Tag Archives: Alternative Finance

LFP078 – Special Episode! 30,000 Feet Guide to UK Property Investment in the Fintech Age with Alex Michelin, founder CapitalRise

We all know that buying a property in the UK is a nightmare, that property prices are through the roof, that a first time buyer in London has an average age of 39 and that the “Bank of Mum and Dad” now has to contribute to around a third of first time purchases. Yet most folks in the UK are owner-occupiers and have to go through this.

How can Fintech help?

I’m delighted to be joined today by Alex Michelin, a former investment banker turned highly successful property developer, who not only has been immersed in this for over 15yrs but who recently founded CapitalRise a Fintech property portal. The team of eight at CapitalRise has over 75yrs of direct retail investment experience between them and the co-founders Alex and Andrew Dunn, who have acquired, developed and sold over £1bn of real estate. CapitalRise has been spun out of the highly successful top-of-the-market luxury property developers Finchatton.

Given the “challenges” (<coughs>) of the UK property market how can Fintech help? Before we get to that Alex sets the scene with an overview of all the many ways one can get exposure to UK property. So by the time we get to Fintech y’all should have a good idea of where it fits in, what it disrupts and its potential relevance to you.

Topics discussed include:  Continue reading

LFP069 – IFAs, Fintech & Roboadvisers with Dan Kiernan Research Director Intelligent Partnership

IP banner for London Fintech Podcast“Everyone” frets over financial advice in the Fintech Age. Regulators set out to “protect the consumer”, worthy bodies talk no end about the need to protect “people” (never themselves oddly – generally they imply (/mean) folks of lesser education/wealth) and the rest of us are just confused over the labyrinthine rules around tax, savings and investments.

Needless to say a myriad on rules and regulations and the implicit costs of this suprastructure all act together in a Kafkaesque way to produce the opposite result – known as “the advice gap”.

In Fintechland breathless media and PR firms high on sugar, caffeine and other stimulants promise us a golden era of so-called “roboadvice”.

Dan KiernanHow to make sense of all this?

I am delighted to be joined today by Dan Kiernan Research Director at Intelligent Partnership “the UK’s leading provider of research, training and events on Alternative Investments” to cut through all this and to give us insights into why advisers are not recommending eg P2P to their clients when it has outperformed bank deposits for more than a decade.

On the show today we discuss all of the above and: Continue reading

LFP067 – Rethinking Banking: Marketplaces and App-Only Banks with Tom Blomfield CEO Monzo Bank

LFP Banner MonzoReformation or refactoring of banking is the Holy Grail of the Fintech Revolution. Do that and the revolution is a big deal. Get nowhere near and its all rather marginal. So-called challenger banks have ended up rather same-y. Will “App-only” banks end up going down the same route forced my micro-regulation and micro-supervision into the same tight mould. Or will they somehow remain within the constraints of the mould but somehow break it at the same time?

Its that paradox that faces Tom Blomfield CEO and founder of Monzo Bank. (and co-founder back in the day of GoCardless who were on the show in LFP046) A long way towards full authorisation as a bank will they become merely “me-too” or will they refactor banking as we know it?

Tom BlomfieldI have been an interested spectator on the sidelines for come time wondering which way the ball will bounce. At Lendit Europe 2016 I finally succumbed and took one of Tom’s pre-paid Mastercards – not least as which they offer wholesale exchange rates abroad and I was just off on holiday. It’s actually quite cool and more useful than expected. Certainly one gets a clear idea of what its like to feel like the business is really focusing on you as a customer-centric organisation with great design and service.

But back to the big picture – will Tom change the mould or will the mould change Tom?

Topics discussed include: Continue reading

LFP066 – Solving Fintech’s Profitability Problem with Bob Jones CEO & Founder Blue Motor Finance

LFP Blue Motor Finance2016 is the year Fintech realised it had to aim for making a profit. Very few do and for the tiny handful that do its mostly “minimal”. Solving this problem is absolutely vital for the Fintech revolution. This is the story of a Fintech that has done just that – satisfying customers, staff and shareholders. Blue Motor Finance has gone from 12 to 100 staff, 0 to 40 people “on the road”, £0 to £200+m loans, and £0 to seven-figure profits in just two years. A phenomenal achievement, and by a firm not widely known in the broader Fintech world.

Bob-JonesSo listen up and find the real secrets of balanced Fintech success as CEO and founder Bob Jones shares how a lifetime’s lessons (having been in asset finance for over 50 yrs) has enabled him to reach these goals.

Bob has been a CEO of some big companies, many of which he turned round. An management buy-in provided a bridge from the top roles in BigCo to starting from scratch and leveraging all that experience.

So without further ado topics we discuss include: Continue reading

LFP064 – P2P in the US, China and UK with Peter Renton

Lendit US 2017After organising nearly 1,000 folks in the O2 for Europe’s largest P2P conference ever I managed to grab Peter long enough to have a fascinating tour of the globe and P2P sitrep in the three major hubs.

Peter Renton PhotoPeter Renton has perhaps has more of a broad and deep understanding of P2P worldwide than anyone.

When he first came on the show way back in LFP015 he shared with us the fascinating history of US P2P with its hugely up and down roller-coaster road.

Since then he has created the world’s go-to conferences on P2P in the US, China and Europe which gives him a unique insight into what’s what and where.

It’s a big world and P2P is a vast domain these days so there is plenty to discuss. Key topics are: Continue reading

LFP062 – “Hard Fail” Provision Funds Revisited with Rhydian Lewis CEO Ratesetter

Ratesetter LFPI am delighted to be joined on the show today once again by Rhydian Lewis CEO at Ratesetter to talk about the ultra-hot topic of provision funds in p2p/marketplace lending. Rhydian was on in the early days back in LFP019 in an episode talking about P2P beyond the metaphors. That’s a good theme for today on a narrower topic as all too often when one reads about provision funds its metaphorical.

Rhydian LewisIn practice as with most/all of FS one really needs to get the metaphorical whiteboard out and draw some diagrams and a bit of arithmetic to make it real.

Lets provide some context first. Ratesetter was formed 7 yrs ago and has accumulated an amazing 300,000 customers with an amazing 250,000 on the platform right now and have lent an amazing £1.5bn with no lender ever losing a penny of interest or capital along the way.

Those are phenomenal achievements that very very very few Fintechs will ever manage to better.

But like growing up there are growth pains along the way. Ratesetter has been somewhat the P2P of choice for taking pot-shots at this year for the FT Alphaville column and the impressive Kadhim Shubber who seems to do more research than most. What are euphemistically described perhaps as missteps around self-investment of provision funds, not publishing future loan losses and rebasing of how the provision fund excess is calculated came in something of a flurry and even generous if sceptical folks like I started to raise an eyebrow.

But behind all this is the need to change. Did Ratesetter – or for that matter you and I – get everything right in 2009 (or for that matter every year since) or do they and we all need to keep changing in the light of experience and further thought?

Let’s briefly mention provision funds.

So briefly a soft-fail provision fund to use my terms is like the platform having a piggy bank into which it puts a few pence on every deal. If lenders loans are impaired that piggy bank is raided to subsidise them. But when it runs out the platform says “sorry guys no more funds to subsidise your loss, over to you”.

A hard fail model in contrast (which off the top of my head Ratesetter is the only big user of) when it runs out pools all investors assets together (to share the losses out). This is a big phase change – like going from water to ice. Its always been a concern of mine – if only as 30+ yrs in FS has shown me time and time again in different markets the impossible is always happening. No amount of whiteboard ink will ever save everyone in all circumstances.

So lets dive into all of this. An annus trickyus for Rhydian and colleagues and this important point about hard provision funds.

Plenty discussed on the show including: Continue reading

LFP057 – Five Reasons Corporate Governance is Essential for Fintech with Geoff Miller CEO Afaafa

AFAAFA

Geoff Miller

I have the pleasure to be joined today by Geoff Miller, CEO of Afaafa and former CEO of GLI Finance which he built from having no presence in AltFi to having over two dozen share stakes and loan agreements.

If existing FS has gone far to far in the direction of endless PC box-ticking – the porridge is too hot, then for sure in Fintech the porridge is too cold. Fintech is a long way behind grown-up FS is on corporate governance – the average Fintech board being comprised of founders & VCs/angels – little independence there.

How can Fintech get the porridge “just right”?

What are the advantages for a Fintech of a well-composed board?

A quick count on LinkedIn shows that Geoff may have been on getting on for two dozen boards.  So who better to talk about the importance of corporate governance then Geoff. As Professor John Kay said in LFP055 corporate governance may sound like a dull box-ticking exercise but it is a vital function of FS. Just look at what has happened to senior executive pay in the UK when the FS industry (now the largest holder as most of our investments are indirect) hasn’t much to vote much at board meetings. If the cat is off busy making whoopee its hardly surprising if the mice steal most of the cheese.

If you are anywhere near the Fintech scene in London (or in some other countries) you will have heard of Geoff. Geoff has always been a rare soul in terms of brutal honesty. At AltFi Europe 2015, the general tone of which was “ra-ra aren’t we wonderful” Geoff spoke of “woeful underwriting standards and hopelessly naïve CEOs”.

Geoff is an ideal guest on the London Fintech Podcast as he doesn’t just have “views and opinions” which are so prevalent amongst the so-called “thought-leader” classes   Rather he has been at many coal faces with many miners. And as with coal mining its often painful work. In LFP037 John Regan gave an excellent account of managing ones way out of business model crisis at Platform Black. GLI Finance had its own internal shuffle before Xmas bringing in new management. More recently Funding Knight went into administration and there was plenty of work for the board there.

Topics discussed on the show include: Continue reading

LFP056 – “Everything You Wanted to Know About Fintech Venture Capital But Were Too Afraid To Ask” with Rob Moffat Partner at Balderton Capital

Balderton BannerI am  delighted to welcome Rob Moffat, Partner at Balderton Capital to dive into the topic of Venture Capital and Fintech.  As I aim to present London Fintech in the round I have been – for a long time – keeping my eye open for a friendly VC to have on the show. This has taken two years would you believe!

Viewed from Mars you might think this is curious given how the whole mainstream tech media is so focused on fund-raisings, so-called valuations (and fantasy animals with one horn), and the whole machismo around money.

Viewed not from Mars the VC sector globally is perhaps rather problematic. If this is a surprise to you then I recommend as an entry point Diane Mulcahy’s 2014 Harvard Business Review article Venture Capitalists get well paid to lose money. As a former VC she knows where to direct the fire – high fees, illiquidity and underperformance. As I recall in the greatest tech boom ever, in the US the aggregate stats are something like that the average VC hasn’t even returned to the investors the funds they raised, let alone got a carry cheque (the performance related fee).

Furthermore as we heard way back in LFP008 with Richard Goold the UK/European venture capital market was very thin indeed in most of the 20th Century (post-WW2 the UK basically had the (originally government) 3i as the only player for a long time) and returns were poor.

Set against this virtually every Fintech that scales needs VC money – without which there would be no boom at all.

Equally like in all industries there are always some good players with a reputation for adding value. It was such a lead that led me to Balderton Capital who are one of the real players in the London Fintech scene.

Rob MoffatRob also writes a lot on the industry – I recommend his blog – and is on the board of seven of Balderton’s investments, the best-known of which in UK Fintech are perhaps GoCardless and Nutmeg. Balderton invests around £20m per annum into Fintech.

Above and beyond this Rob is – finally – someone who is happy to talk on air about the reality of VC and Fintech. As he joined the firm in 2009 (from Google) he has experienced the Fintech world from roots through shoots and now into a rather varied garden.

There is more than plenty discussed on the show, key topics include: Continue reading

LFP055 – How Fintech Could Become Far Greater by Re-Forming FS with Professor John Kay

John KayI am delighted to be joined this week by Professor John Kay – one of the UK’s leading economists and outstanding authority on Financial Services to discuss the truly vast potential that still exists for Fintech to disrupt FS. Fintech as we know it now has so far only put its toe into that ocean of possibility.

Maybe Fintech as we know it now is as good as it gets. Or maybe it could be far far more. If the latter it really needs to get stuck into the areas we discuss on the show and in a far more radical way really support society at large and both re-form and reform FS.

John’s CV includes having written for the Financial Times for over 20yrs, being a successful author of at least 9 books, a fellow of St John’s college Oxford for some 46yrs, a visiting Professor at the LSE, being awarded the CBE, has been a director of well over a dozen FS companies, a successful businessman (Google tells me he has an investment in London Fintech Nutmeg), a member of the British Academy, the Royal Society of Edinburgh, establishing the IFS as one of Britain’s leading think tanks,  and in 2012 producing a review for the UK Government on equity markets and long term decision making. Post-Brexit he has been appointed to advise the Scottish Government on European Union issues.

So he knows a thing or two about FS. Not only this but as his website strapline is “accessible and relevant economics” he has the rare ability to take all that knowledge and experience and make it readily assimilable to the layman. Never more so than in his latest book “Other People’s Money: Masters of the Universe or Servants of the People?” (which currently gets 4.4*/5 from 32 reviews on amazon.co.uk).

If you want a taste of the book and an education (I learnt a lot and I know a little about FS myself) I recommend checking out John talking about the book at Google or at the LSE. And then buy the book 🙂

Anyway all this deep background serves for a very deep and vitally important issue.

Fintech would not be where it is today without the FS crisis of 2008. Leading authorities – John, the ex-governor of the Bank of England and the ex head of the FSA – have all written books saying that the fundamental dynamics behind that crisis have not been eliminated and that we will see a similar crisis again. I agree entirely.

In his Google Talk John mentioned that his book was in part educative but also in part so that when the next FS crisis breaks authorities will not be able to say (as they did last time) they had no forewarning and no policy prescriptions to reach for.

This made we wonder whether we couldn’t repurpose and leverage John’s work – inverting it as it were – turning problems into opportunities and showing what Fintech could do to both reform and re-form FS. Continue reading

LFP054 – Special Episode! Do we need Fintech 2.0? What are Brexit’s impacts? with Giles Andrews Zopa Chairman

Zopa-930-x-180Less than a week ago the UK voted to leave the EU. This comes against a background of severe problems for listed US marketplace lenders, a worlwide tailing off of institutional capital into the sector and only a tiny number of Fintechs having achieved profitability (many years after launch).

I thought it time to take a big picture look at Fintech – is Fintech 1.0 flagging? Do we need Fintech 2.0 to take us onward and upwards? Will Brexit be a positive force or a negative force for Fintech?

ST-ZopaA14vc051I could think of no better figure to discuss this with than Giles Andrews who has been at the top of perhaps the UK’s oldest Fintech Zopa per se as well as one of the most blue-chip today.

It’s a wide-ranging conversation but one that lays out some of the parameters of the territory ahead – one which right now may be shrouded in fog but one which we all, including the Fintech sector, will travel through.

It’s a longer episode than normal and there is plenty on the show. Some main topics we discuss include:

Continue reading