How are the changing tides and winds in newFS vs oldFS lending? How are the incumbents and newbies doing? How is the balance of institutional funding of P2P and retail going? What’s the best way to succeed? When does accepting institutional funds turn into just being a front-end for oldFS?
Landbay only do buy-to-let mortgages and since their first loan four years ago have done nearly one thousand loans with a total lent of over £200m and an astonishing 0% loss rate which is a tribute to their strict credit criteria (average LTV 70%) as well as operational efficiency.
They recently won the 2018 Best Buy-To-Let lender of the Year award ahead of Barclays, Lloyds and – well – all others 😀
They were also placed #20 in Deloitte’s Fast Tech 50
Much Fintech (online wealth managers qv) is just “putting lipstick on a pig” – digitising existing processes at oldskool prices. No-one can say this about CrossLend who securitise loans ~200,000 times cheaper than oldskool prices and securitise down to one single loan as small as €1,500 :-!
Furthermore oldskool securitisation has all too often been a metaphor for investment bankers taking a huge chunk of value out of a package of assets and slicing and dicing the residual into complex tranches that even bamboozle the ratings agencies. With catastrophic effects – 2008 & CDO-squareds qv.
CrossLend has grown to a team of around 45 people, based in Berlin and Luxembourg and work across Europe – Germany, Netherlands, Spain, UK, Norway, Finland.
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.
Trade Finance is one of those less media-highlighted but vital areas of the economy – it really is the oil in the engine of international trade. It’s one of those “how hard can it be” areas where it turns out quite a lot of wrinkles make it more of a speciality field than it might be. One can presume that this is due to it being an ancient business, after all finance was needed for the silk road and all other routes and merchant banking had its origins in international trade.
TradeRiver were founded in 2011 and have provided over £100m of working capital finance to businesses in the UK. They provide UK businesses with a unsecured line of revolving trade finance to fund purchases of goods or services within 24 hours, both worldwide and in the UK. Facilities can vary from £100k up to £5million. They recently opened an office in Baltimore to serve the US market.
Being a digital player their aim is to be quick, simple and paperless (more rare than you might imagine in Trade Finance).
I am delighted to be joined today by Guy Willans, Trade River’s COO whose varied career – from Sandhurst, working around the world, an AIM listed dot-com, importing, sales and twelve years at HSBC et al certainly provide a rich enough background to discuss Trade Finance in the round and in context.
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.”
Can InsureTech change the landscape of insurance as a whole or will it just enhance parts of the value chain? Conventional wisdom says the latter but the appearance of a model called “Reinsurance as a Service” [HT to Daily Fintech] could have far wider repercussions.
Traditionally insurance (in all its very diverse/speciated forms) is in three layers. Brokers. Insurers and Reinsurers. Traditionally you would deal with a broker. They would get the policy from a an insurer (eg Aviva who we had on the show in LFP048). Insurers in turn would re-insure themselves with aptly named – er – Reinsurers.
We’ll talk about how Reinsurance as a Service might change that “stack”.
Andy is the CEO of Digital Partners, Munich Re’s entity for interfacing between it and the Insuretech world. MunichRe is one of the worlds largest reinsurers. To give you an idea of what that means it has around 43k employees, €50bn of revenues and €276bn of assets.
Incumbents across FS are trying all sorts of approaches to the Fintech phenomenon. Judging by results to date Munich Re have found one of the best avenues. In a relatively short time they have established partnerships with a number of InsureTechs, none of them “tangential”, including Bought by Many (stars of LFP027), Blink Innovation, Next Insurance, Simplesurance, Slice, So-sure, Trov, Wrisk.
Reformation 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?
I 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?
2016 is the year Fintech realised it had to aim for making a profit. Very few do and for the tiny handful that do its mostly “minimal”. Solving this problem is absolutely vital for the Fintech revolution. This is the story of a Fintech that has done just that – satisfying customers, staff and shareholders. Blue Motor Finance has gone from 12 to 100 staff, 0 to 40 people “on the road”, £0 to £200+m loans, and £0 to seven-figure profits in just two years. A phenomenal achievement, and by a firm not widely known in the broader Fintech world.
So listen up and find the real secrets of balanced Fintech success as CEO and founder Bob Jones shares how a lifetime’s lessons (having been in asset finance for over 50 yrs) has enabled him to reach these goals.
Bob has been a CEO of some big companies, many of which he turned round. An management buy-in provided a bridge from the top roles in BigCo to starting from scratch and leveraging all that experience.
I have the pleasure to be joined today by Will Wynne MD and co-founder of Smart Pension who have had the fastest 0-60 of any Fintech that has been on the show to date and it’s a record that’s hard to beat.
How did they do it? Listen up and all will be revealed – though if all of us can read recipe books, few of us can become master chefs like Will who previously sold millions of flowers (from knowing nothing about that business) and in his spare time raised £100m for charity.
I say “wow” more in this episode than in any other – I think you can see why…
In 2014 I hung out a lot in the Fintech startup scene. So many moths! Such a big flame! One of the insider “trick questions” in Fintech is “name a success from all the Fintech incubator/accelerator programs in London”. Actually to be honest someone did come up with one name very recently – though sadly I’ve forgotten it so will lose the game next time that question comes round.
All of which is to say that the ex-ante chances of an individual Fintech getting anywhere are roughly less than zero. And as for ideas … sigh – so many people tell me they have an idea – yes everyone has lots – there is a bigger gulf from idea to business perhaps than there is from startup to business of scale. And then a big gap from “business of scale” (which the best Fintechs have reached) to – er – what might we call it. Scrapes his memory for long-since economics lessons … of yes its coming back … yes the stage that Fintech ain’t got to yet … its … yes “a profitable business” J
So how do you win the lottery? How do you beat odds of less than zero percent of getting anywhere?
Are you interested in how to do this? Would your Fintech be better off for acquiring 75,000 clients?
Listen up and the formula for instant fame and success will be yours. Terms and conditions apply.
In this episode we are taking a break from talking to the biggest players in London Fintech and dive instead into the far more numerous, if lower profile, world of small Fintechs.
Given the outburst of tech and business creativity right now there have been plenty of new and young companies forming in this sector – both from the Fin side and the Tech side of the FinTech phenomenon.
It’s admirable that so many folks are foregoing the wage slavery and potential necessity to be a clone to fit into giant FS or IT firms and starting out on their own. Equally as all the stats show it’s a highly risky path with the vast majority falling by the wayside.
How do startup and small Fintechs alter the odds?
What is it like working at the smaller end of the Fintech ecosystem?
I am delighted to be joined to discuss this topic by Alexandre Gaillard. He is uniquely qualified being the founder and CEO of a small Fintech Investglass and the Founder of the Swiss Fintech Meetup.
There’s plenty to talk about in this world and amongst the many topics we discuss are: Continue reading →