Experienced fintech and financial services board director Peter Oakes advises non-executive directors (NEDs) to be selective when considering board appointments. “Quite an amount of due diligence needs to be done on the company first,” he says. “If you think you are just joining a club, you’re better off not doing it. If you take on risks you don’t understand you can end up in the papers for all the wrong reasons. You must make sure it’s the right fit for you and that you have something to offer the company or the market it operates in, something they don’t already have on the board. You should add to the diversity of experience and thought on the board.”
A long-time member of the Institute of Directors (IoD) Ireland and founder of industry representative body Fintech Ireland, Oakes is currently a non-executive director of several regulated fintech and financial services firms while also providing expert advice regulatory compliance to clients in those industries. “IoD membership has been invaluable throughout my career,” Oakes shares. “It provides access to crucial resources, networks, and educational programmes that keep me at the top of my game, especially when it comes to governance and regulatory knowledge. Before accepting any board position, I always ensure that I am equipped with the right skills and insights to add meaningful value.”
He recalls one of the first offers he received to join a board. “I was about to join it, but I couldn’t get my head around some important aspects of its business model and what the duties and function of an independent non-executive director (INED) on its board would be, so I turned down the opportunity. A couple of years later, the company ended up in trouble with the regulator. The best advice is not to rush into it. If you find you have accepted every directorship offered, that should be a warning bell.”
A career shaped by regulation and governance
A solicitor by profession, Oakes began his career in regulation in Australia when he joined the new regulator established by the government there to replace six others. “That was occasioned by a corporate governance crisis in Australia at the time,” he explains. “It forced the government to rethink company law and directors’ duties as enforcement of the previous law was not happening. I ended up as registrar of the Companies Auditors and Liquidators Disciplinary Board established to hear evidence and determine breaches of legal obligations by auditors and liquidators.”
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On moving to London in 1997 he was approached to join the Financial Services Authority (FSA). “They were going through the same process as Australia had and were forming a new regulator out of about a dozen forerunners.”
On leaving the FSA he worked a consultant for some time and set up a compliance business. He was then asked to join the Central Bank of Ireland as Director of Enforcement and Financial Crime in 2010.
“The country was entering the full effects of the financial crisis and lots of things needed to be done – rehabilitation of the banking sector, investigations into banks, boards, directors, CEOs, and so on. My role was to carry out the enforcement piece. We had about 80 staff in that area at the time. Around that time, the Irish government decided to harmonise the fitness and probity laws. I was involved in drafting that legislation. The wider job also led me to join a number of important top-level internal committees including Senior Management, Supervisory Risk and Authorisations.”
He left the Central Bank in 2013 and moved back into consultancy where one of his assignments was advising the Saudi Arabian Central Bank on various aspects of its operations.
“I subsequently moved into industry for a while,” he says. “I went to London in 2014 to set up Bank of America’s payments business there. Back then in London they were talking about nothing but fintech but when I came back to Ireland it wasn’t really being talked about. People forget that Ireland was home to the world’s first internet only bank – First-e. Ireland was already doing a good job at fintech but just wasn’t talking about it.”
Ireland’s fintech evolution
He believes the success of the Irish fintech sector is at least in part a spin-off benefit of having such a large number of US tech companies based in the country. “They employ a lot of people on very good salaries. Many of them made good money on share options and decided to deploy it into fintech start-ups. Also, a lot of people in the telecoms sector saw the monetary value of data being moved on telephone lines. They understood data and saw the opportunity there.
“Ireland had a lot of smart people with good technical skills who thought financial services needed to be reinvented,” he continues. “There are now about 300 indigenous fintech companies in Ireland and another 140 from around the world selling into or using it as a base for growth and access the EU market of 450 million people. The future is only going to be limited by their ability to raise money. Fintech firms can be capital intensive because of regulatory requirements to put money aside if they get into trouble. Brexit has given Ireland a big opportunity to become a European base for big international fintech firms.”
Joining the board of one of those firms can be an attractive and even an exciting proposition but people need to be aware of the nature of the company they are joining. “With a fintech company, you may find you are working with people who move fast, break things, fix them and move on,” he points out. “It can be quite attritional. It sounds great, but when financial regulators hear about it, they see risk and they want to see the NEDs addressing that. If you are not comfortable having conversations with entrepreneurs and investors, it may not suit you.”
The workload of an independent non-executive director
More generally, he advises those contemplating joining a board to be prepared for quite a heavy workload. “You have to drill down into things. Look at the board reports and what they are telling you. Listen to what different directors and executive directors are saying and if they are in tune with what the financial report says. You must be comfortable reading profit and loss accounts, balance sheets, discounted cash flow reports, and able to ask questions that may not be asked by anyone else. You don’t have to be a chartered accountant but being able to make sense of the numbers is important.”
Independence of thought is also important. “The old adage used to be that INEDs are a bit like bidets, no one is sure what they do but they add a bit of class. That shows how much has changed. As an INED, you’ve got to be able to help the company, but your role is very different to that of the management team and other NEDs. You have to be willing to put your hand up and say you need to ask a question. And not in a way that people will groan and say you are just doing it to get your name in the minutes. They need to be informed questions.”
INEDs on financial services company boards have obligations under the companies acts and financial services law to act independently and offer constructive challenge, he adds. “If you are not comfortable with being called in by the regulator and asked questions, it’s not for you. You need to show empathy and appreciate the views of other board members but you’re not there as a cheerleader for management.”
Personality matters too. “Some boards can have very frank discussions and that works for those companies. But if you put a person from that board into another company like a family business or a credit union it might not work at all. Sometimes you may need to say the emperor has no clothes in a very loud voice.”
Getting the right governance insight and support
Oakes joined the IoD in 2008 initially to familiarise himself with the Irish company law environment. “I joined because I was looking at becoming an INED here in Ireland and wanted to get a feel for the difference between Ireland and other countries. It was a great short cut to learning about that. I completed the Chartered Director programme in 2009 and found that very useful.”
He recommends membership to anyone interested in joining a board or advancing their c-suite career, not only for the education and training provided but for the quality of the events organised by the Institute. “One of the best things about it is the range of events they hold which are attended by people at various levels of experience. They provide a great opportunity to grow your network. The educational programmes are also excellent and provide tremendous value. It is great for continuing professional development (CPD). The IoD keeps me CPD compliant as an INED and that enables me to continue in business. There is a very practical business side to membership as well.”
For more information, visit iodireland.ie
