Your Guide to UK Fintech
Paul McCorquodale
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COO | Founder | CEO | CTO | Helping Businesses Develop Strategy | Empowering & Developing High Performance teams
What is Fintech?
Lets ensure we are both on the same page: Fintech is simply an abbreviation for Financial Technology. Its all about using technology and innovation to create services and products for the financial industry. Some startups are beginning to disrupt the industry but the big players, especially banks are starting to invest large sums of money and resources into revolutionising their technology to compete. Technology is Technology and the financial industry is no different so we are seeing the innovators, producteers and engineers from the previous online, mobile, e-commerce and m-commerce industries either pioneering the future of financial services or being brought in to accelerate them.
Although Fintech has been around for a number of years, 2018 is expected to be a pivotal year for this sector especially as open banking legislation in the UK started to come into affect from January this year. This basically means that banks must use technology to enable a simple way that third parties can execute transactions on the customers behalf , where customers have authorised it. It is really being put in place to try and make it easier for consumers to switch between one bank and another. Combine this with the EU Payment Services Directive (PSD2) updated regulation and the walls are being brought down. These are the Trojan Horses that will level the playing field and disrupt the industry with innovative services.
Who to watch in the UK?
This is where it gets exciting. Below are just some of the businesses that will change the way you handle finances in the future. Be careful though, as my challenge is that I want to try all the new innovations personally and then start thinking wow what if it could do this.
If you know of any other fintech disrupters in the UK then feel to add them in the comments section and if they are ones to watch then I will add them to this article. So let jump in to the ones to watch:
Curve
What do they do? This fintech startup is based in London and provides a technology that lets you consolidate all of your bank cards into a single Curve card. Think of it like apple pay on steroids embedded into a physical card. It let lets you manage all payments through the app and automatically enables reward schemes for specific stores.
Why watch them? They have positioned themselves in a great space to work with both the disrupters and the current institutions, providing complimentary services. Their “back in time” technology means even if you use the wrong card to pay for something, you can swap it to another payment card within 14 days (financial time travel). So far they have had over $12m investment and are lead by CEO Shachar Bialick
Trussle
What do they do? Online Mortgage Manager. They are changing the way consumers manage their mortgage. Founded in 2015 and already they manage over £500m in mortgages. If you have found the property then Trussle can find you the right mortgage online in less then five minutes as it searches through over 90 UK lenders and ~11,000 products to find the right one for you
Why watch them? The system doesn’t stop once you have selected your mortgage as Trussle continues to track the market against your mortgage. Alerting you if there is a better deal available and suggesting a move. They are lead by CEO Ishaan Malhi and so far had aprox $5.7m in funding
YoYo Wallet
What do they do? On e-payment and e-loyalty application driven by QR codes. YoYo like to do things differently and automatically enable your cash back and loyalty awards via their mobile Wallet.
Why watch them? The convience of the mobile wallet is just the tip of the iceberg. YoYo is really all about the data, analytics and prediction of consumer behaviour to drive future loyalty. With ~$27m in funding so far Michael Rolph and the team are moving fast.
Truelayer
What do they do? Building the APIs and reusable services to allow other businesses to access and easily integrate with banks. This might not sounds as exciting but for a techy this is brilliant. Truelayer are creating the tools that allow others to build their products and innovate.
Why watch them? As innovation hots up creative minds want to focus on creating innovative products. So the demand for tools that do the hardwork of maintaining integrations become more and more important. Truelayer will make it simple for startups to access banking information and enabling the banks to meet the regulations. They charge a small fee for accessing the API and as long as they make it plug and play this scale quickly. With investment so far of $4.5m, CEO Francesco Simoneschi is setting Truelayer up for the future.
Revolut
What do they do? They are a digital challenger bank. Once signed up users get a physical MasterCard. When you make purchases abroad the card exchanges the money into the local currency so that you don’t get hit with any fees. Users can also easily send money to friends and family through channels like like WhatsApp.
Why watch them? Their recent innovation: “disposable virtual payment card” is brilliant. Designed especially for making online purchases. This virtual card changes its details including card number etc after every transaction making it harder for the fraudsters to keep up. CEO Nikolay Storonsky has firepower behind the team with around $86m in funding so far.
Monzo
What do they do? Digital challenger bank rebuilding the current account from the groundup. Monzo is building its banking software from the ground up to give customers a real-time current account that lives on your smartphone.
Why watch them? They have around 500k users and are focused on creating a transparent user lead bank that provides real-time account information, geolocated transactions, peer-to-peer transactions and spending reports in the palm of your hand. CEO Tom Blomfield is leading the team and with over $109m in funding so far they have a lot of firepower
Atom
What do they do? Digital challenger bank. They were one of the first to receive a licence — in June 2015, and launched services by April 2016. In less than two years of operations, Atom has taken £1.3bn of deposits and loaned over £1.2bn
Why watch them? Atom is focused on user experience, providing convenient personalised services via mobile. CEO Mark Mullen and the team have industry knowledge and financial backing to the tune of $369m
Starling Bank
What do they do? Digital challenger bank for consumer and business. With its own in house core system and uses GPS And Bottom line technologies for processing and payments.
Why watch them? They are focusing on putting Starling personal and business accounts at the heart of what they are doing and then creating great partnerships to make functionality endless. CEO Anne Boden and the team are fuelled by ~ $70m in funding and their marketplace is the key to their future with more and more capability driven by partnerships
Nutmeg
What do they do? Online investment management services. Enabling users to invest from £1000, with saving goals and guidance. With over £1 billion in assets under management, and more than 48,700 clients.
Why watch them? They have proved the model of making it easy to invest with great user interface and simple pricing. Now new CEO Martin Stead with $77m of funding is scaling the business.
TransferWise
What do they do? Their main offering allows you to transfer money between countries at up to 8 times cheaper rates than traditional methods. This is achieved through having Transferwise accounts in every country that manages your transaction.
Why watch them? Well they have been valued at over $1.6b after operating for just 7 years. They are also moving into borderless accounts and credit cards allowing you to spend anywhere in the world using the local currency. CEO Taavet Hinrikus is leading the team with $396m of funding.
GOCARDLESS
What do they do? They enable small businesses to process payments and direct debits quickly. By aggregating payments they keep their fees low at 1% with a cap of £2
Why watch them? Currently focused on the UK and Europe with over 2097% growth rate. They have had £4bn worth of transactions from 35,000 customers so far. Their remarkable CEO Hiroki Takeuchi is in the driver seat and taking his team into the future with total funding so far of over $47m
IWOCA
What do they do? They provides small businesses instant easy access to working capital without all the traditional hurdles. Providing up to £150k of capital.
Why watch them? They are using AI technology to automatically calculate lending risks which then calculate what credit limit and lending model to offer. With no upfront fees and time based interest models its really simple. CEO Christoph Rieche is leading the team with a total of $90m in funding so far.
Cleo AI
What do they do? Your own personal financial advisor is the Cleo AI chat bot. Based on Facebook Messenger it connects to all your accounts to provide the big picture. Allowing you to query your finances or even ask things like “How much did I spent in restaurants last week?”.
Why watch them? They are growing fast. CEO Barney Hussey-Yeo and the team already have nearly 200,000 users and if they can execute and refine the AI they could help people look after their money better in the future. They are integrated into a huge number of banks and are growing both in the UK and USA, with $2m raised so far.
Tide
What do they do? Business bank challenger Tide is trying to give small businesses a bank that is easy to use but has all the tools they need for business today.
Why watch them? They are not just providing a business bank account but also a suite of online tools including automated book-keeping, expense tracking (photo and notes per transaction) and automated invoice scanning. Low fees: 20p per transfer and £1 per ATM withdrawal. Tide is also supported by Barclays. CEO George Bevis is currently leading the team and recently raised $14m in funding.
Note: check out their simple redesign of a bank card. Its verticle. Yep makes sense doesn’t it.. Years ago swipe payments were horizontal, but today 90% of transactions are verticle.
Chip
What do they do? Automated Savings App. Chip calculates how much you can afford to save and automatically transfers it to your chip savings account
Why watch them? Although the savings spacing is becoming busy Chip sees themselves providing AI automation to manage lots of financial services in the future with savings being the first of many. CEO Simon Rabin is leading the team and has had an initial injection of over $1m
Pockit
What do they do? Bank account type services for all regardless of income or credit status. They provide customers with an online account, mobile app and a Master card
Why watch them? They are targeting a gap in the market and have already over 200,000 customers. These customers have specific needs and Pockit plans to start adding more specific financial services to support their community. CEO Virraj Jatania is leading the team with $10m in fuel so far.
CountingUp
What do they do? New Challenger Business Bank account with integrated accounting and Tax systems.
Why watch them? The UK government are driving a digital tax model for businesses and so the need for more real time and automated business tax system is growing. For businesses real time accounting information can be the difference between success and failure. CEO Tim Fouracre is leading the team and they have had an initial injection of ~£0.75m in funding.
Wealthify
What do they do? Cardiff based Online Investment System for everyone. They are simplifying investments and enabling this for anyone to take advantage.
Why watch them? They have signed a strategic partnership with Aviva, the UK’s largest provider of general insurance and pensions provider. This will give them access to 15 million UK customers, which will help Richard Theo and the team accelerate their ambition of turning 1 million savers into investors by 2020.
Wrap up
So as you can see there is lots of activity in this sector and the UK fintech scene is establishing itself as a power to watch in the international fintech market. Some of these startups are innovating and changing how finance works in the future. It would be great to see more businesses enabling services that traditional finance services were not capable of providing. One area that would be great to see improved is family finances. Joint accounts were the traditional resolution but what do families need tomorrow to share and empowering their family members? Watch this space as I think 2018 will see fintech grow quickly and as the banks complete their open APIs this can only accelerate.
COO | Founder | CEO | CTO | Helping Businesses Develop Strategy | Empowering & Developing High Performance teams
Originally published at https://www.linkedin.com on April 18, 2018.
