David Prosser for Forbes writes: Britain’s financial technology sector is booming, accounting for a third of the total global investment in the industry according to Silicon Valley Bank. That’s second only to the US, and while other European Union countries also have their success stories, put together, they’re attracting just a tenth of the finance flowing into British firms.
That dominance is reflected in the FinTech50, a new listing of Europe’s most exciting financial technology businesses, where more than half the constituents are UK companies. Here’s just six of the best that Britain has to offer.
Borro
The credit crunch prompted a wholesale withdrawal from the small business lending market by Britain’s big banks – six years later they are only just beginning to think about returning. A wide range of alternative lenders have stepped into the breach, but Borro is unique in its particular niche of the market.
The online lender offers loans of up to £1m to individuals and business owners, with the advances secured against borrowers’ personal assets – anything from fine art to a vintage wine collection. An in-house valuation team runs the slide rule over the assets and offers a very quick lending decision.
DueDil.com
How can businesses proceed with confidence when they first have dealings with private companies about which little is publicly known? The large credit reference agencies are geared up to provide data on large companies, but offer a very narrow set of analytics. DueDil.com, however, promises much more – and can provide intelligence on a much larger number of businesses.
Within the past year, the company has got its funding round away, developed technology that provides access to data from 20 different European countries and signed up more than 150,000 customers. Not a bad start.
FreeAgent
Freelancers and micro-businesses don’t always have the time or the expertise to stay on top of their accounting, but their affairs aren’t complicated enough to justify the expensive fees charged by traditional accountants. FreeAgent squares that circle with a cloud-based accounting service that has already attracted more than 34,000 subscribers.
The business is just five years old but has been able to roll out a series of new services very rapidly thanks to a software-as-a-service model that gives online users access to sophisticated tools as and when they need them, rather than requiring customers to make sizeable upfront investments.
FundingCircle
FundingCircle wasn’t the first venture in Britain to offer small businesses access to loans through a crowdfunding platform, but it has come to dominate the market. So far investors on the site have lent more than £200m to small businesses that might otherwise have been unable to access credit.
Last year, the business announced a venture in the US, which promises to supercharge its already impressive growth. And while it was initially dismissed by the banks as irrelevant and unthreatening, insiders say a tie up with one of the UK’s big high-street names is now imminent.
GoCardless
The UK’s direct debit scheme enables customers to pay organisations automatically and electronically – it’s convenient and secure. Unfortunately, the system has been less than accessible to smaller businesses, leaving them to rely on more expensive payment methods.
Enter GoCardless, which launched just two years ago with a new technology solution that has enabled thousands of merchants to bill their customers by direct debit for the first time. Within a year, the start-up business had become the UK’s largest direct debit provider – next months it’s launching into continental Europe.
Wonga
Love it or hate it (and there are plenty in Britain, including some influential policymakers, who fall into the latter camp), Wonga has made more of an impact than any other new entrant to the financial services industry in living memory. The payday lender has developed a sophisticated algorithm that enables it to offer instant decisions on online applications for short-term loans – and where it says yes, it’s also able to deposit the cash in borrowers’ accounts immediately.
Wonga has already lent hundreds of millions of pounds to individuals and is now beginning to make inroads into the small business market. It’s hotly tipped to launch an IPO sooner rather than later.
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