52% of UK SMEs based floodplains don’t have flood cover! Insurers struggle to insure flood risk due to the difficulty of modelling and assessing the economic impact. Many people/businesses are unable to get insurance cover at all. Every year, globally, there are $50bn of flood caused economic losses of which only $9bn are covered by insurance.
Into the breach (geddit?) step Floodflash formed by Adam Rimmer and Ian Bartholomew experts in modelling event risks – together with the important fixed-payout insurance concept (doesn’t need much reflection to see how good that could be) this constitutes parametric insurance.
Floodflash is an Insuretech startup with great potential. Its also an opportunity to hear from a firm in the FCA sandbox.
Parametric insurance sounds very techie but in its best known form – life insurance – has been around for centuries.
The market failure above is huge.
On this show we discuss the role of event-based, no-exclusion, instant settlement in addressing this problem. Many people/businesses simply cannot get insurance at present.
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?
Nick Ogden is, inter alia, the founder of the FTSE Worldpay and a bunch of other interesting businesses. In 2014 he created ClearBank the UK’s first clearing bank for 250yrs and is setting out to show what a modern, hi-tech clearing bank can offer existing Banks, Fintechs and Corporates.
Its mission is “to create greater competition, transparency and leading edge technology to the banking market.”
Historically the function of Clearing Banks were to clear cheques when there were hundreds of banks in the Uk and traversing the country took days.
This function expanded and now Clearing Banks clear payments of all natures – in the UK FPS, CHAPS, BACS (Direct Debits et al). Clearing banks are basically the experts at “transaction banking”.
But onto the show – how do you disrupt an oligopoly – four clearers control most of the market?
What can one get if one starts with a fresh tech stack rather than piling more on top of tops?
Conrad was on the show back in LFP020 since when he has built Funding Options (strapline “your free marketplace for business finance”) into one of the most successful London Fintechs. They were chosen as one of three UK government mandated SME Referral Portals, are the largest of those by an order of magnitude, increased revenue fourfold last year, are on target to triple again this year as well as being on target to be the UK’s largest introducer of working capital finance.
Funding Options essential task/service is lining up all the many SME borrowers out there with relevant sources of Finance. A task made all the harder by the plethora of lenders and the many types of lending finance available.
Steve Husk has decades in IT and FS and in this tour d’horizon we dive into his experience of delivering IT solutions from design through to sales, why the Cloud as a technology enables a totally different service proposition and what it means to scale in Fintech.
Collateral management has been assuming an ever increasing importance in banking driven in large part by massive (and somewhat inconsistent across continents) regulatory changes as well as innovative approaches to IT being able to far more simply deliver firm-wide solutions rather than the formerly un-joined-up “per silo” basis. Its also been elevated from a back-office issue to a middle-office issue of importance to risk management, compliance.
When I first met CloudMargin back in 2014 (folks don’t believe me enough sometimes when I say the queue to be on this show is long…) there were three founders and about half a dozen staff. Now only one of the founders remains and the firm is 50 strong and manages collateral worth an amazing $2.5trn on behalf of its buy-side and sell-side clients using its SAAS/Cloud solution.
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.
Today we aim at the beating heart of FS – its IT systems. I am delighted to be joined by Mark Beeston founder of Illuminate Financial who has over two decades of hardcore FS experience trading derivatives, COO- and CEO-ing, to discuss Capital Markets Fintech.
A lot of Fintech is B2C, some is B2B but there is a whole chunk trading under the Fintech rubric which aims not to disrupt the provision of FS but rather enhance the incumbents. Disrupting existing IT vendors to FS not FS.
Illuminate Financial are Capital Markets VCs extraordinaire. Their claim is “we cross the chasm between enterprise Fintech and the Financial Institutions it should serve”. I can do no better than quote further re where this gulf comes from:
Regulation is increasing, the industry is deleveraging, and compliance is becoming ever stricter.
Financial institutions have been slow to adopt new technologies, while vendor management and procurement processes are focused on contracting multi-million dollar enterprise solutions from billion dollar corporations.
In doing so, they often overlook the innovative lower cost and highly scalable solutions offered by newer and more entrepreneurial suppliers.
Organisations know that the answers may lie in Fintech. Yet the ever-growing hype around the subject has made it more and more difficult to distil the signal from the noise.”
Do you have to be either “a Fintech” or “an incumbent”? Increasingly as #newFS and #oldFS converge this duality becomes less meaningful and its more about how well FS players young and old are embracing both “digital” per se as well as the business model changes it both implies and enables.
Azur is a great example of this trend. As an “MGA” (more on that anon) they fit into a well-established “old” category of the insurance industry. They are a comparatively new company whilst part-owned by a global giant. And they certainly “get” the digital thing in terms of both “tech” and also “business model changes”.
In LFP074 Andy Rear of the reinsurer MunichRe discussed with us their concept of reinsurance as a service. Put simply the ability to, as it were, just plug into the wall for your electricity/reinsurance – which then leaves InsureTechs able to do everything they might want and avoid falling into a regulatory net and needing a gazillion dollars of capital. Andy said that the key to the future were MGAs – Managing General Agents – but we barely skinned the surface on them
So here we are diving into MGAs and in the interests of brevity lets jump into the topics we discuss: Continue reading →