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(Almost) everything you need to know to start in Fintech

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This workshop will provide readers with a global overview of the Fintech world, market dynamics and how London has managed to become a leading Fintech hub. They will learn about the various business models that fall under the Fintech umbrella (Payments, Money transfer, Crowdfunding, Lending, Data & Analytics) and also discuss new banking models that are trying to inspire and shape the bank of the future.

Published in: Technology
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(Almost) everything you need to know to start in Fintech

  1. 1. (Almost) everything you need to know to start in Fintech University College London MSc Technology Entrepreneurship Friday 22th August, 2014 Sophie Guibaud & David Meinhart
  2. 2.  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
  3. 3.  What is Fintech? Agenda
  4. 4. What is Fintech?
  5. 5.  Payments  Lending  Crowdfunding  Data and analytics  Personal Finance  Money Transfer  Digital Currencies  … Technology applied to financial services
  6. 6. 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
  7. 7. 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
  8. 8.  What is Fintech?  Global overview of the industry Agenda
  9. 9. Focus Areas within Fintech Deal Share Source: CB Insights, FinTech Investment Landscape, 2014
  10. 10. Notable Fintech exits Source: CB Insights, FinTech Investment Landscape, 2014
  11. 11. Focus Areas within Fintech Investment Share Source: CB Insights, FinTech Investment Landscape, 2014
  12. 12. Notable Fintech investments Source: CB Insights, FinTech Investment Landscape, 2014
  13. 13.  What is Fintech?  Global overview of the industry  Where is Fintech? Agenda
  14. 14. or Where is Fintech?
  15. 15. US on a global level? Source: Accenture, The Boom in Global Fintech Investment, A new growth opportunity for London, 2014
  16. 16. UK and Ireland in Europe? (1/2) Source: Accenture, The Boom in Global Fintech Investment, A new growth opportunity for London, 2014
  17. 17. UK and Ireland in Europe? (2/2) Source: Accenture, The Boom in Global Fintech Investment, A new growth opportunity for London, 2014
  18. 18.  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
  19. 19.  What is Fintech?  Global overview of the industry  Where is Fintech?  What makes London so special? Agenda
  20. 20.  Historical leader in Finance  Historical leader in Start-ups  Availability of Talents  Availability of Funds How has London become the leader in Europe?
  21. 21. What is boosting London as the center of Fintech?
  22. 22. Fintech Accelerators
  23. 23. Launched on August 6th 2014 Fintech Governmental body
  24. 24. 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
  25. 25. 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?
  26. 26.  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
  27. 27. 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
  28. 28. 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
  29. 29.  What is Fintech?  Global overview of the industry  Where is Fintech?  What makes London so special?  Business models in Fintech Agenda
  30. 30. Focus on Fintech business models
  31. 31. Fintech map Source: www.venturescanner.com
  32. 32.  Payments  Money transfer  Crowdfunding  Lending  Data and Analytics Selected case studies
  33. 33. Payments Source: iZettle
  34. 34.  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
  35. 35. Money transfer Source: Transferwise
  36. 36.  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
  37. 37. Crowdfunding Source: www.crowdfundinsider.co.uk
  38. 38.  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
  39. 39. Lending Source: www.independent.co.uk
  40. 40.  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
  41. 41. Lending Source: www.chipshopawards.com
  42. 42. Data and Analytics Source: DueDil
  43. 43.  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
  44. 44.  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
  45. 45. Topic 1: Focus on new banking models
  46. 46. + Traditional & digital banks
  47. 47. Traditional & digital areas Source: Accenture, A Critical Balancing Act: US Retail Banking in the Digital Era, 2013
  48. 48. Rise of mobile banking Source: Accenture, A Critical Balancing Act: US Retail Banking in the Digital Era, 2013
  49. 49. 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
  50. 50. 2 types of Emerging Disruptors Source: Accenture, A Critical Balancing Act: US Retail Banking in the Digital Era, 2013
  51. 51.  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
  52. 52. Who could the emerging disruptors be? Source: Grant Thornton, Can Challengers Banks disrupt the power of the banks?, 2014
  53. 53. Futures of banks Backbone Innovators Hybrid? 2014 2020
  54. 54. The everyday bank Source: Accenture, A Critical Balancing Act: US Retail Banking in the Digital Era, 2013
  55. 55. Who will the winners be? Source: Grant Thornton, Can Challengers Banks disrupt the power of the banks?, 2014
  56. 56.  Simple Creating better interface and user experience for customers  Bankable Offering externalised innovation for minimum investment Selected Case studies
  57. 57. Demo time !
  58. 58. 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
  59. 59.  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
  60. 60. Disruptor, Disrupted  Starting out, big data and police tape  Lessons learned about team  Regulations protecting the public
  61. 61. 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
  62. 62. 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…
  63. 63. 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
  64. 64. 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
  65. 65. 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
  66. 66. 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
  67. 67. 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
  68. 68. 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
  69. 69.  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
  70. 70. Thank you for your attention! Any questions? Sophie Guibaud David Meinhart sg@bnkbl.com david.meinhart@gmail.com @SophieGuibaud

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