It comes as no surprise that application of new technology has found scope in the context of the financial services industry. Thomas Cook, ten years back who would have thought travel agents could be displaced? Or even the black cabs of London for that matter. Tech disruption in financial services was, to say conservatively, waiting to happen.
Tech start-ups and entrepreneurs across the UK have already set the ball rolling.
According to research by Accenture, Investment in fintech firms in Britain and Ireland swelled to $623 million (418 million pounds) last year, more than double the $264 million seen in 2013 and representing 42 percent of fintech investment in Europe. Although our American peers have the lion’s share of Fintech investments.
Our CEO, Rob Udy, Having had been neck-deep in finance through his career, shares his views on Fintech going forward, over a steaming cuppa at our office overlooking the Norwich Cathedral.
Question: I understand that the 2008 crash was ripe for start-ups to use software and offer a lucrative alternative, at a time when trust and reliance on financial institutions continues to wean thin. But besides the disenfranchisement of financial institutions- what has contributed to Fintech?
Rob: A lot of Fintech has supporting alternative finance as people have got bored and fed up with banks. A number of businesses were hurt /put out of business as a result of main stream banking ceasing to provide liquidity instantly as a result of their greed and poor investment decisions in subprime or subprime derivatives.
This had a strong impact on a number of people who were ever more determined to find new and different ways to raise money, and vowed not to go back to mainstream lending.
From a customer perspectives as well, given banks previously were seen as stable institutions who knew what they were doing; the 2008 crash was a real awakening. Customers were open to exploring other sources to get returns, such as peer to peer lending and crowd funding, where the principle was based on getting the best deal for both sides rather than just making money out of them.
Ques: Can we call fintech a 'big' contender yet? Can we call it a money-minting, organised industry yet? Besides factors like valuations of fintech companies like TransferWise.
Rob: I would say it is still establishing itself. It probably has a couple more years to fully compete with established organisations, but given the rate of progress and innovation there will come an inflection point where the main stream providers will be over taken and will not find it possible to keep up a chase.
Ques: Are fintech start ups bullied by the big boys in any way? What troubles fintech startups the most?
Rob: All established businesses would claim it is a level playing field, however there are some indirect routes that make it very hard for Fintech businesses.
For instance, I spoke to the CEO of a start up business who tried to open a bank account for their business. They had applied to 30 banks over a 6 month period and had not been accepted by any. The banks claim their decisions are based on assessment of “risk”, but I suspect it is to do with limiting competition in the market place from the booming Fintech space.
Question: How do Guarantor My Loan use big data? How has it evolved as a practice within the company?
Rob: Our business model is based on relationships between applicants and guarantors. We have found that it is possible to leverage data from various sources to establish the strength of this connection.
For instance, at the moment we are rigorously testing the use of Facebook data in order to establish this. We believe there will be a number of Fintech solutions that will help us with this going forward. It’s only a matter of time that newer technology finds adaptations/applications in our space.
© 2015 Match the Cash Ltd trading as
Guarantormyloan.co.uk. We are authorised and regulated by the Financial Conduct Authority. Interim Licence 661304
Registered in England as Match The Cash Ltd. Registration Number: ZA055459 (ICO)
Registered Office: MATCH THE CASH LIMITED ACRE HOUSE, 11/15 WILLIAM ROAD, LONDON, UNITED KINGDOM, NW1 3ER. Company No. 08667447