BY ANDREW DON
ANICCA DIGITAL, a Leicester-based specialist search and digital marketing
agency, faced a worrying fortnight last
Christmas. An unprecedented number of
clients o wed money to the ;;;;,;;;-annu-al-turnover company. The directors’
immediate thoughts were to enter an
invoice financing arrangement with a
conventional bank, but Ann Stanley, the
company’s founder and chief executive,
called another business contact she knew
“I hadn’t realised that although the
interest rates charged by the high-street
banks are competitive, the hidden fees are
horrendous,” Stanley says. “[I learned]
about set-up costs, monthly charges and
minimum-use charges and so the list went
on.” The charges amounted to many thousands of pounds a year, and Stanley would
also need to provide a personal guarantee,
her business contact explained.
Instead, her business contact advised
Stanley to approach Verus;;; (verus;;;.
com), one of the burgeoning new alternative ;nance services for businesses, a ;eld
known as ;nancial technology, or ;ntech.
Fintech companies use new software to
create alternative and innovative ;nan-
cial services. Stanley’s reservations van-
ished when Verus;;; quoted the same
interest rate as Anicca Digital’s (anicca.
co.uk) high-street bank, but without any
other costs. Plus, she was told her business
would pay interest only for the days it
accessed the money. “We no longer have
to worry about late payers, as we know we
can access the money when we need it,”
she says. “It takes a huge pressure o; the
business, but without the costs normally
associated with this type of service.”
Born out of bedlam
London is the fintech capital of the
world, and Verus;;; is one of a new generation of ;ntechs that emerged out of the
last ;nancial crisis, when small and medium-sized enterprises (SMEs) lost trust in
conventional lenders and the government
had to bail out Royal Bank of Scotland and
Lloyds/Halifax/Bank of Scotland.
Fintechs encompass a wide range of
;nancing models, including peer-to-peer
lending and crowdfunding, payments and
money transfer, currency exchange and
investment. Janos Barberis, co-editor of
The FINTECH Book: The Financial
Technology Handbook for Investors,
Entrepreneurs and Visionaries (
Econo-mia, ;;;;), explains that ;ntechs are companies that apply technology to deliver
;nancial products or services more e;ectively than conventional banks and help
their users save money. They o;er a narrow product focus that enables them to run
leaner and pass the savings to customers.
Up-and-coming fintech companies
include Transfer Wise (
for money transfers; Square (squareup.
com) for mobile payments; Kickstarter
kickstarter.com), Crowdcube (crowd
cube.com) and SmartAngels (smart
angels.fr) for crowdfunding; and
lendingclub.com) and Zopa
zopa.com) for peer-to-peer lending.
“The new ;ntech companies can o;er
SMEs more than just money,” says Tim
Morgan, chief executive of Verus;;;.
“Crowdfunding can be used as a marketing tool and for engaging suppliers.” But,
he adds, companies need more help and
education in understanding ;ntech and
A new frontier
Fintech’s relative newness poses a
potential risk. Lack of historical data and
established process might, occasionally,
create hiccups in terms of service continuity or support at some ;ntechs. “The
fact that the sector is gro wing fast will also
mean that, going forward, there will be a
concentration of the industry, and thus
certain companies won’t be here anymore,” Barberis says.
Tom Blomfield, chief executive and
founder of fintech bank startup Monzo
monzo.com, formerly Mondo), says ;ntechs are using technology in new ways to
challenge the status quo in an industry
that has been stagnant for decades.
“There are millions of people who don’t
like or trust their current bank service,
and it’s up to us to o;er something di;erent,” he says.
In the future, as millennials establish
and grow their businesses, financial
experts expect the ;ntech revolution to
gather pace. Meanwhile, companies like
Anicca Digital are enjoying new ;nancial
options via ;ntech companies. C
Andrew Don is a London-based freelance
business journalist and author.
Fintechs offer an
for business loans
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