Banks struggle to modernise. Philipp and his childhood friend Richard Unger and Martin Damaske believe their Berlin-based startup can show them how. Article by BIZAGE INTERVIEW TEAM

What is the origin story of AAZZUR?

I first met my now business partner Richard Unger when I was 11 years old. I had moved to a new school - Vienna International School – and at that age was shy and hadn’t yet learned how to cover up my shyness by being extroverted. When hiding out at lunchtime in the hall, I met a group of people who played Dungeons & Dragons, one of these was people was Richard, he became my best friend. We both had computers and an interest in technology, and we started learning to code - even earning our first pay checks by offering our skills to others, when we were only 16. That was the start of my love of being entrepreneurial.

After we finished school, Richard became a developer for large corporations, and I became an entrepreneur, but I always knew I wanted to work with Richard.

In 2014, along with a group of technology focused business people I had met over the years, we decided to try and build a challenger bank. Richard was part of this process, and it is also where we met our now business partner Martin Damaske. This project, however, couldn’t move forward for a number of reasons, and in the end the company separated.

As the previous project didn’t work, we wanted to start a new one. Martin, Richard and I had a couple of ideas and we had access to an empty villa in Vienna. It had space for a large team to co-habit and swimming pool for leisure. We rented the villa and a group of us moved in for 3 months to plan, strategise and get a new company off the ground.

We initially had two ideas – another challenger bank, or the concept of building a layer above and between banks and insurance. This second idea was to target financial improvements and ultimately combine and re-bundle financial products to make them more relevant and of use to the customer, depending on their lifestyle and spending habits.

We were looking to effectively monetise the customer base. Our solution would solve the problem of innovation in banking and challenger banks that mainly give away their services – such as cards and accounts - for free. This would also solve a problem in real time for customers. There are lots of areas in financial services that are just waiting to be reimagined and we had a group of people who had the ideas, skills and knowhow to build a solution. Research showed us that younger generations are scared of these services as they don’t understand the complexities of insurance. So we decided to build a tool to tap into this market.

We initially had the idea, but no name, programmers building a prototype, and hours of planning and refining and over the 3 months, things started to come together. Towards the end of the 3 months, we decided on the name AAZZUR, applied to Techstars, got in and moved to Berlin.

It was while working at this villa that we also stumbled across someone who has since become a star in our team, Laura was the wife of one of the developers, she lived with us, but had no real role at the start. During our stay she reorganised the whole house, beginning with the kitchen and shared spaces, we realised she needed to be busy and hired her as intern. Today she is head of product.

What does the name mean?

Azure is the colour blue and the colour of the sky. It is also near the beginning of the alphabet. We wanted a name that was protected and far away from competitors - and AAZZUR was born. The spelling is derived from finding a unique URL and being individual.

What can AAZZUR do for banks?

For banks we are one stop shop for fintech services, an integration layer solving multiple problems and integrating services such as insurance, sustainability and accounts. We are also a gateway for banks to become a service to suppliers. We offer unique and easy ways for banks to enter the Banking as a Service (BaaS) sector, but don’t want to set up the infrastructure themselves.

We are not app builders or a service company. We don’t produce products, we re-bundle and improve other people’s products and services. Back in the 1970s most car manufactures built around 70% of the car and all component parts in-house. This is the same as banking today, most products and services are built in-house. Looking at car manufacturing now, most parts and systems are made by specialists and bought into the car factory to be assembled into the finished model. The fintech world is moving banking towards this idea of products and services being produced by specialists and then brought together under a provider. Much like how cars are manufactured today, where there are many, many different services and providers. This leads to choice for the consumer and a much improved product.

In this new movement, all banking systems share the same components but use specialists to create components. AAZZUR is the integrator of these components. We are a systems administrator using many different suppliers, and we help all these systems work together.

Tell us about the underlying technology. Is it cloud native design? Microservices? Kubernetes?

All of the above.

AAZZUR is a microservices, cloud based, containerised API aggregation platform that can be deployed in the cloud or on-premises that has modules for BaaS, Banks, Insurers and contains an intelligence and data warehouse layer for customer insights and product recommendations.

It is a core enabler for embedded finance and connects to smart finance blocks which are scalable front-end modules to rapidly deploy and monetise embedded finance for financial services.

It's often said that banks struggle with technology, and are stuck with spaghetti systems with modules from decades ago. Is this caricature true?

Partially this is true, it is true of some banks but not all, but we have built a solution to sidestep this issue. We are not here to untangle the IT infrastructure that banks already have in place, instead we are a powerful opportunity to leverage what they have and re-bundle and repackage services in a very light touch way.

There is a good reason banking systems have evolved like this. Banks are not incapable, but they are risk averse, and this means the kind of decisions they make are based on never throwing anything away.

It takes a certain discipline to innovate and sometimes it only happens because of legislation. Take Open Banking - PSD2 in Europe –for example, had this legislation not happened, this type of innovation would be fragmented at best.

At AAZZUR we respect this infrastructure and the technology that has been built previously, but we also offer a solution to the problem of moving this infrastructure forward into the next wave of digital transformation.

What clients do you have?

We have a few different clients that we are working with. At the moment we are rolling out pilot projects with insurers and banks across the UK and EU. We have also collaborated with Swiss banks through F10 Global. We are also working with Challenger banks and investment platforms who are early adopters of embedded finance.

"Our developers, co-collaborators and designers are top notch and very international. We are HQ’ed in Berlin, but it really is a microcosm of the world".

Tell us about the fund-raising. What was the process? What are your plans regarding further rounds?

Yes, every smart start-up is always fundraising. We always talk to our investors – past and future - to keep them up to date regarding this rapidly changing industry and our evolving business plans. We see it as lines not dots, and we talk to investors even if they won’t invest now, as we feel it’s important to show them our overall trajectory and keep AAZZUR in their sights for the future.

As I have talked to investors from different areas, I have noticed different countries seem to have a strong cultural bias to different areas of investments, with English people better at identifying seed stage companies, angel investors better at identifying good teams and German investors better at identifying Series B onwards companies, as they like checking details such as technology, market and people and deployment are all correct.

Investment is also subjected to interpretation; we are raising £1.6M which is quite a small figure in investment terms. We are now proving our scaling and go to market strategy and will do a substantial round later.

At the moment our investment round is very strong – we have interest in more than half the round before it was officially opened. We account this progress to our unique offering but also the promise of the fintech sector becoming a $7 trillion industry over the next 10 years which could result in the doubling or tripling of the banking space if it is adopted as predicted.

Who is the team at AAZZUR?

The team consists of myself as CEO, Martin as CFO and Richard as CTO. We also have Laura Keturke who is our Head of Product. Our developers, co-collaborators and designers are top notch and very international. We are HQ’ed in Berlin, but it really is a microcosm of the world. I love my team and the hard work they do; and as a management team we try to interfere as little with technical innovation as possible.

How do you market AAZZUR?

Our route to market has been via partnerships and this has been really successful for us. For us this has meant we can build something scalable as it has increased our customer base without the need to hire more salespeople. Founders should be good salespeople, as it is part of the job and they have the passion and conviction to sell the product, but there are only so many hours in the day and companies can’t just add more founders to scale their business.

We have identified partnerships where AAZZUR is a complimentary service, where their customer base is who we want to get in front of and forge partnerships. We have discovered that it is possible to run 2 or 3 different partnerships in succession, but this is a fulltime job and wouldn’t want to upset existing partnerships or not have the time to manage the existing ones by adding more.

We have also used simple networking techniques to bring AAZZUR to market by attending conferences and fostering relationships with key people in the industry.

Talking to the wrong customers (ones that are way too large) hasn’t worked so well! We strongly believe we have a good offering for banks, but banks like to work with large companies, which has been an uphill struggle for us as a start-up. We have made a few inroads when meeting a real champion inside a bank who understands AAZZUR, the future of banking and trusts that we are in that future.

Our biggest bit of advice is to go where the market is, rather than insist on where the market should be. Go where the people are and make some noise about the business to this audience.

What is the five-year plan for AAZZUR?

At the moment, working with early adopters, and smaller banks in Europe but we can see this growing significantly over the foreseeable future. In 3 years’ time we plan to be established as a major player in the BAAS industry and we envisage that the whole banking sector will have changed significantly in this time. We will be opening our second international office servicing clients from across the UK, EU and further afield. We will grow with our clients and reimagine banking as we know it.

Anything else to add?

I have had a feeling that we are on the cusp of change twice in my life. The first time was when I was working for Razorfish - straight out of Uni, I was in New York pitching to a large luxury clothing retailer and our pitch outlined why they should be adopting internet and web technologies. The response was that no one would buy clothing online and I remember being so sure that they were wrong, and change was coming. I have that feeling again now, with embedded finance, only time will tell if I am right, but I am sure we are about to see major disruption to the banking space, and I am proud to be a part of this change. Embedded finance has the potential to be as big a disruption to our lives as the internet.

The original article can be found here.