First principles for Fundbox gives it the visionary edge in SME lending

Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a neowealth disruptor in Australia. This week US SME lender Fundbox landed fresh funding, raising $176 million from new and existing investors. What sets Fundbox aside from other lenders in the market is its […]

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Payments giants battle it out for the new breed of retail customer

Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a neowealth disruptor in Australia. Payments processor Adyen has prized eBay away from PayPal and a high profile customer from Square.  Is there a changing of the guard afoot in the global fintech […]

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Instant gratification underpins successful fintech – the rise of early wage access providers

The other night I was out to dinner with a few friends, and I got into a conversation about our obsession with convenience, of which we are all guilty of. The thing is, we shouldn’t really be embarrassed about our drive for immediate satisfaction. After all, it simply represents our desire to protect and retain […]

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Creative economy, micropayments and Bitcoin

Note; originally published Januuart 2016, republished August 2019 (as this becoming true about 4 years later) About 40% of the labor force in America will be self employed by 2020. Globally, including the developing world, well over 50% is self-employed. Whatever you call it – the free agent economy or the on demand economy or the […]

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FinFit at the forefront of the financial literacy dilemma

The world is waking up to the fact a vast swathe of the generation coming through are in dire financial straits. This has significant implications on society at large. Poor financial knowledge leads to poor financial habits, which ultimately leads to poor life decisions, at crucial junctures. So how do we address this? While many […]

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Latin America digital banking giant Nubank to add business accounts to its line-up

Asia seems to be where many fintech investors’ eyes are turned these days, however there are plenty of other underbanked markets that hold just as many opportunities, possibly more, for the savvy global venture hunter.

South America is one of those markets, and its stand-out performer to date has been Nubank.

The online bank started out life wooing personal banking customers, and now counts 10 million of Brazil’s 209 million residents as customers. While its bread and butter has been a slick digital experience for retail customers, the company is now looking beyond personal banking to business banking for SMEs.

Complementing its current base of personal account holders, the new line of products will focus on self-employed professionals and individual micro-entrepreneurs, otherwise known as MEIs. Their needs are not that different to a retail account holder, and the move will no doubt increase average revenue per account holder, plus entice new customers. Around 800,000 of Nubanks clients are reported to have already requested the bank move into business banking, no doubt helping sharpen the decision around product prioritization.

This announcement from Nubank shows an understanding of the growing global trend around flexible work, and how financial services are so central to empowering this trend.

It therefore comes as no surprise that the likes of SoftBank Group are reported to be sniffing around. It’s rumoured that any financing deal Nubank undertakes, would value the company in the realm of $8 – $10 billion. According to Vox, that would make it the second most valuable fintech in the world, behind Stripe.

If Nubank can conquer Latin America (the company has just started expanding into Mexico), it seems like that valuation will be well justified.

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).

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Indian Neobank NiYo gets Tencent on the Cap Table

Just two weeks ago we reported on Daily Fintech that the Indian SME banking sector had received a $30 million funding injection, with Tiger Global leading a round into Open, a neobank targeting the sector.

In that same article, we surveyed the booming Indian neobanking space, and drew your attention to another player similar to Open, NiYo. This neobank wants to own the banking relationship with salaried employees in India, offering 50% salary advances via its platform, at 0% interest. It also has a multi-currency Visa travel card and a tax-saving feature for employee expense management.

Just a few days ago, NiYo hit the headlines in its own right, with news another big funding fish, Tencent, was part of an even bigger $35 million round into the business.

Talk about stealing the spotlight from its competitor.

While there’s the usual chatter about new products and doubling down on distribution, it’s reported the neobank is also on the acquisition hunt, and open to bringing oboard other startups that can fast track its overall vision.

There is a slight irony in the fact that as neobanks like Open and NiYo rise, parts of the industry are in severe decline. Nowhere was this more evident this week, than the (somewhat) shocking news stalwart Deutsche Bank will retrench as many as 18,000 of its global workforce in the coming weeks. The dramatic impact technology has had on certain aspects of the two divisions feeling the brunt of the cuts at Deutsche – equities and fixed income – could have some viewing the move as a bellwether for other inefficient parts of legacy banking. No one can deny business banking is right up there – NiYo and Open are being funded because of it.

While there is no defined news on the extent to which Deutsche’s Indian operations will be affected (their equities team is a small operation), it’s worth remembering India’s huge role in processing and supporting offshore teams. The flow on effects of high salaried, and often highly leveraged employees in Western countries losing their income in a market where replacement jobs are thin on the ground, is all part of a growing concoction of financial chemicals that could pop the global asset bubble. It only takes one prick, after all.

At least in India, the opportunity for re-invention and growth in the financial technology space is abundant, where payments and banking innovation is flourishing thanks to a lack of legacy systems and throttling regulation. Might be time for a sea change for some of those ex-Deutsche employees, who are fed up with the bright lights and ruthlessness of Manhattan and London.

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).

Is Funding Circle the barometer for SME opinions on Brexit?

Listed SME fintech Funding Circle sent waves through their share price this week, with news the lender was halving its growth forecast for 2019.

Facing reduced credit demand from the sector, it now anticipates its 2019 revenue growth on 2018 will be 20%, rather than a previously forecast 40%.

Loans under management on the platform are up 37% for the first half of 2019 compared to the same period in 2018, currently sitting at £3.5 billion. Originations are up 14% on the prior corresponding period, at £1.2 billion. All healthy figures in their own right.

While the share price took a fall on the news growth was expected to slow, investors on the P2P lending platform are no doubt pleased with the forecasted increase in returns on a net basis. The full year 2019 outlook expects these to be in the range of 5.0 – 8.5%, up from 4.4 – 8.4% in 2018.

The company is blaming the ‘uncertain economic outlook’ as being behind the drop off in growth. With Brexit negotiations and outcomes still incredibly uncertain, it’s easy to empathise with the many UK based SMEs who must be struggling to read between the tea leaves of UK and EU policy, in order to decide whether to make capital investments in the next 12 months.

So just what do SMEs really think about Brexit?

Research released by payments provider WorldFirst in February of this year seemed to think they were smelling the Brexit roses, with the number of small businesses indicating they were broadly positive about the UK’s exit hitting 41% in the last quarter of 2017, up from 33% in the prior year.

A separate study by academics at St Andrew’s University found that in 2016, 25% of businesses viewed Brexit as a major obstacle to their success. This number had jumped from 16% in the year prior, when they were surveyed right after the referendum. Their survey canvassed 15,867 SMEs, using government data collated by the UK Department for Business, Energy and Industrial Strategy.

Research released by Co-operative Bank in January placed Brexit concerns as top of the list of worries for SMEs, followed by increase in operating costs and then competition. Access to funding was second to last on the list, which may be testament to companies like Funding Circle doing their job well.

SMEs, like most of us who are surveyed, probably say one thing and do another. My bet is that the pace at which businesses like Funding Circle are growing is probably one of the best barometers of the SME market’s true reaction to Brexit. And in line with a cliché that speaks to the human condition, they seem to be living out the phrase, ‘when in doubt, do nothing’.

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)

India’s SME fintech sector flourishing – Facebook and Tiger Global take stakes

The convergence of simplified business banking with accounting is happening at a phenomenal pace.

The latest player to get the global investment market excited is Indian neobank startup Open, which recently announced a $30 million funding round, led by Tiger Global.

Today the neobank allows new customers to seamlessly link or open a new business current account online, powered by Indian bank ICICI. From within the online banking platform, they can then issue simple invoices and receive payments, streamlining how the banking and accounting arms of their business interact with each other.

The approach taken by Open is almost identical to UK neobank Tide, which now claims 1 in 12 new UK business accounts’ is opened via its platform.

Open isn’t the only neobank in India worth watching.

InstantPay plays in a similar space to Open, minus the accounting bundling, with its suite of services extending beyond SMEs to corporates and individuals.

NiYO wants to own the banking relationship with salaried employees in India, offering 50% salary advances via its platform, at 0% interest. It also has a multi-currency Visa travel card and a tax-saving feature for employee expense management. Bank owned challenger brand Yono by SBI is also going after the consumer market.

Tiger Global aren’t the only US firm doubling down on Indian fintech. Facebook, who see opportunity in the tangential social commerce space, have taken a stake in Indian startup Meesho.

Meesho are effectively redefining the definition of a SME, enabling a new generation of Indians to establish home run businesses, reselling goods via its marketplace. Suppliers list goods, and resellers then market those goods out to their community of Whatsapp, Facebook and Instagram connections, setting their own margins. Collectively, resellers have access to 7 million customers on their platform, so a big carrot for suppliers to access.

The influence of cultural norms on how fintech’s develop is fascinating, and demonstrates the gulf that is expanding between how the west and the east think about innovation. Many take from the other (Open arguably from Tide), but undoubtedly some of the most interesting and novel applications in finance, like Meesho, are happening in the developing nations. There is no doubt in my mind this innovation will accelerate economic parity with more developed countries, and possibly even place western nations at a disadvantage from a financial infrastructure perspective, in the not too distant future.

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)

£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)