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Fintech: A New Age Of Financial Services

June 16th, 2015 by

The financial sector has come late to the technology party, but we seem to have reached a point where things are truly moving forwards. We take a look at some interesting fintech startups making waves here in London.

“Do you know what our busiest bank branch is in the UK? It’s our mobile app on the 7.15am train to Paddington.”. Ross McEwan the CEO of RBS, said this in a report from the British Bankers’ Association (BBA) called ‘The way we bank now’. The banking public has welcomed the convenience of apps for managing money to the point where the thought of queuing in a bank branch is starting to feel like something that belongs to the past.

It’s not actually that long ago that banks started embracing the technology tools that make people’s lives easier. Banking apps have only been widespread over very recent years, and contactless payment has only become common in the past year. The financial sector has come late to technology, but we seem to have reached a point where things are moving forwards: big financial groups are truly embracing technological solutions, while small startups are coming up with some very innovative ways for us to manage our finances.

Some of the most interesting developments in fintech right now are happening because mature finance groups are reaching out to startups, helping them get off the ground. This isn’t just charity: by supporting a wide range of smaller companies to come up with new ideas they can choose which solutions to adopt themselves for the future, either by buying the startup or by licensing the developed technology. Increasingly major companies opt for the latter.

RBS launched a partnership earlier this year with peer-to-peer lenders Funding Circle and Assetz Capital, in an effort to help companies receive funding. Half of small companies who apply for loans are rejected by banks, according to research by the Department for Business. A more established support system is the Barclays Accelerator, where selected startups are nurtured by industry experts, and given seed funding by Techstars. “We recognise that to drive innovation within Barclays, we also need to look outside of the organisation and embrace the innovative start-up ecosystem,” Derek White, chief design officer at Barclays, said to ‘Financial News’.

The most recent batch of Barclays Accelerator companies, who were revealed in March, include:

  • Origin, a new bond marketplace for large corporations and institutional investors
  • Basestone, a cloud tool to help manage construction projects
  • Ravelin, a producer of “machine learning” software to help spot fraud
  • LiquidLandscape, a provider of data visualisation tool for traders to better analyse data.

Possibly the most interesting thing about the London fintech startup scene is that many of these companies are actually making money, unlike the startups focusing on free services. “London already has some $1bn valuation startups, namely Monitise, Powa and Transferwise,” Alex McCracken, managing director of venture services at Silicon Valley Bank, told ‘CityAM’. McCracken added that the London fintech scene stands out due to its “high quality and growth of companies that were just formed a few years ago, and yet now have significant transaction volumes, revenues and users. These businesses are disrupting incumbent financial services institutions”.

Here are some more London fintech startups definitely worth watching:

  • BlockChain brands itself as the world’s most popular BitCoin wallet. Founded in 2011 by UK developer Ben Reeves, BlockChain aims to provide software that makes BitCoin safer as well as easier to use.
  • HedgePo is a portal where investors and fund managers of the hedge fund industry can get together and exchange information. David Tawil and Ryan Kalish established the company in 2012, bringing a technology solution to financial services networking.
  • DueDil is a one-stop-shop for information about unlisted companies. Founded by Damian Kimmelman in 2009, DueDil’s database has been praised for creating more transparency among companies.
  • Nutmeg is a no-nonsense savings and investment management service, set up by Nick Hungerford in 2013 in response to what he perceived to be an opaque and exclusive industry.
  • FundApps takes a cloud-based approach to organising companies’ regulatory compliance information. Established in 2010 by Andrew White, FundApps came along “to drag finance software kicking and screaming into the 21st century”.

Have you got a startup idea which can compete in this market? Follow our Setting Up A Business series, where we have explored market research, writing a business plan, business structure and finding funding.

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