January Fintech Round-Up
This is our fourth blog post alongside NatWest, and will explore and provide input in the Fintech scene. We will be highlighting interesting Fintech startups and relevant sector news, as well as detailing upcoming tech events and opportunities.
European Fintech 2018 Outlook
By Steven Hunter, CEO and Founder of 9fin - Using AI to extract key information from financial documents
What does 2018 hold for Fintech?
The broad base adoption of cryptocurrency as a means of payment, store of value and investment?
A mass shift away from traditional retail banks to VC backed challengers?
Large tech players like Amazon using Open Banking APIs to aggressively enter and dominate the consumer finance space?
Who knows. But at 9fin we’re incredibly optimistic about the state of Fintech in Europe and the future of capital markets technology.
Reasons for optimism in Europe
The last few years have made a fool out of anyone making predictions… But let’s at least hope 2018 continues the trend of Europe catching up on its big brother across the pond.
It’s not very well known, but the European and North American economies are broadly the same size, around $20 trillion in GDP terms. Yet, in terms of venture capital funding Europe is still significantly behind.
If you believe CB Insights data then 2017 venture capital investment in North America was 4.2x larger in dollar terms and 2.2x in number of deals when compared with Europe.
But, we’re catching up…
Last year European VC investment grew +40% to $17.6bn (vs. +17% in North America) and +16% in number of deals (vs. -5% in North America). That’s an all-time high.
The growth rate for Fintech looks even better and was also at a record level in 2017. Europe grew +121% to $2.7bn (vs. +33% in North America) and +46% in number of deals (vs. -14% in North America).
Investors may be hoping for a few more unicorns.
Capital markets technology is beginning to come of age
While reading a few of the 2017 VC funding reports we seized on a quote by CB Insights that perfectly underlies the reason we started 9fin:
38 years! That’s a staggering statistic.
Often, the people we speak to simply can’t believe that capital markets are so archaic, especially within the world where 9fin operates — debt / fixed income.
To give you a sense of the technological ‘development’ in our area of Fintech, did you know that loans and bonds are still largely traded over the phone, market moving news can take hours to reach investors, and some companies’ results are still distributed by fax!
That’s why we built 9fin. In a nutshell, we use AI to extract key information from financial documents. By making data easy to search, filter, and analyse we help fixed income professionals make better investment decisions.
Many headlines and VC dollars have gone towards B2C Fintech, rightly so. But we still think B2B is massively underinvested and where Fintech will — perhaps quietly — make the biggest impact. Hopefully 2018 can be the start of that revolution.
Our favourite Fintech articles from the past month
1. Mifid II launched
Mifid II, a revamped version of the Markets in Financial Instruments Directive, is designed to offer greater protection for investors and inject more transparency into all asset classes: from equities to fixed income, exchange traded funds and foreign exchange.
These ambitious regulatory reforms, are ‘poised to transform Europe’s financial industry’ from January 3rd 2018.
2. ‘Why alternative finance is now mainstream’
By Peter Alderson, Managing Director of LDF
3. ‘Why banks and Fintech startups need each other more than ever’
By Amy Neale, Vice President and Senior Business Leader at Mastercard
Top Fintech startups to watch
In addition to 9fin, here are some of the top Fintech startups for whom 2018 could be a big year…
Flux
Flux, who create technology for receipts and loyalty to live in your banking app, have made history as the first authorised Account Information Service Provider (“AISP”) in the UK under new Open Banking (aka PSD2) regulations that went live on January 13th 2018, under firm reference no. 791567.
Curve
Curve, the Fintech company that connects all your cards to a single card and app, is finally launching to U.K. consumers. Until now, the service remained in beta and was only officially available to business users.
TradeTeq
TradeTeq makes trade finance investments accessible by delivering machine learning driven advanced credit analytics, reporting, and investment solutions, essentially transforming trade finance assets into transparent and scalable investment exposures.
Maxatta
Maxatta offers technology that can solve the manual processes involved in financial markets. Their software allows for bespoke systems to be built to client specifications, meraning that the module will adapt to the user, rather than the user having to find solutions for a lot of “one size fits all” systems that many banks currently have in place.
Upcoming Events and Opportunities
- Rainmaking Colab Fintech
Launched on 16th November and created by the founders of Rainmaking and Startupbootcamp Fintech, Rainmaking Colab is a theme based innovation program, designed to equip corporates in mature markets with the capability and experience to create engagement and solve real business problems.
Rainmaking Colab connects later stage startups with proven technology and business models to the right people within established industry organisations.
The programme runs in waves throughout the year. Each cycle targets a different industry theme, with the current theme in London being ‘Digital Identity’.
Further information can be found via the website.
- RBS and NatWest Fintech Accelerator Programme
The Royal Bank of Scotland and NatWest will launch their Fintech Accelerator Programme in Edinburgh, Manchester, Bristol and London, in April. In conjunction with Entrepreneurial Spark, Dell, and DIT, the Bank is providing a bespoke 6-month support programme designed to enable Fintechs to reach their growth ambitions.
Unlike many accelerator programmes, Royal Bank of Scotland and NatWest’s proposition is fully funded by the Bank which means no fees are payable and there is no requirement to give up equity. The programme provides Desk space in the local Entrepreneurial Spark Hub, mentoring, sales strategy, technology and IP reviews and through the DIT, and a network of International Accelerators support to expand globally.
For more details or to apply please contact FinTech@rbs.com / FinTech@natwest.com
- Capital Enterprise and LCIF Networking Drinks
Please join us for our monthly networking drinks on Wednesday 21st February, to mingle with and find out more about some of the dynamic startups, investors and advisors we’re showcasing through our funds and programmes at Capital Enterprise and the London Co-Investment Fund.
This month we are delighted to host and partner with Sport Tech Hub — London’s first facility dedicated to startups driving innovation in physical activity and sport. Sport Tech Hub are backed by London Sport, the strategic body aiming to make London the most physically active city in the world.
By Steven Hunter, Gracie Jones and Nick Slater
