Teamspirit Fintech breakfast - 26th September

Thursday 26th saw our latest FinTech breakfast with the Financial Services Forum to host some of the leading FinTechs who are crossing borders and building global brands.

Joining us this time: Ben Johnson (Xero), Alessandro Capuano (Fineco), Peter Janes (ShieldPay) and Phil Alcock (Raisin). With the UK having maintained its investment lead attractiveness over Asia in the first half of 2019 (Source: CB Insights Pulse of Fintech Report Q2, 2019) and maintaining its European fintech crown, our panellists all have a unique experience of contributing to that environment. Here’s a rundown of some of the key talking points.

We kicked off the morning with a discussion on the collective focus to cross borders into new markets (three of our four companies were founded outside of the UK – Xero in New Zealand, Raisin in Germany and Fineco in Italy). This year has seen the domination of the so-called funding ‘mega rounds’ – £100m+ raised in D and E series funding – with the aim of supporting the international expansion of unicorns. But when is the right time for businesses to actually take the plunge and begin expanding overseas?

The main considerations for launching in a foreign market, according to our panellists, are positioning, product-fit and the receptivity of local regulators – though the challenge of moving existing services into a new market was a recurring theme throughout the morning, with differences in local regulatory customs, tax rules and business styles providing potential barriers for both brand and business.

Our panel agreed, however, that there is a great deal of potential in a partnership with a local bank or financial provider – as this can help a new service establish sales channels, achieve a sense of trust and legitimacy without large-scale ad spend, and negate the pitfalls of entering a new market without an established local network (particular important in markets such as the US.) Likewise, investment from a high-profile institution (such as Goldman Sachs) is a good way of advancing the credibility of a brand both in the UK and when scaling abroad. The panel agreed that open banking and the democratisation of information has allowed some start-ups to develop as cross-border propositions in the first place, rather than waiting to transplant a fully operational business into a new regulatory ecosystem.

After a quick discussion of brand and marketing channels (social media is still vital for building referrals—with TV and out-of-home creating stature) our panel came onto the issue of trust and transparency. Trust is still one of the biggest hurdles for challenger banks and FinTechs, with many consumers still not trusting banks like Monzo with “the heavy stuff” – their main salaries, direct debits or large sums such as inheritance. There was discussion around the loss-leading strategies of some challengers, some of whom have created unrealistically attractive entry terms, only to gently strip back the unaffordable features further down the line. This along with a lack of focus on profitability is one of the potential negatives that could, our panellists speculated, affect the reputation of the whole industry in the long term. Considering that FinTechs have had less time to build reputation than older banks, negative press – from anywhere in the world – will have a knock-on effect on the market-leaders. Yet another persuasive argument for an strong brand and securing a partnership with an established bank.

We rounded off the session with a Q&A and a quick discussion of what each of our panellists thought they’d done well in their company’s journey, as well as some of the mistakes. We’ll keep those ones confidential – some things are just between a panellist and their audience! But if, like us, you have a hunger for fresh insights and anecdotes from inside the world of FinTech, be sure to keep your eyes open for the final FinTech breakfast of the year on November 26th on The Race to primary banking relationship status.