Until recently, banks were slow, antiquated, and inflexible institutions. But, as technology advanced, the power shifted to consumers and a new genre of financial services was born.
With 75% of consumers having used a FinTech payment or transfer service*, there's no denying that FinTech has become an integral part of many people's financial lives.
Founded in 2015, Monzo Bank (Monzo) was one the first of a number of app-based challenger banks in the UK. Today, it has over 4 million users, has cleared transactions totaling £34 billion, and has raised over £373 million**.
Considering this impressive growth, we wondered about the masterminds behind Monzo's robust and scalable legal function. That's why we were delighted to speak with Frances Coyle, Legal Consultant and former Legal Director at Monzo Bank.
In this portrait, Frances tells us about her experience in the legal departments of high-growth tech companies as well as how you can scale a lean legal team. This conversation was so rich with insights that you'll also want to read 'Legal for scaling FinTechs', where Frances explores how to build a scalable legal function.
Thanks for accepting the invitation to speak with us here at Tomorro! Could you start by telling us a bit about yourself, please?
Sure. I've spent over a decade working for FinTech banks, acquirers, and payment companies including Monzo, Klarna, Adyen, and Ingenico. From a Legal Entity Accountant to a Legal Director, I've worked across the UK, the Netherlands, Sweden, and Singapore in several roles, mostly in the tech space. Legally, my background is in financial services, payments, and data protection.
Nice! You have a lot of experience working with scaling tech companies. How did you end up in the tech space?
Interestingly, my first role at Ingenico was actually as a Legal Accountant, so I was focused more on the numbers. But, when I started working with the company, I found the payment side more interesting so I moved into the more regulatory, financial services space. I guess my experience is quite unique in that as you become more familiar with how companies like Monzo and Klarna operate and scale, you become more effective at applying legal to these arenas.
Well, it seems like that shift was the right choice! We're a bit biased but we feel the tech space is a great place to be.
Absolutely! It's definitely something that's evolved. It wasn't an area that we studied at university or even in LPC. You had modules like M&A and contracts, but the product area was never covered in its own right. I think that, in the future, legal studies will continue to evolve and more outdated modules will be replaced by something from the tech space.
We like to hear that. Your most recent role was as Legal Director with Monzo. Could you tell us more about that?
Sure. I was at Monzo for four years and I was the Legal Director of Product which means I led on all the retail and business products that were offered. It was all about building up this discipline and enabling product lawyers to act as mini-GCs for their specific products. They'd be looking at everything from the regulatory side to commercial contracts to data protection.
We'd also be working with the business analysts and project managers to bring products to launch. Together, we were making sure that we were building something that customers loved to use but also ensuring that the whole process was legally compliant and sustainable for the organisation.
Of course. And presumably it's a heavily regulated space?
It is. When you're dealing in a very regulated space, it's even more important that in-house lawyers work closely with the designers and project managers to help them understand, ahead of time, if there are any boundaries to what the law says is permissible. This might be in terms of the type of customers that you'd be allowed to target, what your financial promotions would need to include, what you could potentially call the product, or even what you could potentially charge for it.
So, when you work in highly regulated spaces, you want to make sure everyone is aware of the boundaries and potential challenges ahead of time and during the structuring phase. Otherwise, you might find that you've built something, spent a lot of time, money, and energy on it, only to realise that it can't proceed in its current form. Teams can also, understandably, get quite frustrated if they've spent time creating something and then find out too late that it would not be compliant. Working closely with relevant teams can avoid wasting time and money, as well as lead to faster time to compliant product launch.
So how did you and the legal department at Monzo work with other teams in the business?
We would work really, really closely with the main teams that we were working in collaboration with and this is important for a few reasons.
Firstly, as the legal department, we needed to make sure we understood which direction the business wanted to go in. This helps you know what you need to put in place today to enable you to get there, rather than slowing the business down closer to launch. Working in the same direction as the business enables you to find solutions to challenges before they rear their heads so that they don't become blockers.
Secondly, if you know the company is particularly interested in an area that changes a lot and where there are significantly more rules than there were say five years ago, there is an opportunity to give the teams a really good lay of the legal landscape. This helps them understand the boundaries in place, the areas that take more time, and the areas that less time from a legal standpoint. You can also be prescriptive in what they can and cannot do to let the teams know this before they've even started the developing stages. This allows you to work together to achieve your objectives in a way that is going to be efficient, sustainable, and legally compliant.
Lastly, working closely with other teams helps to reduce complexity and often uncovers a simpler way of achieving your goals. But you can only understand how to do this if you have all the relevant expertise in the conversations. The less complex something is, the faster you can move; and for startups who are always trying to launch fast, this can be a competitive advantage for the business.
In essence, the legal department working closely with other business teams helps to identify challenges and find solutions ahead of time, as well as enabling you to identify opportunities to make things take less time. For instance, if you identify a tweak you could make to a process or a contract to make it significantly less complex from a legal standpoint, then you have an opportunity to lower costs, reduce time spent, and get the product out faster.
So it sounds like working towards the same goal is really important?
Working towards your company's objectives is so important for legal departments. Keeping these front-of-mind allows in-house lawyers to build the key goals into their decision-making model.
If you work for a company and one of their objectives is 'time to launch', then everyone inside the organisation will know that that's a key driver and will act accordingly with less resistance, including the legal department.
How did your role and the legal department change over the four years you were with Monzo?
Over the four years, the legal department doubled, which was a tiny growth in headcount compared to the rest of the business metrics such as customer numbers which were at least 10x-ing. That said, we did adapt our approach to include non-lawyers and contractors.
We took this approach because we were focused on where we could add the most value and how our costs were made up; meaning we were able to increase the value that the legal team was outputting without increasing the cost at the same rate. To me, this is scaling.
We identified what was slowing us down and explored the best solution for these specific challenges rather than hiring more lawyers by default. For instance, we found that it was not necessarily 'legal tasks' slowing us down but more operational activity such as contracts and due diligence. This led us to hire operations people rather than more lawyers.
Contractors, on the other hand, allowed us to plug in highly specialised expertise on a project-by-project basis. This worked well for Monzo as when you're in the startup/scaleup phase, things change so fast. Being able to plug someone in quickly (as they don't have notice periods) means that you can react super quickly but also utilise people who have deep experience in areas of the law that it might not make sense to bring on full time. It essentially results in you having the best, most relevant people working on the right projects.
It sounds like hiring more legal ops professionals and using contractors kept the legal department agile?
Absolutely. In fact, with each new full-time hire, you also add operational complexity. It will take longer for communication to flow as the team gets bigger.
At Monzo, even over my four years, we only doubled the lawyer size but all the other metrics were 10x-ing. So by maintaining a small, nimble legal team and plugging in the expertise when we needed it, we made sure that we could keep pace with the rest of the organisation while still delivering quality output. It also kept us flexible because the type of lawyer you might need to hire to bring to deliver a credit product might be very different than the one you would hire for a business bank account.
If you're lean and nimble, you're able to move faster in different directions. Speed is always going to be an advantage so this is key for scaling companies.
That's a great point. And now you're starting your own consultancy! Can you tell us about this exciting next step?
That's right. I'm going to be specialising in financial services, payments, and data protection. I'll be working with lots of companies who are interested in building products that haven't necessarily been built or been built in that way before and who really need a product lawyer to help them through that journey.
Working with business analysts and project managers takes some experience and I can add real value here. For instance, the way you'd layout information in this environment is quite different than if you were working with only other lawyers. Also, having an understanding of how fast things move means that I'm not surprised when unexpected things happen and I build that into project plans.
I believe iteration is really important in this arena too. Things move quickly so you need to keep trying different ways of doing things and measuring success to keep pace.
How exciting! It sounds like building a scalable legal function is a bit of a superpower for you! Would you be up for sharing your advice on 'Legal for scaling FinTechs'?
Absolutely! I have some advice that can help small legal teams create a robust and scalable legal function. I'll be supporting companies to achieve this through my consultancy also so I'd be happy to share my advice.
Want to know how small legal teams can build a robust, scalable legal function? Check out our follow up with Frances here 🙌
Great! Well, thank you again for sharing your experiences and advice! It's been super insightful and lovely speaking with you! Where can people find you if they'd like to get in touch?
** Business of Apps, 2020