Seven disruptive fintech start-ups

Matthew Finnegan July 23, 2014

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1. London leading fintech innovation

The UK can lay claim to some of the world's most innovative firms specialising in financial technology. This is perhaps unsurprising, given that the Square Mile - home to many of the world's financial powerhouses - is situated just a few miles down the road from the burgeoning start-up scene of Old Street's Silicon Roundabout, while projects such as Level 39 support tech innovation within the City itself.

These agile firms are continuing to turn the heads of large venture capital firms, and are attracting some of the $3 billion (£1.75bn) spent globally on fintech start-up investment each year, triple the amount seen in 2008 according to a recent Accenture report.

Whether threatening to usurp the dominance of the 'thousand-pound gorilla' incumbent banks and payment providers, or partnering with them to help modernise their services, here are some leading fintech start-ups based in the UK today…

2. Money transfer: The Currency Cloud

International money transfer services are big business, with trillions of dollars crossing borders each year. It is also an area of disruption in the digital age, with large providers such as Western Union expected to see competition from tech firms like Facebook - which has recently been working with UK start-ups on its own offering.

One of the start-ups leading the way is The Currency Cloud, which now processes $6bn in payments every year, having launched in 2012. The company offers a automated foreign exchange (FX) payments engine with APIs for use by other customer-facing companies - including start-ups such as TransferWise - allowing it to offer lower rates than banks and money transfer firms.

Backed by a number of leading fintech invest firms, including Atlas Venture, Anthemis Group, and Notion Capita, the start-up recently announced its latest funding round, receiving $10 million (£5.8bn).

3. Secutity: Digital Shadows

Are you aware of your digital footprint? Founded in 2011, Digital Shadows protects banks from cyber attack using its big data analytics and threat intelligence platform, monitoring the huge volumes of potentially sensitive information companies amass through cloud services, social media and mobile.

The Canary Wharf-based firm was recently tasked with supporting the Bank of England-led initiative to improve cyber defences throughout the UK finance sector, as online attacks continue to increase.

The company, led by CEO Alastair Paterson, was one of the winners of last year's FinTech Innovation Lab, speaking to ComputerWorldUK at the time.

4. Bitcoin: CoinFloor

With the reputation of bitcoin taking a battering following the bankruptcy of what was once the largest exchange, Mt Gox, CoinFloor is one of a number of 'second generation' trading platforms that are seeking to generate wider use of the virtual currency.

It aims to do this by providing a more 'trustworthy' exchange, with full anti-money laundering (AML) and "know your customer" (KYC) procedures. It has also been engaging with UK financial regulators, which have so far kept the nascent electronic payment method at arms' length.

The London-based bitcoin exchange was recently boosted by announcing the appointment of a former managing director of both Goldman Sachs and Credit Suisse, Adam Knight, as its new executive chairman.

Image source: Flickr/BTC Keychain

5. Online wealth management: Nutmeg

Founded by former broker Nick Hungerford and financial services software expert William Todd in 2011, Nutmeg let users build and manage investment portfolios from their laptop.

Aiming to disrupt the status-quo of traditional stock broker firms, the online service allows investments of as little as £1,000, with users' personal preferences guiding decisions on investments.

Started in Silicon Valley but now situated in London's Vauxhall, Nutmeg has recently announced a new funding deal worth $32 million (£18.6m) to support its expansion, taking its total investments so far to $50 million (£29.1m). Backers include asset management house Schroders, and venture capitalist firm Balderton.

6. Money transfer:Transferwise

Another start-up providing international money transfer services, Transferwise has captured the interest of some notable investors.

The peer to peer money transfer company received a $6 million (£3.9m) investment round last year, led by the venture fund founded by Facebook’s first outside investor and co-founder of PayPal, Peter Thiel. More recently it landed a $25 million (£15 million) investment from Sir Richard Branson, which will be spent helping the company raise awareness of the hidden fees applied to overseas money transfers, among other things.

7. P2P lending: The Funding Circle

The Funding Circle is an example of how start-ups and big banks can work together. Last month, the peer to peer lending firm announced a partnership with Santander, which will see smaller businesses turned down for a loan referred to the start-up.

Offering a new way to access finance, the Funding Circle has already seen £40 million investment from the government as it encourages more lending to SMEs in the UK.

The Southwark-based start-up is backed by Index Ventures, Union Square Ventures and a number of angel investors, it has facilitated loans of over £300 million in under four years.

8. Risk management: Credit Benchmark

(Image source: https://www.flickr.com/photos/lendingmemo/)

Aiming to improve transparency around credit risk, Credit Benchmark collects internal risk estimates produced by banks to create anonymous 'consensus' ratings.

Earlier this month the company received $7 million in funding from Index Ventures, which it will invest in 30 new staff including data scientists to help grow its data source in the credit risk information industry, a market the company claims is worth $6 billion (£3.5bn). Headquartered near Moorgate, the start-up will also use the funding to help set up shop in New York.

Image source: Flickr/Simon Cunningham

Seven disruptive fintech start-ups

Matthew Finnegan

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