FinTech Findings: Insights from FinTech founders and analysts

What do you know about TheCityUK? Well, they are the industry-led body representing UK-based financial and related professional services and, as I discovered in November, they know how to put on a good conference. And it’s thanks to them that I’ve been on a fast track quest to learn more about the nuances and nature of our FinTech community in the West of England.

On November 21st TheCityUK held their National Conference at the home of welsh rugby - the Principality Stadium in Cardiff. Sponsored by PwC, the theme of the day was driving business growth and the agenda was packed with interesting insights. From the opening address by Ken Skates AM, Minister for the Economy in the Welsh Government who highlighted the 140k jobs across Wales in financial and professional services, to Andrew Kail’s presentation on PwC’s recent report on the ‘currency of collision’ and helping us all to capitalise on disruption.

In the afternoon, I had the pleasure of joining a fun-packed panel discussion to share my perspective as Scaleup Lead at Rocketmakers (and previously as Scaleup Enabler at Engine Shed) alongside Keith Morgan of the British Business Bank, Matthew Gough from Eversheds Sutherland and Kellie Beirne, CEO of the Cardiff City Region.

Hosted by Marcus Scott of TheCityUK the panel focused on the theme of ‘supporting the startup economy’ - a topic close to my heart. Marcus asked the panellists to prepare a few insights and to focus on the needs of FinTech startups. It’s those those insights that lead me to this blog.

In true Briony-fashion, I didn’t want to misrepresent this important group in our startup community so I asked a few people for their take on FinTech. And having gathered these interesting insights from helpful and generous people, I thought you might be interested to hear them too.

Analysing FinTech

First, I asked Stuart Harrison for a few thoughts - he’s working with his colleague Julian Wells of Whitecap Consulting (and FinTech West) to deliver a report on FinTech which will share data both qualitative and quantitative on Bristol, Leeds, Manchester, Newcastle and Birmingham.

In Bristol, Whitecap’s analysis tells us that we punch above our weight given the size & population when it comes to FinTech. For instance, there are 19 regional (i.e. non London) businesses that have gone through the last 5 cohorts of the FCA sandbox and of those, 5 are from the South West (NW 3, Yorkshire 3, Scotland 3). Unsurprisingly, every region that Stuart analysed complains about funding and lack of access to (affordable) talent.

The promise of FinTech - fad or future?

FinTech offers an economic growth opportunity to the UK and the South West. On a national level, the sector is expected to create around 30,000 more jobs and over 1600 new businesses by 2030. According to Dealroom, since 2013 European FinTech companies have created over 2x more value than any tech sector in Europe.

Bristol based FinTech

  • Bristol is the largest centre for financial and related professional services in the South West. It provides 33,565 jobs, amounting to 11.3% of the city’s employment
  • Bristol is one of the few cities outside of London to have a FinTech Accelerator (NatWest). You might wonder what FinTech brands you can find in the South West - I’ve included a little list of those I know below. Get in touch if I’ve missed you.
  • Whitecap’s research has so far found more than 20 startups and scaleups in the Bristol region who are dedicated purely to FinTech

What the media tells us about FinTech:

  • The word FinTech was first mentioned in the media in association with Bristol in 2014. That year, there were 14 articles. Prior to 21 November 2019 there had been more than 620 articles.
  • According to Whitecap’s analysis of media coverage over the last 3 years, Tech is the most common association with FinTech in Bristol.
  • This was 20% higher than the overall UK average, highlighting that Bristol’s Tech strength shines through in FinTech.

The facts of FinTech

  • Number of FinTechs in the UK 1600 Source: DIT - State of the Nation
  • Number of FinTech workers in UK 76,500 Source: DIT - State of the Nation
  • FinTech Workforce as % of FS Workforce 5% Source: EY 2015 UK FinTech Report
  • FinTechs with London Headquarters 77.0% Source: EY FinTech Census 2019
  • FinTech Investment Growth Year-on-year over past 5 years 31% Source: KPMG Report - FinTech Transforming Financial Services in the UK

The Founders Perspective

I also asked four fab founders working at the coalface in this sector for their answers to two specific questions:

  • Adam Jones at Redington
  • Georgia Stewart at Tumelo
  • Adrian Sheddon at Lumio
  • Matt Franklin at Payaca I asked the FinTech

Here’s a mashup of their answers for your delectation:

1. What are the particular models of collaboration that can be identified between FinTechs and their larger industry partners?

Companies have tried a whole host of different approaches to facilitate collaboration, and they’re not really specific to FinTech. When considering which one is right for your business, the most important step is to deeply understand the purpose that is driving the collaboration - is it a need for a larger firm to be more innovative and in which case, how can they make sure they don’t quash that innovation during the collaboration process. FinTech companies typically have innovation and agility in abundance but don’t have access to market and distribution - both are difficult and expensive to build organically (as illustrated by Nutmeg in recent times). Our founders suggest that collaboration can only be effective where there is mutual understanding of the objectives and a level of sharing and honesty on both sides. Companies looking to drive collaboration and capitalise on the FinTech phenomenon might want to consider:

  • Corporate companies sponsor accelerators (Natwest, Level 39 etc.) where large firms are hoping to gain insight and also foster businesses which they can invest in or work with later down the line.
  • Corporate companies or public sector organisations run hackathons, demo days and client engagement challenges.
  • Fintech companies often sell their services directly to larger firms (standard enterprise license model). A tough ask considering the flight path of most startups and the length of corporate procurement cycles.
  • FinTech companies run proof of concepts for big firms. These are usually relatively low cost to help fly under the procurement dept whilst allowing them to work together and start to build out a product proposition. However, it seems that even small scale proof of concept projects are difficult to sell-in.
  • FinTech companies are being acquired and integrated into larger organisations (such as the recent acquisition of Seccl in Bath)
  • FinTech companies are sometimes acquired with a view of being the "new-co" and older legacy business transferring across
  • Larger firms support FinTech founders by opening up their network, making introductions and inviting them to speak at events which can lead to vital new enterprise customers for the FinTech company.
  • Mutual learning sessions between innovation teams and FinTech founders

2. How can communication between FinTechs and the wider industry lead to products that solve problems and create solutions?

FinTech companies are notoriously more agile and innovative, their product design process is built on methodology and thinking from lean startup, hooked and sprint. As a result they focus keenly on the problem space - building a deep empathy with the customer, and getting direct iterative feedback. Financial services firms on the other hand, largely have longer heritage, complex team structures and a lower appetite for risk which leads them to struggle to deliver products that solve societies problems. Financial Services firms might lean on the specialist skills of design agencies, but I wonder whether their culture is ready to take on an iterative, innovative product.

So on that basis, it would be fair to assume that FinTech companies are solving the right problems - the challenges faced by people in communities every day. The opportunity for FinTech companies therefore lies in how they align themselves to regulatory drivers and broader industry initiatives so that they can position themselves as leaders in their space with true USP against incumbents.

What's next on Planet FinTech?

If you enjoyed reading this article, watch out for the reports that will be published by Whitecap Consulting very soon:

For more FinTech fun, watch out for news about the two Strength In Places bids that are live and local at the moment on the theme, or join FinTech West or the TechFin conference in 2020.

And last but by no means least, join me to hear more on FinTech from panellists from Nationwide, RBS, Tumelo, Tide and Finnos at SQ LIT on Tuesday 7th January:

And if you can't make that one, Redington's Fintech With Social Purpose Meetup is happening in January too - find out more and sign up:

Who are the Fintech Startups that I know about:

Tumelo, Moneyhub, Crowdcube, Fundsurfer, Payaca, Redington, Bristol Pound, WealthClub, Seccl, Lumio, Clarion Bond, Invest West, Chainium, Avon Mutual, Xavier Analytics, Parmenion, Loqbox, ScottLogic, Xledger, NMI, Brightpearl, Senta… who have I missed?

Added later because every day is a school day... Flexys, Fundity, TipTap, Sixty Pensions...

*As Scaleup Lead for Rocketmakers, I work to raise awareness of the challenges faced by fast-growth, scaleup companies in the West of England, my goal is to help the public and private sectors to solve these problems, whether related to office space, access to finance or leadership capacity. Get in touch to find out more: *