A Cambridge FinTech startup story
There’s more to the financial services sector than London. As the FinTech sector flourishes in the UK, here’s how one company spotted a gap in the market to better support SMEs
What drives someone to eschew the comfort of a City job to start a financial technology (FinTech) company? For me it was a combination of push and pull. On the one hand, investment banking was becoming more strangled by regulation and risk aversion. On the other hand, I was keen to build a business of my own – and get started while I was still young and energetic enough to do so.
Why did I choose to start a business focusing on international payments for small and medium-sized enterprises? As a sales head in a hedge fund financing business, I’d been having some interesting discussions with clients about how non-bank financial institutions could provide loans directly to borrowers, thus cutting out of the loop (“disintermediating”) the banks. Such loans were more flexible, tailored to the specific requirements of the customer and could be arranged faster. As an early user of Zopa – the peer-to-peer personal loans website – I also understood how online financial services could truly empower their customers.
Lending was clearly not the only application for FinTech, and I set about identifying big markets which were dominated by the traditional players. It didn’t take long to spot foreign exchange as a market which was shrouded in mystery and burdened with opaque fees and charges. Recent FinTech start-ups like TransferWise and Azimo were doing a great job in personal currency exchange, but there was a gap in the market for a service focusing on SMEs, which are increasingly international, but underserved and overcharged by the banks.
A different approach
Coming from a big bank I understood that, due to technical challenges resulting from unwieldy legacy systems, banks tended to design new services to be as easy as possible for them to deliver.
Here was an opportunity to turn things on their heads and build a payments service that was designed from the ground up to meet the needs of the customer. A service offering intuitive tools and functionality which would fit the way our users worked, responding to the unique challenges faced by the SMEs at the heart of the UK economy.
Basing the business in Cambridge, and using designers and developers who had never built a financial application before, meant that we could build something new and unhindered by conventional wisdom. Furthermore, the local business community consisted of just the right blend of international-facing and technology-aware customers who would be the ideal users of such a service.
Now, 10 months since we launched our web application, we’ve recruited 100 SME customers, and have helped them exchange over €30m (saving them an estimated £500,000 in fees and charges). We’ve received over £1m of seed financing from a group of experienced financiers and technologists, and are expanding our Cambridge team rapidly.
Our business has proved that the financial sector doesn’t have to be all about London. Technology is opening new doors. The UK offers the right talent and experience for challengers to do things differently – and there’s the appetite for it.