Tag Archives: Payments

LFP086 – What a 21stC Clearing Bank can do for you with Nick Ogden, Executive Chairman ClearBank

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?

This topics and much more discussed on the show include:  Continue reading

LFP079 – Diving Into UK Challenger Banks with Darren Meek London FS Lead at PwC

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.

Topics discussed include:  Continue reading

LFP075 – Managing Fintech Rebundling with Nikolay Storonsky CEO of Revolut

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.

 

Topics discussed on the show include: Continue reading

LFP068 – The London Fintech Podcast’s 2016 Highlights and 2017 Awards

Dilbert by Scott Adams - Fintech 2016 turns into Fintech 2017Happy New Year boys and girls 🙂 May 2017 be a great one for you and yours! This is the New Year Special where I look back at my 9 highlights from 2016, dish out 10 immensely prestigious awards  and take a peak at 2017.

So without futher ado lets kick off the awards… 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

LFP060 – PSD2 & Open Banking in UK & Europe with Paul Thomalla ACI Worldwide

ACI London Fintech PodcastI’m delighted to be joined by Paul Thomalla expert on the upcoming changes in open-banking, SVP at ACI Worldwide, member of the Payments Strategy Forum (PSF) and board member at Nexo Standards.

Upcoming changes re opening payments to non-banks and opening access to bank account data will change the industry. On top of this we have UK and European initiatives in re (even before Brexit). It’s all swirling round and I thought we needed a guide to clarify where it all is and where it’s all going.

Paul Thomalla SVP global corporate relations and business development CASUALBut first some intros to Paul’s hats.

ACI Worldwide, founded in 1975, is one of these perhaps behind the scenes incumbent payments companies that most of you may not have heard of. Suffice it to say they do $14 trillion of payments per … wait for it … day (!!) Interestingly staff numbers are around 5,000 so that looks to me like $3bn per staff member per day. Either their fingers move fast or do you know what … incumbents can use tech as well or even better than those assailing the castle might ever think.

Lazy Fintech commentators and those with little experience in FS – two categories summed up in many a LinkedIn so-called thought leader article – often talk about FS as if FS were basically almost entirely Banks. As listeners to the show will know its far from that. There is a vast ecosystem of players into which Fintechs are trying to find themselves a place at the table.

In LFP049 we had the pleasure of talking to Rich Wagner, Chairman of the Emerging Payments Association. The Payments Strategy Forum is another player in the equation – Paul can explain the whole meta-process of how incumbents, startups, associations and forums and the regulator and legislators interact to produce the FS world we live in.

Oh yes and we start the show with a story which will take the all-time London Fintech Podcast record for anecdotes – taking an ex-US President to a pub in London.

Topics discussed include: Continue reading

LFP058 – Exchange Traded Funds (ETFs): Tutorial, Bitcoin, Blockchain & Fintech with Laurent Kssis CEC Capital

CEC Capital

Today I have the pleasure to be joined today by Laurent Kssis MD of CEC Capital who has worked in the ETF industry for 14years. We’ve spent a few episodes recently in the heady heights of the super-big picture so let’s get back to the coalface and dive in depth into an important area of FS.

ETFs – Exchange Traded Funds – have been many times on the London Fintech Podcast, always in passing, so I thought it was more than overdue to attack them head on.

Like Banquo’s ghost in Macbeth ETFs are the thing that haunt the whole Investment Management Fintech scene … if, in essence, you can gain exposure to equity markets in a balanced way via a vehicle with minimal fees what exactly is there for Investment Management Fintech to disrupt?

Laurent KssisLaurent certainly has feet in both #oldFS and #newFS camps being the non-exec chairman of the Blockchain investment company Coinsilium. So he is the ideal expert to talk to us about this sector today.

Conceptually ETFs started life as traded funds – if you like index-tracker investment trusts – although why they weren’t just called investment trusts is a question for Laurent. According to wikipedia since 1993 in the US where they were first created an unbelievable $3trn have been invested in them. They have also moved a long way from their origin as index-trackers with (quoting wiki) “By the end of 2015 ETFs offered 1,800 different products covering almost every conceivable market sector, niche and trading strategy”.

So that’s ETFs per se. But like everywhere in FS the wave of innovation that is Fintech is lapping on many shores. If ETFs have inhibited the growth of one area of Fintech what is Fintech doing to them? Listeners will certainly get their money’s worth today as we range from a tutorial on the basics of ETFs through Bitcoin ETFs to blockchain – a huge waterfront.

Topics discussed include:

– how Laurent’s career led him to being an expert on ETFs and progressing that into hot areas like Bitcoin and Blockchain

– the relevance of the “transition management” world [what happens when one fund manager takes over eg a pension fund from another]

– an ETF is a “marketable investment vehicle that allows you to buy and sell during trading hours of the Exchange a basket of stock/bonds/commodities through a single share”

– comparing and contrasting investment trusts and ETFs; management fees, transparency, NAV calculation, premia/discount ranges

– the multiplicity of ETFs eg there are around 50 different ones on the Euro Stoxx 50; different exchanges, currencies, market timezones leading for challenges for  market makers in setting prices, hedging themselves etc

– “trading channel” effectively the arbitrage channel is the range in which ETFs trade compared to their underlying components; over a decade ago this could have been as much as 10%/+5% to -5% (“quite extortionate”) but then illiquid, hard to hedge against;

– this changed rapidly when institutions started to get involved in larger size

– management fees (“TER” – total expense ratio) typically, on ETFs such as Euro Stoxx 50, have gone from ~0.65% a decade ago to ~0.12% today

– ETFs are allowed in ISAs, SIPPs, 401k

– in 401k’s over 50% of the investments are in ETFS (!)

– ETFs are UCITS compliant (which allows passporting into Europe), registered mostly in Ireland and “tax-advantageous” locations (Jersey/Guernsey/Luxembourg)

– ETFs are open-ended they can increase in size at any point (depending on demand:supply); how this is done

– ETFs are undergoing a huge explosion in diversity – you can buy almost anything via ETFs – gold silver, precious metals, industrial metals, agricultural products

the huge opportunity for Fintech in providing a more up-to-date angle to investing in these; the tendency of the first wave of Investment Management Fintech to just replicate investing in the same boring old stuff as existing I.M. firms (core equity markets and bonds for example)

– a whole interesting tale about Bitcoin ETFs and what Laurent learned on that journey – you’ll have to listen to hear that tale 😉 …

– the difference between ETFs and ETNs (Exchange Traded Notes)

– the recent Bitcoin hacking through BitFinex and how it differs from last years MT Gox; a high quality exchange, the role of regulation in re; hot wallets and cold wallets – a painful tale all round 🙁

– blockchain versus bitcoin

ETFs were new once and have been a great success – what can Fintech learn from that (you’ll have to listen ;-)) …

– ETFs have had a rough ride too – from journalists to scandals…

– an overview of Coinsilium – the world’s first listed blockchain publically listed investment company

And much much more 🙂

Share and enjoy!

 

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

LFP049 – Fair & Equal Access to the Payments Infrastructure for Fintechs with Rich Wagner Chairman Emerging Payments Association

EPA Full Logo_JPG

I am delighted to welcome Rich Wagner chairman of the Emerging Payments Association to discuss “fair access to the payments network for Fintechs”. The EPA which is based in London, in passing houses the worlds only incubator for PayTech Fintechs

This is a real hardcore topic a long way aways from the fluffy bunnies and the cheerleaders in their short skirts. Which I have to say IMHO never look that good on men anyway 🙂

So where to start?

One simple way in is to refer to LFP046 – Payments -Theory, Practice & Laughs with Hiroki Takeuchi CEO of GoCardless. There he split payments mechanisms into credit cards, push and pull. GoCardless specialise in pull [Direct Debit to folks in the UK] and to do that, as he explained they need to build relationships with the banks. The factoid that stuck in my mind is that to integrate say Canada into their pull-network would take a year.

Which gives you some feel of how hard it is for a bank.

Another angle is the establishment of the PSR – the Payment Systems Regulator – which uniquely in UK FS is an economic regulator alone and focused on opening up access, at a much lower level of the infrastructure, to non-banks.

Rich WagnerRich Wagner was the star of LFP031 – Payments & Non-Bank Banking and is the CEO of Advanced Payment Solutions. They, a non-bank formed 12yrs ago, have processed over £4bn of payments, have over 1.2million cashplus cards out there and provide banking solutions for 30% of UK local authorities. So another real hardcore player.

 

Such is the power of the London Fintech Podcast that Rich subsequently also became the Chairman of the Emerging Payments Association and it is wearing that hat that he appears today. They recently released a report entitled “Payment Infrastructure: A Call For Fair And Equal Access For Fintech” which sums it all up rather nicely.

He is an ideal guide to explain to us the changing landscape of payments systems that were designed a long time before Fintech was ever thought of and need to operate with roughly 99.99999% accuracy every day for zillions of pounds. Clearly you don’t want just any old startup API-ing into that. But neither should banks have a monopoly over payments (which to cut a long story short is where the PSR is coming from).

There is also the context that the current system is creaking One incident last year resulted in a high street bank having to disclose 600,000 missing payments in the Faster Payments system (and I personally have heard of worse). Imagine being a payments fintech that happened to have been running on the “rails” of that bank.

Furthermore there is also a pricing angle – the number 600 cropping up again in terms of up to 600% mark-ups being paid for access to the systems.

In this episode we discuss: Continue reading