5th November 2018
AltFi's second summit in Amsterdam was a great success. With one year of Open Banking/PSD2 in the books, fintech leaders from across the UK and Europe discussed use-cases, progress and future opportunities for the framework. Investors in marketplace loans shared their thoughts on the continued evolution of the asset class, while leading digital banking founders explored how the scope of services offered by these disruptors is expanding.
Catch up on all the event highlights below. We look forward to seeing you next year!
Small businesses are driving the economy with 50-60 per cent of economic value coming from SMEs.
Following Brexit, banks have been reducing loans to SMEs and the result is that companies are struggling to grow, but alternative funding sources are helping.
Jerome said that companies are put off if they must do homework or complete complex applications when applying for loans. "This is why Funding Circle retrieves the publicly available data, gets a 360-degree view of the borrower and can give an answer to the application in 24 hours."
Investors are becoming reluctant to hand over cheques to smaller companies because of the lack of trust and reliability in the market.
Stéphane said it takes the same time to complete a £40m as a £40,000 deal so it is only logical to pick the bigger ticket.
The panel agreed on the importanance of transparency when it comes to online lending. Dr. Bartsch said that transparency is gradually improving and Gabriella believes if transparency is done correctly, trust will follow.
Ticket sizes are growing as companies like Creditshelf raises its threshold from €2.5m to €5m.
The continental Europe and UK markets are not too dissimilar. Niels said Spotcap uses continental Europe to test its models before going to other markets. The only significant difference between the markets is risk exposure.
Antoni said there are markets where Fellow Finance doesn't invest like Germany because it requires a full banking license. Fellow Finance is not comfortable partnering with an external bank because it likes to keep everything in-house.
Niels believes it is important to maintain the company's product set and expand in to countries which are compatible when it comes to growth. Whereas Antoni believes products should be added when there is a demand in new markets like Sweden.
LendInvest has transitioned from a fund management bussiness when it launched in 2008, to a marketplace lender, and now to an asset management platform.
Instead of travelling the world meeting clients, it was more efficient to build a platform to raise capital. Now the platform is approached by individuals of high net worth through word of mouth and referrals rather than advertising.
Angelie said LendInvest can approve a mortgage in two weeks which is half the time it takes for other banks, without increasing the risk exposure.
The mortgage industry is still growing and changing so there is much more to happen. Therefore an IPO by LendInvest is not essential right now.
Ronald said people are excited for a European wide P2P regulatory framework to be implemented.
Anne said there is a fintech action plan without the action at the moment. Ways to improve this include scaling up models within Europe which will remove obstacles and introduce fintech solutions such as blockchain which remove and control cyber risk.
P2P regulation should be finalised by July 2020 following a successful trial period.
In five years’ time, Luuc believes there will be both European and local platforms available, increasing competition in the market by lowering barriers to entry. Only the niche players will remain.
P2P lenders are struggling to find credible borrowers which is stunting its growth.
There was a lack of IPOs on the Lisbon stock exchange in the run up to Raize going public.
Jose said: "Going public is an expensive process but it should be seen as an investment. It is the best marketing campaign."
Being licensed and regulated in Portugal, Raize's plan is to focus on building its reputation and audience there before expanding internationally.
Starling Bank is four-times larger than it expected to be at this point in its business plan. It already boasts 10 marketplace partners, and can offer them a robust source of new customers, all of whom have already been subject to KYC and AML checks.
Starling is making a major play for rewards from the £775m RBS Remedies Fund.
Anne said that the bigger banks are copying everything fintechs are doing but are spending far more money and time on digitisation than they need to be. A better alternative, she says, would be to pay firm's like Starling for banking-as-a-service products.
Bud has been working with HSBC to integrate the latest Open Banking solutions, helping the bank understand the impact of the new framework.
The company provides insights to organisations through Open Banking. Jamie said that companies don't need five-years' of data for one piece of information.
Working with both banks and marketplaces, Bud doesn't prioritise one project over the other. Its focus is on customer experience.
Jamie said Open Banking as a culture is very exciting. It is pulling down the walls of banks and enables smaller companies like Yolt to retrieve information from the bigger banks who process data.
Flanker brands are a side business, run by a bigger companies, often banks. Olivier said ING's flanker company Yolt has gained 500,000 users in a year.
The purpose of flanker brands is not to encourage cross-selling but to learn and access more data to continue growing.
Francesco said there is an opportunity for TrueLayer to expand abroad but he is focusing on "riding the Open Banking wave" for now.
Jack said it is important to look at a customer's journey when approving loans. Instead of it being a no, how can it be a yes.
Zopa is in the process and is on track to launch its bank next year.
Customer relationships and integrated solutions is what should be prioritised to be the number one money app.
Revolut was chosen by most of the panel as being the best challenger bank due to its unique offering.