Disruptive fintech and insurtech startups are posing challenges to traditional financial institutions. The document discusses a panel event exploring how incumbents are dealing with these threats through partnerships with startups, investing in innovation, and rethinking their business models. It also examines the funding challenges for startups and questions around the use of customer data and building trust with consumers.

1. Disruptive forces are reshaping the financial services
landscape. Fintech and insurtech are at the top of the
agenda for many big businesses, but how are they
dealing with the pressure from new challengers? And
what are the risks as innovative ideas move from the
sandbox to the open market?
Disruptors: from
sandbox to stocks?
A view from both sides of the coin
London Stock Exchange
Thursday 3 November 2016, 4pm
Fintech/Insurtech Forum
These were the big questions
discussed by a panel of industry
leaders at Bond Dickinson’s event
‘Disruptors: from sandbox to
stocks?’ held at the London Stock
Exchange on 3 November.
Chaired by technology broadcaster
Rory Cellan-Jones, the event charted
a disruptor’s journey from concept to
fundraising to maturity. It explored the
threats and opportunities
technological innovation presents to
insurers, banks and others, asking
how they can partner successfully
with start-ups, while staying on the
right side of regulation.
Partnerships
From smartphone apps and
consumer wearables to claim
acceleration tools and online policy
handling, insurtech includes a wide
range of technologies which are
forcing incumbents to rethink how
they do business.

2. Fintech/Insurtech Forum Disruptors: from sandbox to stocks 2
Ariel Berman is Vice President at
insurance giant AIG. He said his firm
has been “taking stages to survive”
including launching innovation
bootcamps to nurture new ideas, and
acquiring technologies by partnering
with other firms. For example, AIG has
moved a team from the City to
London’s creative hub, Shoreditch to
work with a startup. “We realised
some companies can deliver better
solutions faster than we can,” he said.
Access to funding
A big problem startups face is getting
the right financial backing to reach the
next stage of growth. Gavin Littlejohn,
Chairman of the Financial Data and
Technology Association, noted
venture capitalists and angel investors
are a typical route for early stage
fintech funding, but may not be the
best option. He argued the industry
needs to find more efficient methods
of funding and “deeper pools of
capital to be able to fund business
models where tax issues are not quite
as prevalent as in the early stages.”
Jonathan Drake, partner and
insurance specialist at Bond
Dickinson, explains that this mature
industry is being doubly challenged.
“Insurers have been quite aggressive
in looking to invest in fintech, whether
it’s buying in the expertise or
partnering with it,” he said. “But the
real challenge is that they are not
really innovative organisations. They
have grown large through legacy
acquisitions, they have many different
networks, arms and product lines and
suddenly nimble new competitors are
snapping at their heels. The larger
ones are having to reorganise the way
they work to face these challenges
and understand the risks as well.”
Richard Williams, Founder and CIO of
Innovatively Digital, noted big insurers
are going for scale so they can
“absorb the body blows from these
disruptors”.
Strategic alliances are also forming.
Williams gave the example of a
project by insurtech startup Neos and
established insurer Hiscox to monitor
customers’ connected homes with
app-controlled security cameras,
smoke alarms, and moisture sensors.
The data can then be used to prevent
household incidents occurring. “This
kind of thing challenges insurers to
think differently,” he said. “The insurer
proposition is to pay when there is a
loss, but this can reduce loss and
reduce risk.”
Profitability is the elephant in
the room in the fintech
space... people now have the
ability to start new and
disruptive businesses more
cheaply, easily and quickly.”
Gary Conroy, Managing Director of
Realex Payments.
Berman suggested there might be a
shift in future from angel investors and
VC funds to banks investing in those
fintech companies which can make
their businesses more efficient. He
also raised questions about the
amount of money indiscriminately
flowing into startups.
“Are we looking at another dotcom
bubble? A lot of money is going in to
fintech these days,” he said “Some of
the ideas are great, but many
companies with poor products and
poor ideas are still getting market
share and finance because we are
being blighted by the gold rush.”
Profitability: The elephant
in the room
“Profitability is the elephant in the
room in the fintech space,” noted
Gary Conroy, Managing Director of
Realex Payments. He said companies
like his face a search for scale in order
to attract the attention of larger
partners. However, he added it is
becoming easier to set up a new
business, which is good news for

3. Fintech/Insurtech Forum Disruptors: from sandbox to stocks 3
and regulators have to drive this
because banks are almost systemically
not designed to innovate from within.”
What will financial services
look like in 2020?
Richard Williams predicts a closer
relationship between insurers and their
customers in future, with a greater
focus on relevance and trust. He thinks
insurers will remember they insure
things and people “in the real world”,
and will harness technology to do that,
far beyond in-car telemetrics and
wearables.
In the banking space, Mark Mullen tips
roboadvice to gain greater market
share, while technology will put control
of banking back into the hands of
customers. “Fintech has the potential
to shift the focus of control from
manufacturer to customer. That’s what
is so fantastically exciting about fintech
– it absolutely destroys the universal
banking model and, the sooner it is
dead, the better off the customer will
be.”
Nick Page, chairman of Bond
Dickinson, noted that for fintech
innovation to continue, it will be vital for
Financial Services professionals to
work together: “We see people at both
ends of the spectrum – those with new
ideas they want to sell to the big guys,
and the big guys wanting the new
ideas in order to develop their services.
Professionals like us can bring those
people together and open up new
markets for both.”
industry competition. “People now
have the ability to start new and
disruptive businesses more cheaply,
easily and quickly,” he said.
Martin Cook, UK General Counsel at
Funding Circle, added that in the
direct lending space, there are
businesses which are already
profitable and some which are not.
Often this will depend on how
companies decide to grow and invest,
and whether they value future growth
or more immediate rewards.
Big Data, trust and
consent
One theme which captured our
panellists’ imagination was the future
of ‘Big Data’, and how companies
gain consent to use it. Gavin Littlejohn
said: “The future is socialism, giving
consent for the use of data.
Companies that don’t get consent will
struggle to gain traction, and this will
give power back to customers.”
Underpinning all this is a relationship
of trust, something which the industry
has struggled to rebuild since the
financial crisis.
Martin Cook said reputation is vital to
how young companies build trust
among customers, and this is
something his firm takes very
seriously. “Having worked through the
credit crisis, one of our key goals is
sustainability. We’re prudent, we’re
regulated. Yes, we are high growth,
but high growth doesn’t necessarily
equal high risk.
the right regulatory approach will
be crucial for innovators, with
safe spaces like the FCA’s
‘sandbox’ needed to test new
ideas.”
Mark Mullen, CEO of Atom Bank.
For more information please contact:
Claire Coleman
Partner
T: +44 (0)207 788 2329
E: claire.coleman@
bonddickinson.com
Andrew Barber
Partner
T: +44 (0)207 788 2334
E: andrew.barber@
bonddickinson.com
Alastair Mitton
Partner
T: +44 (0)117 989 6837
E: alastair.mitton@
bonddickinson.com
Jonathan Drake
Partner
T: +44 (0)207 788 2323
E: jonathan.drake@
bonddickinson.com
www.bonddickinson.com
A far-sighted regulator
Mark Mullen, CEO of industry
challenger Atom Bank, believes the
right regulatory approach will be crucial
for innovators, with safe spaces like
the FCA’s ‘sandbox’ needed to test
new ideas.
Atom Bank was recently granted its
banking licence, and Mullen has
nothing but praise for the regulator.
“The FCA is one of the most far-
sighted regulators on the planet. The
direction of travel is pretty encouraging