Weekly Briefing No. 34 | UK Fintechs Will be a Net Winner vs. Incumbents Over Brexit

Brexit happened. We share our initial take on that as well as New York’s surge, some big Series B deals, ABN AMRO’s tie-up with WhatsApp and Wolfram Alpha, a handy tool we love.


UK fintechs will be a net winner vs. incumbents over Brexit.

We’d love to be a fly on the wall at a London pub as UK’s fintech employees talk about the future. For months, they have joined financial services incumbents in warning of dire consequences if the UK voted to leave. Now, it’s happened and it will behoove them to forget the previous rhetoric and try to make a lemon curd out of the lemons. While Brexit will be bad for the world’s overall economic stability, it will be especially harmful for large and systemically important financial institutions who are either based or operate in the UK. UK based start-ups, meanwhile, may have a harder time penetrating the European market and attracting talent and capital. That’s not good news, but when compared to the regulatory challenges facing larger institutions, who will need to assemble internal task forces and hire legions of consultants and lawyers, it looks to us like Brexit fallout will be far less bad for agile start-ups. UK’s fintech leaders can and should do what comes naturally to most of them when confronting a major hurdle: have a beer, plan a pivot and get to work on finding revenues. Big incumbent rivals won’t have that luxury.

New York has overtaken Silicon Valley’s fintech perch. Does it matter?  

After reading Accenture’s FinTech Innovation Lab’s report showing that New York’s Q1 fintech deal volume exceeded Silicon Valley’s total for the first time ever, we initially thought: that’s cool. After all, we are ex-Wall Street guys who have a picture of the Brooklyn Bridge on our website. But after thinking about it, we concluded that it is not only an irrelevant comparison (who cares if New York’s start-ups took in a bit more Q1 money?), but it also speaks to an opinion we’ve had for some time: pretty soon, there won’t be a distinction between financial services and fintech. While it’s been convenient to draw a distinction between start-ups that place a central importance on technology and incumbents by calling the former “fintech” companies (we do it all the time), it’s beginning to feel like a dated term such as “high-tech.” That’s because most every major bank, asset manager, data provider and insurance company has gotten the memo: superior use of technology is not a key to future financial services success, but the key. Some of those incumbents may be slower to do something about it, but our guess is that five years from now, the skill sets of employees at incumbents and start-ups will look increasingly similar — regardless of where the company is based or whether it is deemed a collaborator or competitor.

Series B Big Leaguers.

Their names may not be ideal for SEO purposes, but Number26 and Plaid certainly know how to raise money — a combined total of $84 million in Series B capital. Berlin-based Number26 aspires to be Europe’s leading consumer-facing mobile bank, although it is not yet technically a bank. Its best feature according to this TechCrunch article, is that money can be paid or withdrawn globally using the app without incurring foreign transaction fees or getting whacked by a lousy exchange rate. Plaid, which counts Goldman, NEA and Spark Capital as investors, provides aggregated customer account and transaction data needed to power fintech applications that include budgeting, payments, automated investing and online borrowing. In other words, Plaid stays behind the scenes, fueling the dreams of aspiring apps seeking unicorn glory. That sounds about as sexy as a plaid sweater, but in this case, it’s one we’d be happy to wear.


Boy, those Dutch are innovative.

“How often do you lend somebody money, but have a hard time – for whatever reason – asking to be repaid? We believe Tikkie solves this problem. Nothing could be easier than sending a WhatsApp message with an iDEAL payment request.” That’s the rationale behind the new partnership between WhatsApp and ABN AMRO, according to the bank’s digital chief, Frank Verkerk. US banks: that awkward issue happens here too. Please copy this deal.

Are payments necessary?

We liked this catchy title from a recent blog post published by Kunal Patel in which he makes the point that payment options should be context-based in the same way that an Uber ride is. Despite his bullishness on the idea, Patel concedes that if payments become a background process, there is the risk that financial literacy could head south too.

More blockchain chest-thumping.

Blockchain tech companies with news to share are about as humble as prize fighters who refer to themselves in the third person. Still, we have to admit that if we were Ripple, especially given Ethereum’s troubles, we would trumpet any and all good news we had to share. This week, Ripple signed on seven new institutions, including UniCredit and the National Bank of Abu Dhabi.

Care for some snark with your tacos?

Kudos to Erin Griffin for her witty takedown of corporations and start-ups that seize on quick fixes to address larger organizational challenges. For corporations trying to infuse innovation into their somnolent culture (via “innovation theater”), here’s what she had to say: “Stiff-haired corporate ladder climbers play dress-up in hoodies, trading their golf outings and steak dinners for drone flying and hipster tacos. They return to the home office in Parsippany or Peoria brimming with ideas about growth hacking.” Apart from the mean swipes at two perfectly nice cities, we liked her message and equally rough treatment of start-ups engaged in “corporate theater.”

Company of note

Wolfram Alpha.

This sort-of search engine is rapidly taking the place of Google as our go-to source for information on everything from software to socioeconomic data. It responds to inquiries with externally culled data as opposed to what “normal” search engines (Google, Bing, etc.) produce, which are web pages, news articles and other content. Founded by Stephen Wolfram, a British computer scientist, mathematician and physicist, the company offers several premium consumer and enterprise products, but the free version does a great job for us.

Comings and goings

Three former Deloitte blockchain ninjas including Matthew Spoke, Jin Tu and Kesem Frank have departed the consulting firm to launch Nuco, an enterprise blockchain solutions provider. Also this week, Capital One UK hired Aline Baeck, formerly of eBay, to serve as the head of design, a new position that leverages Baeck’s deep background in design thinking.

Quote of the week

“The new always happens against the overwhelming odds of statistical laws and their probability, which for all practical, everyday purposes amounts to certainty; the new therefore always appears in the guise of a miracle.”

~ Hannah Arend