Which UK FIntech does $3trn of business per annum and are in 7 countries? Well I guess for readers on the website the pic above is a bit of a hint. David Mercer CEO LMAX Exchange joins us today to dive into the subject of marketplaces which have been a fundamental part of culture forever and a fundamental part of Fintech as a mechanism for connecting buyer and seller more efficiently.
LMAX Exchange’s claim is that they are leading the global FX industry transformation to transparent and fair execution. Sounds good but before we get around to that we look in depth at Marketplaces per se.
In this New Year Special I’ll survey the state of the art and present a report card for each of the main Fintech sectors – P2P, Bitcoin, Blockchain, Money, App-only banks, Insuretech, Digital I.M., Regtech, Payments and a deeper dive into the leading AI of 2017. We also examine the broader context for Fintech – namely US Tech Giants who had a seismic shift in 2017.
No awards as such this year but plenty of honourable mentions and a host of goodies for those of you in search of new ideas.
The best post-“post crisis” banks have leaped ahead and are well on the way to leveraging Fintech to make themselves even stronger. Alexander Ball Fintech Manager at ING talks to us about a bank which has over 100 partnerships with Fintechs, the best known of which perhaps is Kabbage whereby ING clients can borrow up to €100,000 online within minutes.
All incumbents, all banks are absolutely not the same. Whilst the slowest and least well organised of the incumbents aren’t doing a great job adapting to the digital world the best organised are.
When a firm with 50,000 staff and €50bn of equity start to leverage new digital ideas and innovations doesn’t this start to leave disruptive Fintech far behind?
How does Alex and his team of scouts and analysts organise this?
How do they date and mate with the right Fintechs?
What are the challenges?
What are the opportunities?
How have they had to change to make all this happen?
A year ago in LFP060 (currently the 2nd most downloaded episode) we covered Open Banking/PSD2 from a Regulatory perspective. In this episode Louise Beaumont argues forcefully that Reg & Tech perspectives are “necessary but not sufficient”. To do Open Banking “well” means to utterly rethink ones strategy.
Louise is the co-Chair of the Open Bank Working Group at techUK , member of the UK Govt’s Open Bank Implementation Entity and Strategic Advisor Open Bank at Publicis.Sapient and thus sees Open Banking from many sides.
She was also on the show three years ago in LFP011, she was a co-founder of Platform Black, the then number two in the UK Fintech Invoice Discounting sector so has plenty of deep background in the Fintech Revolution. Indeed LFP011 was precisely around what she saw as the 5 Key Challenges facing Fintechs growth (which seem appropriate to this day).
So with that track record behind her we can anticipate that her views on Open Banking/PSD2 will be equally relevant in several years’ time too.
So if a year ago we looked into what this is all about and where it is coming from, we can now examine where we are and critically what the key factors for success are in practice.
What are the threats?
What are the opportunities?
Is sharing your customers data so well you lose them all success?
Data is to our age as steam was to the industrial revolution, just rather more intimate as, in extremis, your data reveals you and your life. It needs to be kept secure and it needs to be kept private – few of us would be happy with a world where all our records were available.
But what is privacy? Philosophically, politically, practically and – with the huge EU legislation GDPR on the horizon, regulatory (breaches of which can cost a firm 2-4% of the global revenue of the ultimate parent company). How can “tech” play a part in this? Can it make squaring all these circles feasible? Can one design data privacy into systems rather than just “ice the cake”?
On this show Jason du Preez CEO of Data Privacy firm Privitar whose focus is “Privacy Engineering” across multiple verticals (FS, Pharma, Telecoms et al) joins us to pull together all the threads that make up the tapestry.
If you are anything like me then occasionally you can get impassioned by data privacy and the rest of the time not worry about it.
What is a more nuanced position other than this digital (ha!) choice? What is privacy? Is it absolute, is it relative? How do all these topics relate to the practical day to day roles of firms and how does this relate to the must-do regulation?
Twenty or so new banking licences have been granted since 2010. The UK Retail Banking Sector is incredibly diverse but this is often disguised by the single label of “Challenger Banks” which hides far more than it reveals. UK Retail Banking is a very diverse sector with players with very different focuses and motivations.
In compiling their report “Who Are You Calling A Challenger Bank?”, PwC has interviewed dozens of CEOs and senior executives and, worked with YouGov to establish consumers’ views and preferences. In doing so they have produced a grounded, well-researched analysis (it’s free – check it out) that sheds light on how competition is improving customer choice and driving innovation in UK retail banking.
Darren Meek has 26 years at PwC and joins us today in conversation about the must-know, main important themes of the vibrant scene that exists today.
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.
One of the founding ethos of Fintech was “unbundling” – the slicing of FS into single-issue firms. This is now looking old-hat. Revolut acquired 500,000 customers in less than two years by offering interbank rates on FX transfers and so was one of the most successful of Fintech 1.0.
Now they are leading the way with Fintech 2.0 offering a whole range of products. Managing this transition with respect to both “the brand” and “the app” is not trivial and I am delighted to be joined today by co-founder and CEO Nikolay Storonsky.
Unlike Monzo who have gone down the banking route but Revolut have remained with the simpler/cheaper/faster but narrower e-money issuer licence.
Investment management – despite its known deficiencies – has been least disrupted perhaps so far by “Fintech”. The first wave of I.M. Fintechs (pre- & up to 2015) promised “democratisation” but have made relatively little headway. The awfully named “roboadvisers” are neither robo nor advisers but are ludicrously hyped.
There’s also the rather challenging question of what is there to be disrupted if ETFs (see LFP058) can be bought for roughly zero commission and have minimal fees.
Against this background I was delighted to come across Adam French – he and two other ex-Goldman Sachs colleagues launched Scalable Capital in both the UK and Germany a little over a year ago, and, as befits their background, really know of what they speak. They also have the advantage of befitting from V1.0 of the great “digitalisation of wealth management” experiment and can better design V2.0. They claim to be Europe’s fastest growing “online wealth manager” with around 4,000 clients, £150m of assets under management, and have a tie-up with ultra-blue-chip Siemens to power their employee benefits platform in Germany.