Fitness, family and launching NZ’s first digital bank

Sunday, 4 August 2024

Shane Marsh is the co-founder of Dosh, and is working to built it into New Zealand’s first digital bank.

New Zealand needs a “neobank”, and Dosh co-founder and chief executive Shane Marsh intends to give it one, but he doesn’t intend to sacrifice his family life to do it.

Neobanks are a new kind of bank like Up Bank in Australia, and Monzo and Starling in Britain, taking banking sectors by storm.

They have no branches, delivering deposit accounts, payments, personal loans and home loans digitally to young “digital natives” who want to bank exclusively through their mobile phones.

Neobanks’ lower costs mean they can offer higher deposit rates, and cheaper mortgages, and they play on public dislike of big banks, which has grown through financial crises, banking scandals and high profits.

Dosh now has around 30,000 customers, is months away from adding home loans aimed at young people who have “been losing hope” of ever owning homes. That will built out its deposits, payments and personal loan services. At the same time, it is applying to the Reserve Bank Te Pūtea Matua to become a bank –the country’s first purely digital banks.

Launching a bank is a big job, but Marsh says he’s back at his Devonport home to greet the kids after school every day, but at least he’s launching a digital one with no head office he has to clock regular hours in.

The Banking Reform Coalition’s Kent Duston explains how banks should be broken up.

“The flexibility of being able to work from anywhere is great,” Marsh says. “I’m at home at three o’clock when my youngest gets home from school.”

Marsh has three children, the youngest is 10. His wife works full time in financial services.

“Without the support of my wife this wouldn’t be possible. Sacrifices you make are sacrifices they make,” he says.

But, “I spend more time with them than I did when I worked in a corporate.”

Those corporates included British Telecom and America Online UK in London, Spark in New Zealand, and ANZ in Singapore.

Marsh is not the first founding chief executive of a bank to prioritise balancing work and family life.

‘I had a strong sense that I wanted to do something that would make a difference,’ says Shane Marsh.

When Sam Knowles built up Kiwibank, he intentionally rejected the abusively-long work days that were a feature of the big banks he had worked in.

Launching a bank is a big job, but there is a lot of work that still needs doing, so there is no five-day week. Calls must be made at night, work done in the wee, small hours.

“I’ve never had to ask my staff to do that. They are as passionate about Dosh as the founders are,” he says.

“They ride the highs and lows the same as we do.”

Dosh co-founders James McEniery and Shane Marsh.

The fact most illustrative of Marsh’s intention to built a lean neobank is that Dosh, which now has 30,000 customers, has just nine employees, including the co-founders.

Marsh and his co-founder James McEniery use outsourcing cleverly. Dosh does not need to do everything in-house – technology, compliance, marketing, anti-money laundering and social media.

“In the past seven months, Dosh has put in our savings product, put in our lending product, enabled our customers to have Dosh bank account numbers to pay their salary and wages into Dosh,” Marsh says.

“We have rebranded. And we have applied for a banking licence. Seven months. That’s the speed you can operate at when you are not encumbered by legacy.”

It is pressured stuff, and its not only family life that Marsh tries to balance with the venture.

Marsh used to be a super-fit competitive-grade crossfit athlete, and fitness, and healthy eating are important to him. In fact, he sees them as essential for mental health, and managing the stress of building a bank.

“I loved it. Competitive. Intense,” he says of competition crossfit.

He’s had to take things a bit easier lately.

Staying fit is important to managing stress, says Shane Marsh.

“I don’t train as regularly as when I was in a corporate. The business comes first, and I have to work in training around that,” he says.

He built a gym in his garage so he could do that.

“Best investment,” he says.

Launching a business venture is mind-consuming, and Marsh finds it important to have things that he does which take him into a new mental place.

“There’s only two things I can do now when I don’t think about Dosh, coaching kids’ sport and surfing. Surfing for me is massive, therapeutic. There’s something about surfing which is great for the head.”

In time, Marsh expects Dosh to win banking market share from the “cosy oligopoly” of the big Australian banks, ANZ, ASB, BNZ, and Westpac.

Simplicity Kiwisaver founder Sam Stubbs is a master at publicity.

It may have to go to the investor market to raise capital, but it’s not without powerful backers. Avanti, the country’s largest finance company is a part-owner, and its founder Glen Hawkins, has been helpful, Marsh says.

“Having people around you who have trodden the path, and understand the journey you are going through is very useful. I don’t think you would get that from a VC.”

Marsh has become a powerful voice calling for the Government and regulators at act to inject more competition into banking, lecturing, speaking at conferences, and making himself available to media.

It’s a tactic others have used before him to get their start-ups noticed. Gareth Morgan used attacks on insurers and fund managers to help build the KiwiSaver business he later sold to Kiwibank. Simplicity KiwiSaver founder Sam Stubbs used the same playbook having a go at bank KiwiSaver schemes.

Marsh is measured in speaking about the banking sector.

Some banks have been supportive of Dosh – ASB and BNZ.

New Zealand is one of the only OECD countries that is dominated by foreign banks, says Shane Marsh. ‘Every other country has their banks. Australia has their banks. Singapore has their banks. UK has their local banks. And then you have other foreign banks who are competing.’

“I’ll be forever grateful to those banks, two in particular to enable Dosh to get to where it is today,” he says.

When Dosh becomes a bank, it will be able to issue accounts, and hold money in its own right. Currently, it needs those other banks to hold the money for it.

He also points out that overseas, neobanks have worked with big banks, who have decided they can’t squash them.

“That’s what we have seen offshore,” he says.

In Australia, Up Bank, which Marsh sometimes cites, worked with Bendigo Bank, and is now owned by it.

Would Dosh’s investors (Marsh and McEniery still hold a majority stake) sell out to an Australian bank?

Marsh takes a lot of time not to say “no” to that question.

He understands how attractive a neobank might be to a big bank.

“The banks absolutely see this, but they also recognise their inability to solve the problem, because of their ageing technology,” he says.

“I was in a very large bank that had such bright people. They were really focused on doing great things. They could see the great solutions coming through globally, and wanted to bring that to New Zealand.

“We would write business cases, and they would be approved, but we could not get them delivered because of the technology.”

There is a degree of serendipity about Dosh.

Up Bank is an Australian 'neobank' targets young people who want to do all their banking through their mobile phones, and feel disconnected from mainstream banks.

An old school friend of Marsh’s runs an outsourcing company in Manila, and as a result, four of Dosh’s nine employees are there. “I didn’t even know he was there. He just reached out to me,” Marsh says.

His co-founder James McEniery, a fellow New Zealander, and he were neighbours, who got chatting during Covid lockdown in Singapore, where they were both working, Marsh for ANZ, and McEniery for drinks company Lion.

The pair were seeing new models of banking winning market share off old model banks.

“We saw that there was a new global trend emerging having an impact in a lot of countries, but not in New Zealand,” Marsh says.

“It’s not until you are working offshore that you see so starkly what is missing in New Zealand.”

So, they decided to quit their highly-paid corporate jobs, and return to New Zealand to launch a bank.

Marsh is hopeful the Government will follow Australia, the EU and UK in changing laws to promote banking competition.

After the global financial crisis (GFC) in 207 to 2008, the UK and EU moved against banks they saw as the culprits. In Australia a banking royal commission poisoned politicians against big banks.

“In other countries the government stepped in, and said ‘We think banking should be better’,” Marsh says to drive “open banking” and competition.

“That’s just happening now in New Zealand,” he says.

He thinks that delay here is because New Zealand came though GFC relatively unscathed, but, he says: “You now have an environment, where you’ve got the same four players, operating the same model, making record profits at a time where Kiwis are struggling with a cost of living crisis”.

“I believe it’s New Zealand’s time to take the need for competition in banking seriously,” Marsh says.

“Taking it seriously means government getting involved,” he says.

And involved it now is. Parliament is holding a select committee banking inquiry. The Commerce Commission is conducting a market study, but has concluded the big four banks exist in a low-competition “cosy oligopoly”. The Reserve Bank agrees.

Whether the authorities make things easier, or not, Marsh and McEniery will push on with building a bank.

Marsh believes entrepreneurs are born, not made. But, perhaps their innate natural propensity to take risks needs to be activated by experience, and indeed by people who demonstrated how individuals can make a difference.

Marsh speaks fondly of one of his earliest experiences of an entrepreneur in action.

Marsh, who does not whakapapa Māori, grew up in Hamilton, and had the good fortune to attend one of New Zealand’s first bi-lingual schools in Forest Lake Primary.

“We learnt te Reo Māori every day to the point that I was mostly fluent,” he says.

“It was so ahead of its time.”

He credits the head teacher Mihi Roberts as being the first entrepreneur he recognised as planting a seed for delivering change.