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Steve's ITK: Fintech frenemies

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Steve's ITK

December 3 · Issue #36 · View online
Steve's In The Know: Everything I published recently, commentary you won't find elsewhere, write-ups of events I attended or spoke at, and industry rumours.

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Monzo's Tom Blomfield being interviewed by me at Startup Grind London (Credit: Startup Grind)
Opening thought: Speculate to accumulate
This month has been an absolute fintech frenzy, and my genuine fascination with financial technology continues unabated.
I managed to scoop Monzo news twice, including that Instagram co-founder Kevin Systrom is an investor (sorry Tom!), published a number of fintech exclusives, moderated a packed fintech event in London, and produced a rather fun slideshow taking a look at TransferWise’s early pitch deck to investors.
I also finally convinced myself to buy some Bitcoin. Or, more accurately, a tiny fraction of a Bitcoin: about £200 worth at the time of purchase. Truth be told, I first tried to buy Bitcoin a few years ago when it was priced at around $800, but got put off by the need to upload a scan of my passport to a foreign Bitcoin exchange in order to pass anti-money laundering checks. If I had gone ahead, I’d be nearly $10,000 up.
I can’t say the process this time around has been much smoother. Coinbase, one of the most popular exchanges, was able to verify my account quite quickly (meaning I could begin purchasing Bitcoin) but has completely screwed up the ‘legal name’ it has for me on file (it couldn’t cope with the apostrophe in my surname!).
Next I tried Coinfloor, but the UK-based exchange had trouble accepting my documentation first time and its fee structure clearly targets larger traders. Finally, I signed up to Blockchain (a Bitcoin wallet provider) and managed to make a small purchase via Debit Card, including being charged a hefty 3% card processing fee.
In fact, I’m inclined to think that the only people who are definitely making money in this crypto currency gold rush are the payment providers and exchanges. Picks 'n’ shovels, my friends.
Of course, once I had a wallet full of Bitcoin, the price of Bitcoin fell. I spent my first week as a Bitcoin investor in the red, as only I could do. Eventually, the price jumped dramatically – at which point I tried to short but was unable to as every exchange seemed to crash – before falling back down again but higher than my purchase price. At the time of writing, I’m about 50 quid up. The takeaway? I haven’t got a fucking clue.
Bonus: This newsletter now accepts Bitcoin.
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All the things I wrote
Exclusive: A look through TransferWise’s early pitch deck
InsurTech Gateway is a new insurance tech accelerator backed by Hambro Perks
StrideUp wants to help you buy a portion of your home
Balderton Capital closes new $375M fund to invest in Series A-stage European startups
Mobile payment and loyalty platform Yoyo Wallet integrates with Starling Bank
Ten years on: Seedcamp outs new £41M seed fund and says it’s ready to invest in tokens
Scoop: Instagram co-founder Kevin Systrom has backed the U.K. challenger bank Monzo
Scoop: Monzo’s latest round included £11M in secondary as founding employees partly cash in
Fintech startup Glint de-cloaks to offer a multi-currency account and card that supports spending gold
Scoop: Pact Coffee founder steps down from CEO role as London startup looks to B2B for growth
Zego picks up £6M Series A led by Balderton for its gig economy worker insurance
​Toyota​ ​Mobility​ ​Foundation launches $4M prize for mobility tech targeting lower-limb paralysis
Perkbox acquires digital rewards platform Loyalty Bay
Lofelt raises $5.4M to develop next-gen haptic tech for gaming, AR, VR, automobile, and more
Fintech startup Flux partners with Barclays for itemised receipts
Former PhotoBox CEO Stan Laurent joins Highland Europe as Partner
User-generated content marketing platform Yotpo closes $51M Series D round
Airbnb management service Hostmaker scores $15M Series B funding
Mojiworks raises £2.1M Series A to build games for Facebook Messenger
Challenger bank Monzo raises another £71M from Goodwater Capital, Stripe and Michael Moritz
Closing thought: Fintech frenemies
Me, Tom Blomfield, Megan Caywood, and Barnaby Hussey-Yeo on stage at Startup Grind London (Credit: Startup Grind)
The fintech event at Startup Grind London earlier this month went almost entirely as planned, aside from the first part of the video stream (embedded below) not being recorded.
The night started with a 30 minute fireside where I interviewed Monzo co-founder and CEO Tom Blomfield. He was then joined by Chief Platform Officer of Starling Bank, Megan Caywood, and CEO and co-founder of Cleo, Barnaby Hussey-Yeo.
Afterwards, Blomfield said I was ‘tough,’ as I put him and the challenger bank firmly under the spotlight. Questions included: why do we need a new bank, how will the Monzo marketplace stay honest, how will the company make cash when it is currently losing money per customer, how will it scale to millions of customers, and how is a better UX in any way defensible, both against incumbents, and new fintech startups that don’t have the capital or regulatory burden of a banking license.
It is fair to say that he gave as good as he got and the rapport between us benefited from the fact that, even though we hadn’t met before, we have had many phone calls and the future of banking is a well-trodden topic for both of us.
The panel was equally robust. Monzo, Starling and Cleo are competitors, after all, although it isn’t a zero sum game. In fact, Caywood made the point that the challenger banks and wider fintech startup ecosystem are in many ways on the same side. Fintechs run on existing banking rails and whose better banking rails to run on than the forward-thinking and API-friendly challenger banks, rather than incumbents.
That said, Cleo’s Hussey-Yeo clashed with Blomfield a number of times (exactly as I had set it up) on the thorny issue of whether or not, within the landscape of Open Banking, you need to be a fully-fledged licensed bank to replace a user’s banking app and become the control centre for all of their finances. That argument has a long, long way to go yet.
On a personal note, although I had been unwell in the run up to the event, I was very relaxed on the night and thoroughly enjoyed myself. I did the entire thing almost without notes and that enabled me to keep the conversation fast-moving and quite spontaneous.
Feedback afterwards was really positive, including from a number of founders and employees of other fintech startups who had purchased tickets especially. I’d wanted to design my own fintech event for ages, and I’m thankful that Startup Grind allowed me to do it my way. With a sold-out 350-plus attendance, I like to think it paid off.
Bonus: As I was about to leave, I caught Blomfield’s attention to let him know that I had something on Monzo I needed to run past him. ‘I’ll text you when I get home,’ I said. At which point he turned to Caywood and advised, ‘it’s never good when Steve says that’. A few days later I broke news that Monzo’s latest round included £11 million in secondary investment as founding employees have partly cashed in.
YouTube: The future of fintech with Monzo, Starling Bank and Cleo
Extra: If, like me, you aren’t going to be there, tune in to TechCrunch Disrupt Berlin on Tuesday and catch my colleague Romain Dillet in conversation with Tom Blomfield (Monzo), Valentin Stalf (N26) and Nikolay Storonsky (Revolut).
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Till next time,
Steve
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