Date: 2024-12-21 Page is: DBtxt003.php txt00018078
Tech Finance
Rob Moffat
What I learned in fintech and insurtech in 2019. Opinionated and probably 50% wrong:
I like the article ... but many of its elements annoy me. (1) I am concerned about progress from 1959 to 2019 not since 2009. Compare the technological progress that has been achieved in the 60 years since 1959 and now with the progress of a working class family over this same time frame and there is a huge crisis ... and my generation of leadership did virtually nothing to handle the crisis. Worse ... younger leaders don't appreciate that this crisis ever emerged. (2) I am concerned about the dysfunctional financialization of the modern world and the interest of the tech world (and banking institutions) in making this dysfunction more efficient and profitable using technology and therefore more durable and long lasting. Bottom line, there is the need for disruption, but it would be good if the disruption was actually a meaningful value add for all the elements of the system ... social, environmental and economic ... PeterB
Peter Burgess
What I learned in fintech and insurtech in 2019. Opinionated and probably 50% wrong:
The average person is still struggling to make ends meet, ten years after the last recession. This has a few consequences:
- Employers are taking more responsibility for the financial wellness of their employees. The feature that grabbed the most attention in 2019 was income streaming: the option to get paid while you earn rather than waiting for payday. This sector took off in the US in 2019 (Earnin, Payactiv etc), UK is picking up (Wagestream*, Salary Finance), continental Europe still very early. However the scope here is much broader: financial coaching, budgeting, saving, investing, pensions, life insurance.
- Gen Z are actively using apps to help them get control of their finances such as Cleo* and Yolt. These are enabled by open banking and aggregators such as Plaid, but what really matters is how they relate with their users: conversation, personality and intelligence. Features such as auto-save and overdraft protection are just that — features.
- Regulators have killed off most of the last generation of payday lenders but the underlying sub-prime and near-prime need for credit hasn’t gone away. Credit card debt in UK and US remains very high, way higher than debt from any other source of short term lending such as Amigo Loans or Klarna.
- Neobanks have had a massive 2019, despite a press narrative which has shifted from supporting the underdogs to looking for negative stories. Even the followers have had a big year, although consolidation eventually has to happen. In the end cost leadership will count.
Banking in the UK has seen AISP usage take off, but PISP remains nascent. PSD2 in other large European companies remains very early
We didn’t have a big fintech exit (other than Assurance multi-billion sale to Prudential) and valuations of public lending fintechs have continued to struggle (although payments companies have done very nicely).
Companies are struggling to get control of credit card spending in an era where invoices have been replaced by dozens of SaaS tools, Google/Facebook spend on cards, self-managed T&E and contactless payments. This has led to the rapid growth of dedicated spending cards such as Brex, Pleo and Spendesk; and of SaaS/spend monitoring tools such as Productiv, Pepper and Cleanshelf .
Clearbanc has taken off by offering easy credit to startups. To build a good credit model you first need $100M of losses…
VC firms seeing the sheer size of the mortgage market are willing to bet big that startups can disrupt it. The positives are that an underserved ’niche’ in mortgages can still be many billions of dollars, and that the cost inefficiencies are small in bps but high in €. The negative is the difficulty of getting to a competitive cost of capital, and that it takes years to demonstrate the performance of your new ML-powered underwriting model.
The least said about the politics the better.. .
Happy new year all!
*Balderton investments
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Published by Rob Moffat Rob Moffat Partner at Balderton Capital, the leading early stage VC focussed on Europe Published • 1w 5 articles Follow #fintech #insurtech
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Rob Moffat 2nd degree connection2nd Rob has a premium accountClick to upgrade to Premium Partner at Balderton Capital, the leading early stage VC focussed on Europe London, United Kingdom 500+ connections Contact info Balderton Capital INSEAD Highlights Leanne Kemp ★★★ 康灵安 Francois Pienaar 17 mutual connections You and Rob both know Leanne Kemp ★★★ 康灵安, Francois Pienaar, and 15 others View University of Cambridge You both studied at University of Cambridge Rob started at University of Cambridge after you started Say hello About I am always looking for new investments - typically European online/tech companies with potential requiring early stage financing of $0.5M to $15M. Fintech, insurance and games in particular. I currently work with Balderton portfolio companies including Carwow, Zego, Wagestream, Cleo, Mojiworks and Dream Games. Other investments I have been involved with at Balderton include Wooga, Revolut, Prodigy Finance, Patients Know Best, Qubit, Nutmeg, Citymapper, Credit Benchmark and Gocardless. If you don't know me, please don't connect to me on Linkedin. You can email me instead: rmoffat@balderton.com Read my occasional blog posts at: https://medium.com/@robmoff Previously at Google, where I managed the London arm of the Global Sales Strategy & Operations team. Started my career at Bain, in London & Chicago, where I spent 5 years and was sponsored for an MBA at INSEAD. No alt text provided for this image Rob Moffat Rob Moffat
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