£5m for 5 – the SME fintechs who’ve been awarded RBS grants

Financial disaster has had a silver lining for some fintechs, with many benefitting from RBS’s remediation funding scheme, that was established in the wake of the financial crisis.

Five fintechs are beneficiaries of the latest round of grants. We had a quick look at who they are, and what they do.

Swoop Finance

Swoop’s matching technology helps SMEs find the right funder for their business. Working with over 1000 providers, they can serve up lenders that are a best fit. Born in Ireland, they cover the local and broader UK market.

Funding Options

Matching technology is clearly where the excitement is, with Funding Options performing a similar role to Swoop, this time matching those in need with more than 50 lenders.

Form3

Unlike Swoop and Funding Options, Form3 operates in the payments-as-a-service space. They have access to the Faster Payments Scheme, operating as a Direct Settling Participant. They exist to plug the awkward payments gaps that have arisen as businesses try to make payments work, across an increasingly fragmented ecosystem.

Codat

Codat should call themselves the connecter of the connectors. The company’s API allows you to integrate once to multiple accounting software platforms. Think of it maybe like the Yodlee of accounting.

Fluidly

Last but not least, intelligent cashflow management software Fluidly is all about helping businesses predict their financial future. The also offer automated credit control, claiming they are able to save businesses over 40 hours per month on cash collections.

Here’s hoping some great things come from the £5m grants these companies have received. It is certainly not spare change, and there will no doubt be great expectations from the community, to ensure that money is put towards building great products and experiences that avoid the very disaster the grants were born from.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a new superannuation startup in Australia.

I have no commercial relationship with the companies or people mentioned. I am not receiving compensation for this post.

Subscribe by email to join the 25,000 other Fintech leaders who read our research daily to stay ahead of the curve. Check out our advisory services (how we pay for this free original research)

How Emotional Banking can look like

Emotional bankingIt is Spring and officially in three days summer, so this is the time to open up and bring up topics like Emotional Banking. Several influencers have covered this topic – Chris Skinner, Brett King, Ron Shevlin – and Duena Blomstrom has been focused 100% on Emotional banking in her work and with her book `Emotional Banking : Fixing Culture, Leveraging FinTech, and Transforming Retail Banks into Brands`.

The core issue underpinning Emotional banking is the relationship we humans have with money. Undoubtedly not a simple one and clearly an emotional one.

When was the last time any of the three financial institutions you have relationships with, checked in with you as a person? The reality is that we each engage with at least three financial institutions but often with seven (consumer banking, business banking, wealth management, insurance, broker, etc) and the touch point is ONLY when and if we are ready to transact.

Sadly, most neobanks or challenger banks or Fintechs with banking services, are no different than the traditional financial institutions in that respect. And I am not referring to the fact that Revolut does remember my birthday whereas UBS doesn’t. I am referring to the fact that neither Revolut nor UBS, have any idea of what makes my heart beat, what would make me feel more secure, how I dream about the future, why I trained as a Kundalini Yoga teacher etc.

HOW Emotional banking looks like

Here is a concrete example of HOW Emotional banking can look like. Frost Bank is a 150-year-old Texas-based bank that started off as a small mercantile store and is now one of the 50 largest banks in the US. Frost bank has also been receiving the Greenwich Excellence award in the middle market and small banking category.

What caught my attention is their Optimism campaign called Opt for Optimism. They chose to link Optimism with financial health.

First, Frost Bank embarked on a research study about the link between Optimism and financial health. Here are some of their findings:

 Optimists experience 145 fewer days of financial stress per year

Optimists are 7x more likely to experience better financial health

They published their research in Mind over Money showing how attitude and mindset toward money impact financial health.

Screen Shot 2019-06-17 at 12.15.20

At the same time, they launched a campaign about Optimism through a 30 day challenge during which people can join in performing 30 acts of optimism. They also created a community sharing portal to inspire each other, explore the financial habits of optimists,  watch inspiring films the bank produced for the campaign and find out why Frost Bank cares about something like optimism in the first place.

Share in the comments other examples of HOW Emotional Banking looks like.

Efi Pylarinou is the founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer.

 I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.

 Subscribe by email to join Fintech leaders who read our research daily to stay ahead of the curve. Check out our advisory services (how we pay for this free original research).

Prospa proves fintech is a prosperous investment, skyrocketing in IPO debut

This week the fintech community in Australia celebrated a new SME success story – the long awaited float of SME online lender Prospa.

After stalling at the IPO finish line last year, the venture backed startup came back with a roar, with shares debuting at $4.50, a significant uplift on the $3.78 IPO price, with a market cap in the $720 million region.

Since launching around 7 years ago, the business has originated an impressive $1 billion in loans to the local SME community. Through a strong sales and partnership model, they have done the unthinkable in business banking – made lending to SMEs work.

Not content with just originating loans, and plugging what it believes is a $20 billion lending shortfall to the sector, the company is also innovating. It recently launched a buy-now, pay-later service, Prospa Pay, for equipment and stock. It’s a savvy move, especially given the shift in personal borrowing behavior amongst millennials, thanks to Australia’s fintech success story Afterpay. More and more of these consumers will become business owners over the next decade, and will be hunting for products that look and feel similar to what they have been initiated in.

Prospa joins a growing group of Australian fintechs in the lending space who have found success listing their businesses, albeit at far earlier stages than Prospa. This group includes Afterpay, which has built a sizeable $6 billion market cap. The company now has its sights set firmly on US expansion. Zip has also cracked the $1B market cap mark, and is making significant inroads into the buy-now, pay-later space.

These are huge milestones for the fledgling industry, and a great reward for early stage investors, who have backed founders and businesses in the face of stiff competition from a well-funded oligopoly.

Zip, Afterpay and Prospa are proof it can be done, and should give other early stage investors’ confidence in taking bigger, bolder bets.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a new superannuation startup in Australia.

I have no commercial relationship with the companies or people mentioned. I am not receiving compensation for this post.

Subscribe by email to join the 25,000 other Fintech leaders who read our research daily to stay ahead of the curve. Check out our advisory services (how we pay for this free original research)

EY releases first ever global SME Fintech Adoption Index

The EY FinTech Index, which has been going since 2015, is back for its 2019 edition.

The publication interviews more than 27,000 consumers in 27 markets to take the pulse on where fintech is at.

Unsurprisingly, the sector is thriving, or in EY’s words, innovation has now ‘become the new normal.’

2019 marks the first year the index has taken a deep dive into SME fintech, building out the first ever SME FinTech Adoption Index. It’s a survey of 1000 organisations across 5 markets – no mean feat indeed.

The SME index interviewed decision makers in the UK, US, South Africa, China and Mexico, via a digital survey. An important disclaimer, as digital enablement isn’t always a feature of SMEs everywhere, developed and non-developed nations included.

Here is a snapshot of the results that caught our eye.

China leads the way in SME Fintech adoption, with 61% of SMEs interviewed having used a banking and payments, financial management and financing and insurance service from fintechs in the past 6 months. The UK (18%) is not far in front of South Africa (16%), with Mexico at 11% and the US at 23%.

Global averages for fintech adoption sit at 25%, however China skews the data significantly, given the highly digitized and platform centric nature of the financial services economy. Skewed or not, it represents the future that the western world is lagging behind on.

SMEs that were considered adopters tended to be VC backed, global in outlook and with an online/mobile sales model.

In developed markets, like the UK and the US, the most widely used services are online bookkeeping, payroll management, online billing and online payment processors. In emerging markets SMEs are also frequent users of payments and billing services, but mobile point-of-sale devices and readers also feature.

Fintech isn’t always a panacea, however.

More than half (57%) of those surveyed who were classified as adopters said the services available from fintechs didn’t meet the needs of their company. It presents a distinct opportunity for a unifying force in SME fintech that can connect the dots in a fragmented system for time-poor business owners.

The gap in attitudes between the adopters and non-adopters when it comes to data sharing with fintechs is also interesting. 89% of adopters indicated they were willing to share banking data with a fintech, compared to only 50% of non-adopters. 69% of adopters were willing to share that data with a non-financial services company, which should present some interesting opportunities to those in tangential markets to fintech, where access to banking data could provide additional context and experience enhancement.

You can access the full report here.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a new superannuation startup in Australia.

I have no commercial relationship with the companies or people mentioned. I am not receiving compensation for this post.

Subscribe by email to join the 25,000 other Fintech leaders who read our research daily to stay ahead of the curve. Check out our advisory services (how we pay for this free original research)