(Almost) everything you need to know to start in Fintech
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(Almost) everything you need to
know to start in Fintech
University College London
MSc Technology Entrepreneurship
Friday 22th August, 2014
Sophie Guibaud & David Meinhart
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What is Fintech?
Global overview of the industry
Where is Fintech?
What makes London so special?
Business models in Fintech
Topic 1: New banking models
Topic 2: Technology & Finance
Agenda
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What is Fintech?
Agenda
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What is Fintech?
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Payments
Lending
Crowdfunding
Data and analytics
Personal Finance
Money Transfer
Digital Currencies
…
Technology applied to financial
services
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Fintech in numbers
440 companies
$3B investment in
2013
$950m invested in Silicon Valley in 2013 vs. $780m
invested in UK+Ireland since 2004
51% YOY growth rate in London vs. 23% in Silicon
Valley vs. 26% Global
70% of European
fintech funding for
UK startups
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How has Fintech become so dynamic?
Lack of trust in banks
Lack of lending facilities offered by banks
Banks more focused on applying regulations
than investing in tech
Internet is changing the way we interact with
money
Need for Innovative, Transparent & Inexpensive
Financial Services
=
Fintech
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What is Fintech?
Global overview of the industry
Agenda
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Focus Areas within Fintech
Deal Share
Source: CB Insights, FinTech Investment Landscape, 2014
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Notable Fintech exits
Source: CB Insights, FinTech Investment Landscape, 2014
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Focus Areas within Fintech
Investment Share
Source: CB Insights, FinTech Investment Landscape, 2014
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Notable Fintech investments
Source: CB Insights, FinTech Investment Landscape, 2014
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What is Fintech?
Global overview of the industry
Where is Fintech?
Agenda
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or
Where is Fintech?
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US on a global level?
Source: Accenture, The Boom in Global Fintech Investment, A new growth opportunity for
London, 2014
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UK and Ireland in Europe? (1/2)
Source: Accenture, The Boom in Global Fintech Investment, A new growth opportunity for
London, 2014
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UK and Ireland in Europe? (2/2)
Source: Accenture, The Boom in Global Fintech Investment, A new growth opportunity for
London, 2014
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Since 2008, Fintech financing in UK and
Ireland has grown at twice the rate of Silicon
Valley
In 2013, UK and Ireland together accounted
for more than half of Europe’s Fintech deals
(53%)
In 2013, UK and Ireland accounted for more
than two-thirds of its total financing (69%, or
$265 million)
Nearly 135,000 financial-services technology
workers in the UK
A significant opportunity for London
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What is Fintech?
Global overview of the industry
Where is Fintech?
What makes London so special?
Agenda
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Historical leader in Finance
Historical leader in Start-ups
Availability of Talents
Availability of Funds
How has London become
the leader in Europe?
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What is boosting London as the
center of Fintech?
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Fintech Accelerators
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Launched on August 6th 2014
Fintech Governmental body
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Traditional
players
Banks New
Comers
Banks having traditionally only accounted
for 10% of Fintech innovations whilst VC
backed companies have supported 60%
Fintech Investment Funds
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Incubators Government Investors
The development of a positive ecosystem
is vital to provide a fertile environment for
start-ups and entrepreneurs
Who will boost London as the centre
of Fintech?
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Most of UK fintech ventures are still in their
infancy
Most venture capital investments are still first
round
Availability of funding remains scarce
compared to the US
Fintech companies often lack the expertise,
access, and resources to effectively sell to and
collaborate with banks
Critical Challenges
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Global Research
Accenture, The Boom in Global Fintech
Investment, A new growth opportunity for
London, 2014 Read more
Accenture, The Rise of Fintech, New York’s
Opportunity for Tech Leadership, 2014
Read more
EY & UK Trade & Investment, Landscaping UK
Fintech, 2014 Read more
CB Insights, FinTech Investment Landscape,
2014 Read more
Enrich your knowledge
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Blogs & Websites
TechCrunch: http://techcrunch.com/
Finextra: http://www.finextra.com/
Tech City News:
http://techcitynews.com/
Wall Street & Technology:
http://www.wallstreetandtech.com/
Enrich your knowledge
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What is Fintech?
Global overview of the industry
Where is Fintech?
What makes London so special?
Business models in Fintech
Agenda
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Focus on Fintech business models
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Fintech map
Source: www.venturescanner.com
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Payments
Money transfer
Crowdfunding
Lending
Data and Analytics
Selected case studies
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Concept
An app & a chip-card reader to accept
payments
Problem
High investment in card services,
inefficiency of cash
Target
Mostly B2B
Business model
From 2.75% to 1.50% fee per transaction
Payments
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Concept
Peer-to-peer online money transfer
service
Problem
High fees from traditional banks to
transfer money abroad
Target
Mostly B2C
Business model
0.5% fee per transfer
Money transfer
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Crowdfunding
Source: www.crowdfundinsider.co.uk
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Concept
Online equity crowdfunding platform for high-
growth start-ups
Problem
Start-ups lack early-stage capital / Individuals
cannot invest in start-ups
Target
B2B / B2C
Business model
7.5% fee on money raised by start-ups / 7.5% on
profits by investors
Crowdfunding
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Lending
Source: www.independent.co.uk
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Concept
Online payday lender to short-term personal
cash loans to consumers
Problem
Traditional banks do not provide automated and
real-time cash loans
Target
Mostly B2C
Business model
Interest Rate (1% / day) & Transfer, Extension
and Late payment fee
Lending
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Lending
Source: www.chipshopawards.com
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Data and Analytics
Source: DueDil
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Concept
Due diligence tool and online company database
Problem
Difficulty to find clear and comparable
information about companies
Target
Mostly B2B
Business model
Credit to enterprise plans from £24.99 / month to
£2,499 / year
Data and Analytics
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What is Fintech?
Global overview of the industry
Where is Fintech?
What makes London so special?
Business models in Fintech
Topic 1: New banking models
Agenda
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Topic 1:
Focus on new banking models
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+
Traditional & digital banks
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Traditional & digital areas
Source: Accenture, A Critical Balancing Act: US Retail Banking in the Digital Era, 2013
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Rise of mobile banking
Source: Accenture, A Critical Balancing Act: US Retail Banking in the Digital Era, 2013
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Enable the digital model
Overcoming rigid
legacy technology in
the back-office
Powering an analytics
driven front-office
Positioning more
products in digital
channels
Generate more sales
from digital accounts
Revamp the branch
48% consumers would
be inconvenienced by
the closure of nearby
branches
New branch formats to
lower building cost by
33% and operation
cost by 25%
“Light” branches
Kiosks
Full-service “hubs”
Flagships
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2 types of Emerging Disruptors
Source: Accenture, A Critical Balancing Act: US Retail Banking in the Digital Era, 2013
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Emphasize social responsibility
Focus on customer centricity and empowerment
Present simpler fee structure to customers
Provide personal financial management tools
Embedded with social media (particularly
Facebook)
Leverage Big Data and analytics
Offer mobile bill pay, P2P, remote-deposit, free
ATM access
Characteristics of Emerging
Disruptors
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Who could the
emerging disruptors be?
Source: Grant Thornton, Can Challengers Banks disrupt the power of the banks?, 2014
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Futures of banks
Backbone Innovators
Hybrid?
2014
2020
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The everyday bank
Source: Accenture, A Critical Balancing Act: US Retail Banking in the Digital Era, 2013
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Who will the winners be?
Source: Grant Thornton, Can Challengers Banks disrupt the power of the banks?, 2014
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Simple
Creating better interface and user experience for customers
Bankable
Offering externalised innovation for minimum investment
Selected Case studies
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Global Research
Accenture, The Everyday Bank, 2014
Read more
Accenture, A Critical Balancing Act: US Retail
Banking in the Digital Era, 2013
Read more
Grant Thornton, Can Challengers Banks
disrupt the power of banks?, 2014
Read more
Enrich your knowledge
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What is Fintech?
Global overview of the industry
Where is Fintech?
What makes London so special?
Business models in Fintech
Topic 1: New banking models
Topic 2: Technology & Finance
Agenda
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Disruptor, Disrupted
Starting out, big data and police tape
Lessons learned about team
Regulations protecting the public
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Tech in Fintech – Not so different
Speech reco and HFT
How fast can you change the telly?
‘Yay’ or ‘Nay’
Stock going up or stock going down
Pattern matching, lots of data, latency
sensitive
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Good Innovation, Good Product,
Bad Timing
The innovation that was carbon trading
Wolves of Wall Street saving the
rainforest
From acid rain (US start) to EU
Airspace (EU end)
Still opportunities here…
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Tech in Finance: Why London?
Validate or fail fast
The world in the square mile
Talent: top tech, teams from all corners
and cultures
Regulation is just a tube ride away, and
is pro-business
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Examples of Disruptors
Buying rooftop space at car dealers
Twitter effect, celebs moving pink
sheets to AP hack
NLP IM Bots
Still $T’s notional traded voice and IM
each day
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Key of the Sector: The Talent Edge
No customers
Battle for top engineering talent
Good engineering is rewarded, no sales
and marketing
Differentiate by culture and work/life
balance
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What’s next for Technology and
Finance
Where have the flash boys gone?
Machine learning frontier plus unique
data
Trading on sport events, bitcoin, online
ads
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Back to FinTech - Relationships
Entire process was heavily dependent
on bank relationship
It’s a relationship that starts from an
early age
Both personal and business
Day 3 in London, had accounts open
Huge, un-tapped potential for cross
selling
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Movies, Books, and
Magazine Articles
Wolf of Wall Street, vampire squid,
Flash boys
Flash boys – Engineering w/o sales &
Marketing
Wolves – information arbitrage
Vampire – global reach for info arb with
flashboys and engineers to amplify.
Regulations simply shift staff to other
unregulated entities
Nerds on Wall Street
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What is Fintech?
Global overview of the industry
Where is Fintech?
What makes London so special?
Business models in Fintech
Topic 1: New banking models
Topic 2: Technology & Finance
Agenda
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Thank you for your
attention!
Any
questions?
Sophie Guibaud David Meinhart
[email protected] [email protected]
@SophieGuibaud