>>Redrawing the lines: FinTech’s growing influence on Financial Services

Redrawing the lines:
FinTech’s growing influence on Financial Services

Fintech startups are one of the resounding success stories of the global economy over the past five years.  2016 in particular clearly demonstrated the acceleration of the disruption that is taking place in the global financial services industry.  More capital than ever before is being invested around the world in startups that are creating new financial products and solutions.  This is evident in the fact that the top 100 fintech companies managed to attract an additional US$14.6bn of capital in the last 12 months.

Of the current top 100, one of the very striking features is the tip in the balance towards those considered to be disruptors over enablers.  Disruptors are those that challenge the existing market, enables those that help current incumbents provide a better service or to do better work.

But other than disrupting and enabling, exactly what is it that makes some fintech startups successful and others fail?  Let’s delve a little deeper into five success stories to ascertain, what, why and how they’ve become the pioneering successes that they are.

2016 FINTECH100

Leading Global Fintech Innovators – KPMG & h2 Ventures

Atom Bank “The future of banking available today”

Founded in the U.K in 2014 by CEO, Mark Mullen and Founder and Chairman Anthony Thomson, Mullen states that with Atom Bank “We are creating an entirely new way to bank; a system that is based on what the customer needs and wants, rather than being focused on bank balance sheets.”  Lofty claims, but ones they are amply backing up with fact and reality.  Atom Bank is revolutionising banking by building everything digitally, to the extent that they have no bank branches – it is an entirely app based bank.  Risky business some may say, given the ease with which phones can be stolen and accounts hacked, not so if your app uses the latest biometric security; face and voice recognition security.

It’s not just this that sets them apart though.  Everyone who joins Atom is given their own unique personalised brand – a masterstroke in the age of ‘me’.  This makes it the bank of you, you get to name it, have your own logo and finish it off with your own colour palette in the app.  So far so good and very on trend (remember Facebook is the world’s largest media provider, yet owns no content, and Air BnB is the world’s largest real estate provider, yet owns no real estate), but what makes it a success?  Well, for starters, with an app, your bank is never closed and is always immediately to hand.  Most importantly though, an exceptionally low cost model means that Atom Bank is able to create greater overall value and provide customers with better rates.  As a case in point, Atom Bank’s 1 year fixed saver would earn you 1.75% – over three times the amount of some high street competitors.

So in simple terms, by drastically reducing overheads and costs, Atom Bank is a radically more profitable business model, which in turn means that they can offer you greater returns.  Oh, and with the level of personalisation that they offer, it’s very much your bank.  What’s more, the data that is generated by you using the service is then used to the benefit of you. The more they learn about how you like to bank, the better able they are to adapt to how you bank, and at keeping you one step ahead.

Azimo “Transfer money faster, cheaper to anywhere in the world”

Founded in the U.K in 2012 by Founder and CEO, Michael Kent and Founder and GM, Marta Krupinska, Azimo is an international money transfer service.  Their large digital network enables customers to send money from any internet-connected device to over 190 countries.  Founder Marta Krupinska states, “We looked at how international money transfer worked and knew there had to be a better way – one that was cheaper, faster, simpler and easier to understand.”  And so, Azimo, a new way to transfer money around the world was set up to drastically change the way people living abroad could send money to their family and friends.  Azimo provides their customers with greater options and more freedom to send money the way they want to.  By way of example, they are the first international money transfer service to integrate with Facebook Messenger, connecting senders and receivers through their Facebook friend list, enabling them to exchange details immediately and links them to the Azimo App to make a transfer, all within a few simple clicks.

Transferring money internationally is nothing new, but where Azimo works so well is that it is cheaper, faster, simpler and easier to understand.  It’s all done online to fit in seamlessly with how you live and run your life.  There is a tangible benefit to this on an individual basis, but when scaled up to the size of a community, or even a country, the cumulative effect is stunning.  Not so much money for old rope, but money for a rope made better.

iZettle “Accept credit card payments with your iPhone, iPad or Android”

Founded in the U.K in 2010 by Founder and CEO, Jacob de Greer, iZettle is one of the leading mobile payments companies that consider they themselves to be a new type of bank and proudly, a new kind of ally for small business owners.

They offer small businesses portable point of sale solutions and free sales overview tools.  This makes it possible for anyone to take card payments anytime, anywhere.  When asked why he decided to set up iZettle, Jacob de Greer had this to say, “The timing was right. There was a need from a lot of merchants that wanted a solution like iZettle, that allowed them to take payments in situations where they had not been able to use card readers before.”  Interestingly

The iZettle service is available for both businesses and individuals, and consists of a free App for iPhone, iPad or Android device and two different card readers, the Pro & the Lite.  Where their service makes a huge mark though is that there are absolutely no startup costs, no contracts, and no monthly fees.  The only costs incurred are on the transaction fees on payments that business that use iZettle take.  But where the company really succeeds is that as vendors sell more, the transaction fees get lower, meaning that iZettle actively helps businesses to grow.

So iZettle has become a success by offering a highly effective and cost efficient service where previously none existed – smart move.

Funding Circle “Business financing

Founded in 2010 by Samir Desai, Co-Founder and CEO and Christian Grobe, Co-Founder and Europe COO and located in the U.K, Funding Circle is one of the world’s leading marketplaces, exclusively focused on small businesses.

Samir Desai says this of their purpose, “When we first launched Funding Circle our vision was to create the infrastructure – similar to a stock exchange or bond market – where individuals, financial institutions and governments could all lend to credit worthy small businesses.”  The idea was to revolutionise the outdated banking system and secure a better deal for everyone, and this is exactly what they have achieved.

To date, more than £1.3bn ($2bn) has been lent to 20,000 businesses in the UK, USA, Germany, Spain and the Netherlands through Funding Circle.  With their service, businesses are able to borrow directly from a wide range of investors, including more than 40,000 people, the UK Government, local councils, a university and a number of financial organisations.

But how has this all been achieved?  Well, since 2010, Funding Circle have been able raise around $300 million of equity capital since from some of the largest investors in the world including Accel Partners, Baillie Gifford, BlackRock, DST Global, Index Ventures, Ribbit Capital, Sands Capital, Temasek and Union Square Ventures – testament to the power and potential of their idea.  The idea of lending is nothing new in itself, but where Funding Circle has succeeded is by collectively pooling resources and offering their service to those that might otherwise be ignored by established financial institutions.

Hello Soda “Big Data made Personal

U.K based and founded in 2013 by Founder and CEO, James Blake, Hello Soda is an international B2B big data and text analytics company who create software solutions for ID verification, fraud detection, risk, and personalization.

Their flagship product, ‘Profile’ is a cloud-based data-scoring engine that turns big and unstructured data into valuable and usable insight. ‘Profile’ is able to capture and analyse thousands of data sets from a consumer’s digital footprint.  Further than that it applies advanced analytics techniques, including psycholinguistics and natural language processing, to deliver real-time comprehensible scores and features to businesses in any industry that requires them or can use them.  By way of example, Hello Soda offer ‘Profile’ products for ID/Fraud, Risk, and for personalisation, to increase customer engagement, boost financial inclusion and customer acquisition, and reduce fraud.  In this age of Big Data, being able to quantify it and turn into usable insight is no mean feat, and for those that use it, it can be the difference between success and failure for those that use it.

So what similarities and lessons are there to be gleaned from these examples?  All of them provide services, and none with the possible exception of Hello Soda is radically new.  However what they do is radically redefine existing services.  They facilitate and vastly improve upon the incumbent models and companies.  They’ve seen a way to make things simpler and easier for the end users – this is the key to their success.

Always seek independent advice. This blog has not been approved as a financial promotion by Cogress Limited. We are not responsible for the content of external websites. Potential investors must rely on their own due diligence prior to investing.

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Tal Orly2018-11-16T23:20:07+00:00