Fintech Talk: June 13, 2016
Brexit has once again been the main focus of coverage in the fintech space this week, with mixed opinions emerging regarding its impact on the sector. The Financial Times discussed the threat that Brexit poses for the fintech industry, with investors and start-ups raising concerns about funding and talent acquisition flowing into London. Fortune and Business Insider UK also discussed the booming fintech scene in London and the prospect of slowed growth in light of Brexit. Conversely, City A.M. highlighted the plan of action taken by some of London’s fintech companies, with one investor claiming that UK fintech start-ups are more attractive than ever. John Egan, a director at Anthemis, pointed to the increased value of other currencies against the pound as a driver for external investment in UK start-ups, and suggested the political event will drive innovation, as the financial crisis did.
In the event that London does lose its role as a fintech leader, there is speculation that Berlin will take its place, as covered by the Financial Times and Finance Magnates. Several German tech leaders claim that Berlin is set to take London’s place, with an already thriving tech scene, and that the move is especially likely in the event of the loss of access to the single European market, with fintech companies, such as TransferWise and Revolut considering shifting operations to Berlin. However, certain benefits can still be found in London, such as the proximity to large banks and an established fintech scene - Berlin is still relatively small with only 300 of the world’s 12,000 fintech companies.
Although much of the discussion around the Brexit describes the negative impact on London and the financial sector, the aforementioned, Revolut has drawn attention for raising significant investment despite the circumstances. The currency transfer app, raised up to £6.75m from Ribbit Capital after the news of the Brexit in addition to existing seed investors Balderton Capital, Index Ventures, Point Nine Capital, Venrex and Seedcamp. Revolut also aimed to raise £1 million more through crowdfunding on Monday 11th July, with the goal being surpassed and £12.9 million being raised by Tuesday evening with over 6,600 investors. The success of the app is reported by City A.M. and Business Insider UK, and founder and CEO Nikolay Storonsky is confident the app will continue to flourish.
Away from Brexit, Harvard Business Review writes about increased consumer demand for social value. Fintech brings new speed and convenience to charitable giving, which allows people to give back to their communities much more easily than before. Platforms like PayPal and Humble Bundle allow for micro-donations that use technology to eliminate transaction costs for charities and therefore make small donations accessible. This trend allows fintech to be sustainable and have a social impact, and consequently develop a deeper connection with consumers.
Tech.Co names peer-to-peer lending as the new hot trend in fintech. Traditional lending and investing through banks relies on banks maintaining and increasing margins and profits, and P2P lending circumvents this process. Fintech allows people to connect and transfer funds more easily between individuals rather than institutions, without the need to depend on a business model. Nikos Antoniade, CEO of easyMarkets, notes that P2P lending can be risky and is criticized, but asserts that the trend is here to stay and banks have the opportunity through fintech to adapt to what consumers really want.