November 10, 2014

LFP011 - 5 Key Challenges to the Success of UK Fintech plc with Dr Louise Beaumont of GLI Finance

38 minutes

GLI FInance’s Platforms

The Economist has described the emergence of huge numbers of Fintechs as a Cambrian Explosion. Will this be followed by a Mass Extinction?

I am delighted to be joined on the show today to discuss this by a uniquely qualified individual who has a background in solid BigCos, has co-founded a successful Fintech and advises key government departments on UK Fintech including the current Blackett review on Fintech.Â This week she has been appointed as Head of Public Affairs and Marketing for GLI Finance.Â GLI Finance is an AIM listed company that both invests in AltFi vehicles (see above) as well as investing through their platforms.

Louise is also a woman and one who was showcased in Brummell magazine as one of the top 30 most inspirational women entrepreneurs in the City.Â So we warm up the show with the angle of women in Fintech – there ain’t many and the social narrative is rather PC these days. I see three threads at play here.Â First what I experienced as the “70s narrative” of equality of identity; then the narrative (to which we all subscribe) of equality of opportunity; but more recently and a little perniciously perhaps a third of equality of outcome.Â This last can (ironically) get unwittingly sexist – so for example one sees plenty of calls for more women in tech – but I have never seen many calls for more men in social media – whats that about then?

Louise talks about five challenges, or vice versa five guiding principles for avoid the Mass Extinction of UK Fintech plc (we will have masses of extinctions at the startup level of course purely as so many startups die off anyway).

Around these challenges we touch on a number of issues which London needs to retain in order to not be a “second-best US” Fintech venue but a “first best UK” fintech place.Â Not being excessively PC as per the women issue; retaining a sense of humour; the more European (social democratic?) model of at least some “heart-based” capitalism (to add to the more greed-based US version which certainly took over the City in the past twenty years).

Louise outlines five key challenges to the potential success of UK Fintech plc.

Funding – fierce competition for low levels of development funding in the Â£2-10m zone;

Balance – stopping being too obsessed with technology and not enough on focusing on the impact of a business on its stakeholders.Â As a consequence of being overly tech-focused there has been something of a failure to capture the imagination of funders.Â There needs to be a balance of a tripod of Technology, Operations and Sales&Marketing (with a glue of management ability to guide and hold it all together);

Legislation and regulation – essential to create an environment in which we can be succesful. Equity crowdfunding is a notable example where good legislation/regulation has facilitated the competitive advantage/lead of the UK (technically it’s still illegal in the US I believe).Â In this way we also lead the creation of an environment worldwide as other countries look to the UK’s example. “Good regulation” also requires a process of engagement with the industry for consultation (which is happening well right now).Â It is also required to level the playing field between the incumbent Goliaths and the new David’s challenging them;

Globalisation - this is often seen as a threat whereas we also need to embrace is as an opportunity. I raise the historical/psychological perspective on this namely that the British used to be very outwards in their orientation.Â On the positive side of this legacy London is now perhaps the most tolerant, multicultural city in the world.

Think Big - think beyond the widget, beyond the platforms, see how our Fintech fits into the global supply chain and changes it forever. Following a centuries long Imperial expansion, the British have been undergoing a contraction in their mentality for the past five decades and are perhaps less culturally global in business ambitions than the Americans whose turn at the global empire game it is.Â Added to this the increasing size of FS organisations has narrowed the horizons of the average FS person to a certain “white-collar factory” corporatism in the past twenty years.Â Somehow we need to overcome these and find a “European” or “UK” paradigm to thinking global again (without the Pith Helmets), without going down the neo-imperial US conquest route (most every major global tech firms is American which is extraordinary from one perspective (but perhaps not from a historical perspective (East India company qv))).Â Louise outlines her thoughts on how to do this (as well as now doing it in her day job for GLI Finance which has platforms in several continents and several types of business line).

Finally we recorded this at Crowdshed – which as a crowdfunding platform involves crowds (which can be heard roaming around the prairies in the background at some points). Louise ends with an incredibly impressive tale of one of the deals bringing together investment and philanthropy funding.Â I won’t spoil the tale by relating it here but listen to the praiseworthy success rate of a campaign by the Running Charity which helps young people who are homeless or at risk of being homeless get into education and employment.

Now doesn’t that kind of thing make you think that along with:

a) GLI’s mission of funding SMEs (which are a massive part of the economy);

b) Fintech can be A Good Thing; and

c) that there is perhaps some chance of London FS regaining the social conscience it lost when it got sucked into greed-based capitalism (after all look at all those livery companies that have been around for a long time “doing good”).

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