The Fintech sector may be an emerging sector in Cornwall, and not as developed as gaming or software development, but the companies here are putting the region on a world stage – and that’s just the beginning.
Fintech businesses use new technologies to ‘create new and better financial services for both consumers and businesses’.
Nationally the sector has annual revenues of £20bn and that figure is growing. Fintech in particular is expected to create 30,000 new jobs over the next 10 years alone.
Mostly led by start-ups, this is a relatively new industry that uses technology to improve activities in finance – think online banking straight from your smartphones, cryptocurrencies or crowdfunding as examples of technologies that aim to make financial services more accessible to the general public.
Think of the way that peer-to-peer lending and crowdfunding are changing the way community projects get funding to help them get off the ground, or for new inventions to finally reach the production factory. Think of new apps to help you better manage your bills.
It is happening right here, right now in Cornwall.
Belinda Waldock, co-founder and director of Software Cornwall, said: “Fintech is set to have a huge impact on our traditional finance models and systems, for example, the recent new ‘open banking’ regulations force UK banks to open up data to APIs, enabling fintech companies like CFT Group, based here in Cornwall, to develop apps and services like Duesday that customers can then use to access, analyse and control their financial data and better manage their finances.
Combine this with new ways to invest money like the Crowdfunder investment model that originated, and still remains, in Newquay – it’s easy to see how banking and finance in the traditional sense is set to change dramatically as new disruptive and innovative solutions are launched, made possible by advances in technology and ‘open data’.
As virtual businesses, Fintech companies are entirely location independent – as long as there’s a decent internet connection. Where better to be located than Cornwall, with its world class superfast connectivity, amazing quality of life and awesome tech community.”
Andrew James, manager at PKF Francis Clark in Truro,agreed the sector has an enormous potential for growth.
He said: “Fintech has the power to disrupt the current finance market and is already doing so in many different ways. 10 years ago, very few would have heard of the word ‘crowdfunding’ and today we have the largest crowdfunding platform here in Cornwall – Crowdfunder, based in Newquay.
It has made us look differently at the ways businesses can raise funds and is a form of finance that should now be considered along the usual traditional business financing models.”
Marcus Kern is the co-founder and director of the Liskeard-based CFT Group, whose app Duesday aims to revolutionise the way people pay their bills.
The company was incorporated in 2016 in Cornwall thanks to Cornwall Trade and Investment and EU funding. Already, what started as a team of four has more than trebled in size.
Mr Kern describes Duesday as ‘PayPal for the payment of recurrent bills’ – whether it’s council tax, water bills or gym memberships.
“It allows customers to make payments in a more convenient way, including bill splitting. The missing feature of Direct Debit, which is in effect like giving other organisations the keys to your bank account, is the facility to split a bill and pay it from two or more bank accounts.
With Direct Debit you can’t do that which is why most couples have a joint account to pay their bills. But we have designed a bill-sharing facility so you and your partner can pay what you owe and it is taken from separate accounts. That works great for students too who are sharing a flat, having to pay rent.”
Duesday is expected to launch before Christmas.
Mr Kern added: “We’re still in a collaborative testing phase. At present people can register with Duesday to trial it. We are trying to control it so if we find bugs or things are not working quite as well as we’d like for users and merchants we don’t disappoint an entire audience. Using a small group of users we can have a better app.”
The CFT Group employs 13 staff and is looking to grow as the business grows further.
“Recruitment in Cornwall is not issue,” Mr Kern said. “But we have to be realistic about the number of roles to fill. We want organic growth, not overstretch ourselves.
At the moment Fintech is underdeveloped in Cornwall. There are very few Fintech companies here. The nice thing about Cornwall is its sharing environment. We are all very supportive of each other and push business each other’s way if we can and help each other.”
For Mr Kern and others in the sector it will take a couple more Fintech companies setting up shop in the Duchy to generate a trend.
He said: “Investors need to realise that the talent is here. Business premises are really affordable. Internet connectivity is amazing and Cornwall offers the perfect work life balance. For financial regulators it doesn’t matter where you operate from so why not come to Cornwall? I always put the word out.”
Crowdfunder, the UK’s leading crowdfunding platform has to-date raised more than £50m for UK projects.
Based in a re-purposed surf shop overlooking Towan Beach in Newquay where it employs 30 staff, Crowdfunder’s growth has been meteoric.
Since its inception in 2012, Crowdfunder has raised more than £50million for projects across the UK, worked with over 16,000 projects to help them raise the money they need to make their ideas happen.
Crowdfunder is aiming to raise another £160m by 2020.
To fund such growth, the company appealed to the alternative-finance market by raising equity cash through its sister company, Crowdcube, the UK’s leading equity crowdfunding platform based in Exeter.
Last year, Crowdfunder raised more than £1million to focus on growth, increasing profitability and achieving its ambition to build the most effective social investment platform in the world.
Broody, the business incubator backed by leading London based advertising agency Mother, agreed to acquire a 5% stake in Crowdfunder.
Dawn Bébe, one of the directors at Crowdfunder, believes the internet has democratised access to finance in a way which was not possible before for charities, small start-ups and community projects.
She said: “Crowdfunding is still disrupting the finance market and is increasingly the first place projects turn when they want to validate an idea or get the initial funds they need to make their idea happen.
As a high growth innovation business, Crowdfunder is still disrupting, especially in the fund distribution market, where we are providing new ways for partners to support projects they care about.
We have almost 30 Local Authorities running localised crowd-matched funding campaigns across the UK. With Crowdfund Cornwall, local councillors are pledging on projects they want to support in their local wards using their community chest monies as match.
She added: “We have a raft of platform innovations we will be rolling out across the year to ensure projects that matter get supported by people how care.
We are also really excited about our GoDaddy What’s Your Idea?, L&G Community Legends and M&S Energy fund campaigns, which have are supported some great projects that matter across the country.”
To further boost and promote entrepreneurship in the UK and in Cornwall in particular, Crowdfunder has been teaming with possibly one of Britain’s best known and most successful entrepreneurs – Sir Richard Branson and his VOOM! campaigns.
Voom 2018 saw 80 entrepreneurs pitch their hearts out for the chance to become VOOM 2018 finalists and win cash to launch their project, alongside support from Richard Branson and Crowdfunder.
‘Hyper local’ is ironically where the internet – the most global communication channel ever invented – helps connect people and provide community groups and projects with access to funding that would not otherwise exist.
It is there that alternative finance and peer-to-peer lenders are playing an increasingly central role to the point of becoming the first port of call for new business ventures.
Crowdfund your business idea and we’ll lend you money, seems to be the message from the high street banks.
That’s exactly where Folk2Folk came to be.
Folk2Folk, which has its headquarters in Launceston, describes itself as Fintech with a face. Founded by Mark Parnall and Louis Mathers, partners of Parnalls solicitors in Launceston, the peer-to-peer platform has since lent more than £100m to local business projects.
It works by matching local businesses looking for loans with individual investors through Folk2Folk award-winning peer to peer lending platform. Unlike the high-street banks, alternative local lenders like Folk2Folk can take a more holistic approach through their local knowledge and understanding of the reputation of the businesses in their local area.
A spokeswoman for Folk2Folk said: “We use technology to enhance human relationships and bring them together. We remain one of the only companies of our kind to maintain and favour the existence of a local branch network.”
The secret of its success? Mutual trust and transparency.
If you lend money to your neighbour so they can buy a bottling plant for their microbrewery you know where the money goes. But more importantly, you know your neighbour and they know you which means the onus is now on them to pay you back and keep their standing in the community.
Giles Cross, the new Chief Executive Officer said the platform, backed by several high street branches in Cornwall, Devon, Somerset, Dorset, Wiltshire, Gloucestershire, Herefordshire, Worcestershire and the Thames Valley, is a secure investment that can offer returns higher than those offered by many banks at 6.5% returns.
He said: “On a local level, the transactions between our borrowers and lenders have an impact that is felt far beyond their peer to peer relationship through our online platform.
“By accessing secured business loans for growth, development, and diversification, our borrowers are benefiting their local economy and community. They are creating and sustaining jobs, they are retaining talent in non-urban areas, and stemming its tide to the cities.
The more local and rural businesses our lenders help, the greater the positive impact on the UK economy.”
He added: “Vibrant rural and local economies attract people into those areas, new homes are built, house prices are stabilised, other local businesses benefit as a result and from being part of the inevitable supply chain, the demand for better communication and connectivity increases, local bus routes retain their relevance, local schools and services are maintained and issues of social deprivation are better tackled.”
TorFX is a currency exchange company that offers better exchange rates than high street banks to customers.
The company, which was set up in 2004, processes more than £6 billion in foreign exchange and international payments every year for personal and corporate customers.
The firm exchanges over 60 currencies including some obscure exotic currencies and punters don’t even pay any commission fee.
And where is this company based you might ask? New York? Paris? Shanghai or London perhaps? No. Penzance.
TorFX, voted International Money Transfer Provider of the Year 2016, 2017 and 2018, also has offices in Europe, Australia, the USA and South Africa, with the group employing more than 300 financial services staff including 85 in Penzance.
A spokeswoman for the company, which takes up three floors of the PZ360 building in the town, said: “A lot of people wonder why a big financial services company chose to base its UK head office in Cornwall.
While the beaches were certainly a plus point, the decision was actually a strategic one. By basing our head office in Penzance where the overheads are far lower than in cities like London we’re able to adopt a more competitive pricing strategy and offer our customers a better deal on their currency transfers.”
To read the full, original article visit Cornwall Live.
Find out how Cornwall Trade and Investment can help your business.
Whether you’re looking to locate in Cornwall, or to start exporting beyond its borders, get in touch with our friendly team to talk through your needs.