Fintech

Fintech fringe: The UK is uniquely positioned to drive the growth and scale of the sector in Europe

Published

10 months ago

12 June, 2024

One year after its world debut, Fintech Fringe returned to London during London Tech Week 2024, turning his attention to the growth and scalability of the sector.

This year, the event highlights why the UK is one of the best places to grow and scale a business. From exploring strategies to grow and acquire new customers, to fundraising and complying with evolving regulations, Fintech Fringe serves as a breeding ground for new ideas and partnerships as it provides pragmatic and practical support to grow fintechs.

The four-day event will take place in a variety of locations, featuring Barclays rise hosting the first day and Level39 The second one. The third day took visitors back to the heart of London, where guests enjoyed enlightening discussions at the Thinking machine headquarters. Ahead of the last day at FoxWilliamswe reflect on some of the highlights and highlights of the event so far.

Empowering fintechs for scale and success

One of the best ways new organizations can learn to succeed is by reviewing what established companies have done and adopting and integrating these designs into their own companies.

Nick Drewett, CCO, Starling Engine

Nick DrewettCCO, Transfer Motor provided insights into the neobank’s commercial strategies, business growth and technological advancements. Meanwhile, he also explored how Starling Engine is enabling businesses around the world to advance their infrastructure.

Drewett highlighted the importance of a good customer experience in addition to the role engineers play in decision making: “At Starling, the way we do things is reversed. The engineers? They innovate and write code. They have the ability to adjust the platform and turn features on and off as needed.

“The infrastructure is designed to assume that things will break, but when they do, consumers will never notice.”

He also discussed the importance of call centers in playing an important role in strong customer relationships. Traditionally, “they are managed as ‘cost centers,’ not as an opportunity to build trust and relationships.”

How to orient products to boost sales

One of many in-depth panels included, David McHenryresponsible for product consultancy and implementation, HSBC Innovation Bank, Alexandra Rivas-Gale, product manager, ClearBank AND Adam MoulsonCCO, Griffin. Hosted by opaque WilliamsonSenior Vice President and Industry Executive, Endavathe panel explored how companies need to keep customers in mind and pivot products to align with their evolving needs.

He also highlighted the importance of recognizing and resolving underlying problems quickly and reliably. Moulson addressed this further by saying, “Why are we solving problems? What value will your customer get from solving the problem, and how significant is that value? Before designing anything, demonstrate that there is a viable business opportunity of sufficient size and scale that is worth investing in. If it exists, test it incrementally with customers.

Pivot Product Panel

Growth vs Profitability: How to Scale Safely

Another enlightening conversation focused on the challenges and opportunities of business growth and innovation.

The panel, moderated by David Wallaceco-host of David and Dham Demystifying and with, Susanna Ponce Fremontglobal head of financial and credit risk, Tide; Valentina Kristensencorporate affairs director, OakNorth; AND Michael TreacyHead of Marketing Section, OpenPaydhighlighted the importance of understanding where a company is in its business model in balancing growth and profitability.

They also highlighted the need for effective cost management, agility and compliance. Treacy said: “One of your unique roles as a leader within a company is setting priorities.

“This prioritization comes from evaluating what is happening around you within the company and external parts of your industry. If you try to tackle too many things at once, you’re not doing well with the core proposition of the business.”

Growth vs Profitability panel

Ecosystems and markets: B2B scalability strategies

Himal MakwanaSenior Vice President at FIS; Maeve HeneghanEMEA fintech business development at Amazon Web Services; AND Tom Bentleygrowth manager at NatWest in the box have identified that partners play a critical role in scaling a company. Therefore, choosing the right one is of paramount importance.

Danny Keatingsenior director of business development at JD Consulting, also led the conversation by exploring potential sourcing challenges and solutions organizations may face.

When discussing potential partnerships, the impact embedded finance is having on potential collaborations has been mentioned. Makwana said: “The best is yet to come for integrated finance. We are still very early in this innings. I will measure success the day we no longer talk about integrated finance as a term, but only talk about what it has enabled: that to me is success.

Ecosystems and markets

Technical tips and tricks

Day three of the Fintech Fringe focused on breaking down confusing tech jargon to help fintechs understand how to select the right systems and platforms to support growth and scale.

Multi-billion dollar fintech Travers Clarke-Walkerfounder and CMO of Thought Machine

With the day’s event at Thought Machine headquarters, the company’s founder and CMO, Travers Clarke-Walkertook the stage first to share his vision for scaling a fintech company and revealed important considerations that companies should remember.

“When it comes to expansion, early negotiations are a key aspect of the whole journey – it’s about finding your target customers because they are as much sponsors as customers. As we move forward, it is critical that we recognize their importance in terms of their voice in the market.”

Clarke-Walker also discussed the importance of building a strong organization around your technology or product to ensure success.

“It’s one thing to build a product, it’s another thing to then direct it towards marketing to companies and customers. The most important thing to consider is that it is also one thing to have a great technology, but you need to build a great organization around it, to serve that technology successfully in the industry. It’s as much about building the organization around the technology as it is about the technology itself.”

Sitting with Bank of America

Next, Elizabeth Lumleydeputy director at The bankerhe sat with Andrew McKibbenHead of Technology and International Operations at Bank of America. McKibben broke down the bank’s collaborative and mentoring relationships with fintechs and revealed the importance of not losing sight of key fundamentals.

“We have to remember that banking is built on trust,” he explained. “When I talk to customers, they want new features and more innovation, but they also want reliability, resilience and secure technology. When companies remember this, critical points do not emerge. These pain points emerge when those things are forgotten and you focus on what’s new and shiny.

McKibben also spoke about the collaboration between banks and fintechs: “I think the partnerships are really good. The reality is that the landscape is much more collaborative than it was 20 years ago. Today there is a deep appreciation that collaboration, rather than just direct competition, is better for customers and the industry as a whole.

“Fintech and banks can learn from each other. Banks can bring resources, scale and knowledge from all the countries in which we operate. Fintechs are, by definition, leaner. In many cases they offer faster time to market. This way we can learn from each other to offer the best possible results to customers.”

The fintech fringe of Bank of America

Remember the fundamentals

Another panel focused on the stability and resilience of technology, where several speakers also agreed on the importance of remembering to always prioritize the so-called “fundamentals.”

Lee ProvostFlagstone’s CTO, told a story from his early career: “For my first job as a Java developer, I was working on a database, made my changes, and signed out, very pleased with myself for a job well done. ..until the panicked phone calls came.

“Apparently, I didn’t click ‘log out,’ I clicked ‘shut down.’ Thankfully, they said “Don’t worry, we probably never should have given you permission to shut down the production database anyway.” It was a very expensive lesson for the bank, but very useful for me.

“Usually, when horror stories happen, it’s because the company, processes, people and culture allow mistakes to happen. Whether it’s a UX issue that wasn’t prioritized or manual processes, more often than not it becomes a problem when we were too focused on prioritizing the next big shiny thing.

Tamsin PowellCRO a Creditspring, discussed risk management: “When technology fails, whether it’s ours internally or a third party, it represents an operational risk, a regulatory risk, and a financial risk. Years ago, you would have a technical team sitting in a different office. Now these are cross-functional teams that come together for any product development, incident or change, to ensure we’ve thought of everything.

Jake Fighead of product at MMOB, added: “To achieve harmonious outcomes across teams, there’s the idea of psychological safety – where people aren’t afraid to challenge something the company has said.

“It’s about creating an atmosphere where people aren’t afraid to make mistakes. Only then do you get some kind of contribution without blinkers and that considers the whole thing. A collaborative atmosphere is how we get the most out of a cross-functional team.”

Francis Bignell
Francis is a journalist and our chief Latin America correspondent, with a degree in Classical Civilizations, has a specialist interest in North and South America.
Tom Bleach
Tom joined The Fintech Times in 2022 as part of the operations team; subsequently joining the editorial team as a journalist.

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Fintech

US Agencies Request Information on Bank-Fintech Dealings

Published

9 months ago

30 July, 2024

FinCrypt Staff

Federal banking regulators have issued a statement reminding banks of the potential risks associated with third-party arrangements to provide bank deposit products and services.

The agencies support responsible innovation and banks that engage in these arrangements in a safe and fair manner and in compliance with applicable law. While these arrangements may offer benefits, supervisory experience has identified a number of safety and soundness, compliance, and consumer concerns with the management of these arrangements. The statement details potential risks and provides examples of effective risk management practices for these arrangements. Additionally, the statement reminds banks of existing legal requirements, guidance, and related resources and provides insights that the agencies have gained through their oversight. The statement does not establish new supervisory expectations.

Separately, the agencies requested additional information on a broad range of arrangements between banks and fintechs, including for deposit, payment, and lending products and services. The agencies are seeking input on the nature and implications of arrangements between banks and fintechs and effective risk management practices.

The agencies are considering whether to take additional steps to ensure that banks effectively manage the risks associated with these different types of arrangements.

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Fintech

What changes in financial regulation have impacted the development of financial technology?

Published

9 months ago

30 July, 2024

FinCrypt Staff

Exploring the complex landscape of global financial regulation, we gather insights from leading fintech leaders, including CEOs and finance experts. From the game-changing impact of PSD2 to the significant role of GDPR in data security, explore the four key regulatory changes that have reshaped fintech development, answering the question: “What changes in financial regulation have impacted fintech development?”

PSD2 revolutionizes access to financial technology
GDPR Improves Fintech Data Privacy
Regulatory Sandboxes Drive Fintech Innovation
GDPR Impacts Fintech Data Security

PSD2 revolutionizes access to financial technology

When it comes to regulatory impact on fintech development, nothing comes close to PSD2. This EU regulation has created a new level playing field for market players of all sizes, from fintech startups to established banks. It has had a ripple effect on other markets around the world, inspiring similar regulatory frameworks and driving global innovation in fintech.

The Payment Services Directive (PSD2), the EU law in force since 2018, has revolutionized the fintech industry by requiring banks to provide third-party payment providers (TPPs) with access to payment services and customer account information via open APIs. This has democratized access to financial data, fostering the development of personalized financial instruments and seamless payment solutions. Advanced security measures such as Strong Customer Authentication (SCA) have increased consumer trust, pushing both fintech companies and traditional banks to innovate and collaborate more effectively, resulting in a dynamic and consumer-friendly financial ecosystem.

The impact of PSD2 has extended beyond the EU, inspiring similar regulations around the world. Countries such as the UK, Australia and Canada have launched their own open banking initiatives, spurred by the benefits seen in the EU. PSD2 has highlighted the benefits of open banking, also prompting US financial institutions and fintech companies to explore similar initiatives voluntarily.

This has led to a global wave of fintech innovation, with financial institutions and fintech companies offering more integrated, personalized and secure services. The EU’s leadership in open banking through PSD2 has set a global standard, promoting regulatory harmonization and fostering an interconnected and innovative global financial ecosystem.

Looking ahead, the EU’s PSD3 proposals and Financial Data Access (FIDA) regulations promise to further advance open banking. PSD3 aims to refine and build on PSD2, with a focus on improving transaction security, fraud prevention, and integration between banks and TPPs. FIDA will expand data sharing beyond payment accounts to include areas such as insurance and investments, paving the way for more comprehensive financial products and services.

These developments are set to further enhance connectivity, efficiency and innovation in financial services, cementing open banking as a key component of the global financial infrastructure.

Sebastian Malczyk

General Manager, Technology and Product Consultant Fintech, Insurtech, Miquido

GDPR Improves Fintech Data Privacy

Privacy and data protection have been taken to another level by the General Data Protection Regulation (GDPR), forcing fintech companies to tighten their data management. In compliance with the GDPR, organizations must ensure that personal data is processed fairly, transparently, and securely.

This has led to increased innovation in fintech towards technologies such as encryption and anonymization for data protection. GDPR was described as a top priority in the data protection strategies of 92% of US-based companies surveyed by PwC.

Arid Islam

Financial Expert, Sterlinx Global

Regulatory Sandboxes Drive Fintech Innovation

Since the UK’s Financial Conduct Authority (FCA) pioneered sandbox regulatory frameworks in 2016 to enable fintech startups to explore new products and services, similar frameworks have been introduced in other countries.

This has reduced the “crippling effect on innovation” caused by a “one size fits all” regulatory approach, which would also require machines to be built to complete regulatory compliance before any testing. Successful applications within sandboxes give regulators the confidence to move forward and address gaps in laws, regulations, or supervisory approaches. This has led to widespread adoption of new technologies and business models and helped channel private sector dynamism, while keeping consumers protected and imposing appropriate regulatory requirements.

George Blandford

Co-founder, UK Linkology

GDPR Impacts Fintech Data Security

A big change in financial regulations that has had a real impact on fintech is the 2018 EU General Data Protection Regulation (GDPR). I have seen how GDPR has pushed us to focus more on user privacy and data security.

GDPR means we have to handle personal data much more carefully. At Leverage, we have had to step up our game to meet these new rules. We have improved our data encryption and started doing regular security audits. It was a little tricky at first, but it has made our systems much more secure.

For example, we’ve added features that give users more control over their data, like simple consent tools and clear privacy notices. These changes have helped us comply with GDPR and made our customers feel more confident in how we handle their information.

I believe that GDPR has made fintech companies, including us at Leverage, more transparent and secure. It has helped build trust with our users, showing them that we take data protection seriously.

Dr. Rhett Stubbendeck

CEO & Co-Founder, Leverage Planning

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Fintech

M2P Fintech About to Raise $80M

Published

9 months ago

30 July, 2024

FinCrypt Staff

Application Programming Interface (API) Infrastructure Platform M2P Financial Technology has reached the final round to raise $80 million, at a valuation of $900 million.

Specifically, M2P Fintech, formerly known as Yap, is closing a new funding round involving new and existing investors, according to entrackr.com. The India-based company, which last raised funding two and a half years ago, previously secured $56 million in a round led by Insight Partners, earning a post-money valuation of $650 million.

A source indicated that M2P Fintech is ready to raise $80 million in this new funding round, led by a new investor. Existing backers, including Insight Partners, are also expected to participate. The new funding is expected to go toward enhancing the company’s technology infrastructure and driving growth in domestic and international markets.

What does M2P Fintech do?

M2P Fintech’s API platform enables businesses to provide branded financial services through partnerships with fintech companies while maintaining regulatory compliance. In addition to its operations in India, the company is active in Nepal, UAE, Australia, New Zealand, Philippines, Bahrain, Egypt, and many other countries.

Another source revealed that M2P Fintech’s valuation in this funding round is expected to be between USD 880 million and USD 900 million (post-money). The company has reportedly received a term sheet and the deal is expected to be publicly announced soon. The Tiger Global-backed company has acquired six companies to date, including Goals101, Syntizen, and BSG ITSOFT, to enhance its service offerings.

According to TheKredible, Beenext is the company’s largest shareholder with over 13% ownership, while the co-founders collectively own 34% of the company. Although M2P Fintech has yet to release its FY24 financials, it has reported a significant increase in operating revenue. However, this growth has also been accompanied by a substantial increase in losses.

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Fintech

Scottish financial technology firm Aveni secures £11m to expand AI offering

Published

9 months ago

30 July, 2024

FinCrypt Staff

Aveni, Investment Management, AI, NLP, UK

By Gloria Methri

Today

To come
Aveni Assistance
Aveni Detection

Artificial intelligence Financial Technology Aveni has announced one of the largest Series A investments in a Scottish company this year, amounting to £11 million. The investment is led by Puma Private Equity with participation from Par Equity, Lloyds Banking Group and Nationwide.

Aveni combines AI expertise with extensive financial services experience to create large language models (LLMs) and AI products designed specifically for the financial services industry. It is trusted by some of the UK’s leading financial services firms. It has seen significant business growth over the past two years through its conformity and productivity solutions, Aveni Detect and Aveni Assist.

This investment will enable Aveni to build on the success of its existing products, further consolidate its presence in the sector and introduce advanced technologies through FinLLM, a large-scale language model specifically for financial services.

FinLLM is being developed in partnership with new investors Lloyds Banking Group and Nationwide. It is a large, industry-aligned language model that aims to set the standard for transparent, responsible and ethical adoption of generative AI in UK financial services.

Following the investment, the team developing the FinLLM will be based at the Edinburgh Futures Institute, in a state-of-the-art facility.

Joseph Twigg, CEO of Aveniexplained, “The financial services industry doesn’t need AI models that can quote Shakespeare; it needs AI models that deliver transparency, trust, and most importantly, fairness. The way to achieve this is to develop small, highly tuned language models, trained on financial services data, and reviewed by financial services experts for specific financial services use cases. Generative AI is the most significant technological evolution of our generation, and we are in the early stages of adoption. This represents a significant opportunity for Aveni and our partners. The goal with FinLLM is to set a new standard for the controlled, responsible, and ethical adoption of generative AI, outperforming all other generic models in our select financial services use cases.”