the helm, who likely has a more pro-innovation agenda and greater tolerance for short-term failures in the pursuit of longer-term goals. This simply isn’t in the DNA of most financial institutions, but it’s sorely needed. It’s for this reason that one can reasonably expect Vantiv’s recent move to acquire WorldPay Group — a deal that JPMorgan also reportedly pursued — as a signal for a broader rise in M&A activity in the financial services space in the coming months and years.

THE ECOSYSTEM APPROACH TO WINNING THE LONG GAME

Innovation in financial services will happen in part through the diffusion of new revenue models and technologies, combining entrepreneurial ideas with institutional and operational expertise.

What’s needed is a concerted effort to invest in design thinking systems, and support for diverse and inclusive cultures that bring together people with divergent perspectives to share ideas and new approaches.

The financial services industry is still in the early stages of digital transformation. Some organizations have been quicker to embrace this shift, while others remain firmly entrenched in Industrial Age mindsets. Goldman Sachs falls into the former category, and is providing a model for industry peers to emulate. Beyond simply nodding to the need for greater innovation, it has begun to take a series of bold, decisive steps that are atypical of financial services firms companies. From elevating its former CIO to CFO, as it increasingly defines itself as a technology company rather than a financial services firm, to emerging as one of the most high-profile advocates of cryptocurrencies, it’s clear that the company is thinking in longer time horizons than quarter to quarter or year to year.

Some will follow this model and thrive, and others will fail to adapt and fade to irrelevance, but it will take some time until a clear picture of the new age of financial services emerges. Companies need to be laying the foundation for a more digital future now. This will require a willingness to accept short-term setbacks and, in some cases, sacrifice short-term profit, with a steady eye toward big-picture innovation goals (and with it long-term profitability).

Jeff Bezos encapsulated this philosophy best in the letter he sent to shareholders just before Amazon’s 1997 IPO:

We will continue to make investment decisions in light of long-term market leadership considerations rather than short-term profitability considerations or short-term Wall Street reactions…. We will make bold rather than timid investment decisions where we see a sufficient probability of gaining market leadership advantages. Some of these investments will pay off, others will not, and we will have learned another valuable lesson in either case.

It’s fitting that this conversation is happening almost 20 years to the day after the company’s public-market debut. While financial services firms were unlikely to give much credence to the thoughts of a little-known (at the time) tech entrepreneur, those thoughts contained sage wisdom — and are even more prescient today.