Colab FinTech discusses the future of Alternative Finance

The event kicked  off the next Colab London theme on Alternative Finance

The lending landscape has been through a major evolution over the last 5-10 years. New technology, changing customer demands, and capital looking to achieve greater returns have transformed the way we borrow, lend, and transfer money using technology on the go. 

Last week, Rainmaking Colab hosted a panel discussion at Techspace Shoreditch, discussing the revolution in accessing finance, changing business models and how the financial services industry is embracing the change, but also what the challenges are for FinTech entrepreneurs in this space.

The evening kicked off with a fireside chat between Rainmaking Colab’s Managing Director Helene Panzarino and Castlight Financial CEO Phil Grady, discussing how banks and alternative lenders are using new technologies to assess credit worthiness, and how banks today can stay competitive by implementing hybrid lending strategies and partnering with FinTechs.

Phil talked about the partnership between Castlight Financial and HSBC UK in the delivery of the bank’s first open banking loan and how their CaaS technology is allowing the bank’s lending teams to deliver fast, accurate and insightful decision making as well as a better customer experience.

They also talked about Castlight Financial’s partnership with Paradigm Mortgage Services, which is offering Foundation Home Loans through Castlight’s ‘Affordability Passport’, to help speed up the administration process and allows brokers to avoid gathering documents such as bank statements.

The evening continued with an insightful panel discussion moderated by Nektarios Liolios, CEO and Co-Founder of Startupbootcamp FinTech and Rainmaking Colab. Nektarios was joined by Hugh Kingdon, Head of Business Development at Visa, Lucy Hasson, COO at Esme Loans, Phil Grady, CEO of Castlight, Loubna Bazine, CEO of FriendlyScore and Dexter Penn, CEO of Kalgera.

Today, banks face a variety of challenges from increasing pressure on margins, regulatory demands, customer demands for speed and a frictionless user experience at a lower cost, to competition from predominantly platform-led, marketplace or peer to peer alternative finance companies.

The institutional finance markets are being challenged by platform-led investment opportunities, opening up the source of and options for capital while shortening capital raising cycles and putting pressure on margins. Forward-looking institutions are developing partnerships with alternative finance companies to grow their markets, share fundamental capabilities, and expand their expertise.

Not that it would surprise you, but all the FinTechs participating the panel discussion mentioned that they have set up their businesses because they saw the problem in the market that banks were not addressing and wanted to solve it.

Visa is also active in the alternative finance space. Its real reason to work with new innovative technologies is to improve its customer’s experience. Hugh Kingdon shared how Visa has implemented innovation across a large corporate and emphasised how important it is to choose the right FinTech partner to work with, also mentioning the very recent partnership with Revolut, rolled out just a few months ago.

The discussions moved on to corporates readiness and capability to work with FinTechs. Hugh also mentioned how important it is to inspire people internally, give them the support, tools and goals to drive creativeness and innovation in a big corporate organisation. He admitted that cultural change needs to happen internally, but that it’s really hard to change a big organisation and there are multiple challenges along the way. However, you need to start from the bottom-up to make it happen. 

The panel also discussed the biggest challenge for FinTechs – the time it takes to sell into big corporates from conception to delivery. The experience was different across the panel, but in the end, it was agreed that the sales cycle into a bank and implementation is lengthy – with it taking up to 1-1.5 years. Loubna Bazine from FriendlyScore shared their experience selling into a corporate:  “It starts with the innovation person but in the end comes down to who you are put in touch with from the relevant business unit, and the biggest challenge really is to find the right person you need to speak to.”

Nektarios Liolios added that sometimes even the best teams with great solutions struggle to get access to the data from incumbents which causes the biggest friction.

Dr Dexter Penn from Kalgera shared his experiences and the importance of first investigating the appetite of incumbents to collaborate. Agreeing with Loubna, he also mentioned how crucial it is to find the decision maker but emphasised that you also need to get the right data which reflects the complexity of real life to really make an impact. Dexter believes the future and next step in finance is the leveraging of gains made by cloud computing to help individuals gain more tangible value from their data.

Lucy Hasson shared that Esme loans was born from inside a large organisation - fully owned and backed by Natwest - Esme offers UK-based SME customers a simplified and paperless end-to-end process with competitive rates. Esme was born out of NatWest’s commitment to invest in innovation and technology to become a faster and simpler customer focused bank.

Nektarios Liolios wrapped up the panel by stating that: “Ultimately it’s about offering the people something that they didn’t have before, giving people a better service, better user experience and better products. Giving them access to life changing opportunities they didn’t have five years ago, and not because banks didn’t serve them, but because the way the incumbents operated, they just didn’t have that lens to look through.”

The evening was followed by networking and drinks and more discussion. The event also a kicked off Colab’s next theme – Alternative Finance. If you want to know more about Colab, get in touch



By Triin Linamagi

Head of Ecosystem

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