Plugdin Interview: Navigating growth, global expansion and profitability with Catherine Birkett, CFO

We explore the ups and downs of an ambitious growth strategy with GoCardless CFO, Catherine Birkett.

Catherine shares insights into how GoCardless, a leader in direct bank-to-bank payments, is expanding into international markets and integrating innovative payment solutions. With a focus on achieving profitability and maintaining efficiency, she discusses the company’s journey towards a global presence and its approach to staying ahead in the competitive fintech landscape.

Join us as we delve into GoCardless' unique position in the payments industry, the challenges of international expansion, and the strategic decisions driving its success.
 

Hi Catherine, tell us about the key milestones in GoCardless' journey from startup to a company with a global presence in ANZ, the US, and Europe.

It started in 2016, with the decision to take our successful UK business international. Securing our Series A funding enabled both internal growth and strategic acquisitions. Since then, our revenue has grown from $8 million to $160 million, growing around 30% year-on-year.

We expanded our small business base and established a strong contractual business segment, which now makes up 50% of our revenue. This shift has allowed us to handle larger volumes at a lower cost per transaction.

Another major milestone was our acquisition of Nordigen in Latvia, our headcount in Latvia now accounts for approx.25% of our total employees. This has been crucial for our back-office operations and our push into open banking.
 

What strategies did GoCardless employ to successfully enter international markets, and which markets were the most challenging?

We originally assumed the UK product could be applied directly to other markets, but that wasn't the case.

It became clear we needed to tailor our product to each local market, which obviously made the process longer – but also undoubtedly more successful. We’ve seen significant growth with strong banking partnerships and regulatory compliance across Europe since Brexit.

The US remains our biggest challenge. Building brand recognition in such a large market is difficult, but we are making progress. An inorganic growth strategy – such as acquiring a suitable business in the US – is one of our options as it could help us to break through more easily.

This is inspired by our entry into Australia, in which we benefited from a partnership with Xero.
 

GoCardless is now well funded, but what challenges did you face when finding that funding, and how did you overcome them?

GoCardless has been lucky to raise funds during good times, so it was relatively easier for us than I imagine it would be for a small business today. The biggest challenge in the later stages was explaining our international strategy, as it was clear that we hadn't perfected it in the early years.

We had to convince investors that our approach would be different moving forward, despite our initial struggles with international expansion. Luckily, the core business model was strong, which was reassuring to investors. GoCardless has always been an excellent UK business – the challenge is to replicate that success internationally to become a global leader.
 

As the business has transitioned from start-up to scale-up, how have you balanced rapid growth with the need to maintain efficiency and control over your costs?

In the early days, we weren’t really concerned with spending. That made me uncomfortable since I come from a background where funding was scarce and we had to fight for profitability.

Transitioning to a focus on efficiency and the bottom line required making difficult decisions. But our organisation is now leaner and more cautious with spending.

I scrutinise every individual investment case, making trade-offs when necessary. We can't pursue growth at any cost. Instead, we strive for a balance between necessary investments and cost control. Ultimately, we keep in mind the fact our success depends on growing revenue and supporting our merchants very carefully.
 

What is your vision for GoCardless in the next five years, and how do you plan to navigate the ever-changing fintech landscape?

We aim to be a leading direct bank-to-bank payments business, making it easier to pay in multiple countries. Our ambition is to reach $500 million in revenue, which will include some acquisitions as part of a larger M&A strategy.

Our focus will be on developing our product, achieving profitability, and accelerating that profitability. We aim for at least a 30% bottom line and expect to cross into profitability in the next 12 months. Our growth will accelerate from there.

We want international markets to make up 50% of our business, up from the current 25%, so many of our acquisitions will be outside the UK. We will continue to integrate open banking into our services, remaining vigilant about competitors and industry trends to ensure we stay ahead.
 

As CFO, what have been some of your most significant challenges and learning experiences while guiding GoCardless through its scaling phase?

I'd love to say I've never repeated mistakes, but in a fast-moving business like GoCardless, they do happen. One of our biggest issues has been our internal systems not keeping up with our growth, leading to a lot of manual work. We're currently working on upgrading our systems to better manage and scale our operations.

Experience has definitely made me better at making judgment calls, assessing risks, and building a capable team. It's crucial to make confident decisions and not be afraid to change course when something isn't working, even if it causes some temporary internal friction.
 

What advice would you give to aspiring leaders in the fintech industry who are looking to scale their businesses internationally?

First, be aware of regulations and their changes. When dealing with other people's money, regulations are crucial and can't be ignored. I was a bit blasé about this in my first couple of years – looking back, I realise I should have been more informed.

Second, avoid the ‘growth at any cost’ mindset. Focus on profitability, returns, and efficiency. Carefully consider each investment and its long-term impact.

And finally, learn from your mistakes and strive not to repeat them. Embrace the pressure and challenges that come with navigating change and be steadfast in making quick judgment calls. Tough decisions can be challenging, but are also the most rewarding part of the process.
 

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