2. 2 · ukfintech.com AN INDEPENDENT SUPPLEMENT BY MEDIAPLANET
CHALLENGES
The current state of the fintech sector
L
ast year Innovate fi-
nance visited the US
with the Mayor of Lon-
don, to foster greater
trade and investment
connections between
New York and London -
the world’s biggest and most impor-
tant financial epicentres. Innovate
Financehelpedtoselectadelegation
of leading fintech firms,whichwere
ideally placed to expand into US
markets,to connect with American
investors and large banking organ-
isations, and to foster an introduc-
tion to an ecosystem of influencers,
within the US.This was also an im-
portantopportunityforInnovateFi-
nance to connectwith a similar eco-
system of key stakeholders,within
theglobalfintechmarketplace.
Branching out
There are many reasons why the
global fintech movement has
emerged from the UK - our geo-
graphical location provides unri-
valled international connectivity;
our leading academic talent pool is
world-class; we have prime inves-
tors and impressive business facil-
ities; we promote global thought-
leadership on emerging digital so-
lutions;andwecanprovideasimple
regulatorysystemthatbalancesrisk
andinnovation.Butourjobisnotdo-
ne.Fintech firms both big and small,
face major innovation and growth
challenges.We need to increase our
exposure to great fintech opportu-
nities and encourage smart, active
investors to enter the fintech sec-
tor within the UK. It’s imperative
that we continue to foster leader-
shipskillsandtalent,andweneedto
ensure that those skills are retained.
We need to continue examining
the conditions necessary to create
greater competition,to open up the
fintech sector to new players, and
ensure our SMEs have good access
to the capital needed to grow their
business.It is vital that we continue
to develop and connect the fintech
sector in the UK,including acceler-
ators, investors, academic institu-
tions,code clubs,policy makers,big
techandbeautifuldesign.Thepower
of international corporations, need
tobeexploited.
Global investment
Last year alone over £500 million
waspouredintofintechfirmsbyway
of investment.So being open to for-
eign influencers is essential.Indeed,
American investors drove signifi-
cant growth in the UK fintech sec-
tor - recent heroic funding rounds
include TransferWise (£58million);
Nutmeg (£32million); Funding Cir-
cle(£40million).Morerecentlyhow-
ever,Digital Shadows our local suc-
cess,grew from two people on Lev-
el39,toover30,andisnowlaunching
in the US via Passion Capital after
having raised £5.2million in their
latestfundinground.
This raises an interesting question
about the US v UK financial services
sector. The recent ‘Bootstrap to IPO’
event,hosted byInnovate Finance,ex-
plored the different sources of financ-
ing, from angel investors, to venture
capitalistsandalternativeinvestment.
It also highlighted the cultural differ-
ence – the attitude towards risk and
theconfidencetodominateinaglobal
marketplace.Itwassaidthatthatthere
is no lack of entrepreneurial talent or
technological innovation when we
comparethetwomarketplaces.Butthe
industry -- entrepreneurs, investors
andconsumersalike--hassomewayto
go.We need to champion the huge so-
cialandeconomicimpactofthesector.
Weneedtogetbehindthesenewhigh
growth fintech companies, who are
bringing greater choice,diversity and
resiliencetothefinancialservicessec-
tor.This isn’t just the responsibility of
the entrepreneur,or the investor.This
is the responsibility of all us, as con-
sumers,to ask for and make sure this
changehappens.
Thesearesomeoftheconcernswe
hope to address at our Global Sum-
mit on March 9th at the Guildhall.
This historic gathering will explore
the impact of fintech on society and
theeconomy,andtogetherwithover
700delegateswewilldiscusshowwe
can overcome challenges to make
UK fintech bigger and better - and,
crucially, help build a global sus-
tainable banking sector that means
somethingforeveryone.
AstheUK’sindependentvoiceofthefintechsector,InnovateFinanceisbearing
witnesstothetransformativeinnovationsthatarereformingthefinancial
servicessector.
P4-5: The alternative
finance expert panel
EDITOR’S PICK
FINTECH
2ND EDITION, FEBRUARY 2015
Managing Director: Carl Soderblom
Content and Production Manager:
Cary Hastings
Designer: Vratislav Pecka
Business Developer: Alex Williams
Responsible for this issue
Project Manager: James Grant
Phone: +44 (0) 7789 936829
E-mail: james.grant@mediaplanet.com
Mediaplanet contact information:
Phone: +44 (0) 203 642 0737
E-mail: info.uk@mediaplanet.com
FIND EXCLUSIVE ONLINE
CONTENT AT:
MEDIAPLANET UK
#FINTECH
ukfintech.com
Claire Cockerton
CEO/ FOUNDING DIRECTOR
INNOVATE FINANCE
“Last year alone
over £500 million
was poured
into fintech
firms by way of
investment”

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4. 4 · ukfintech.com AN INDEPENDENT SUPPLEMENT BY MEDIAPLANET
PANEL OF EXPERTS
Investing in businesses canbeenjoyable,andbacking“thenext
bigthing”hasthepotentialtoproducelife-changingreturns. How-
ever,it’s important to create a diverse portfoliowhen looking at eq-
uitycrowdfunding.Investinginsmallandearly-stagebusinessesis
highrisk,andthemajoritywilllikelyfail.Thosethatdosucceedwill
potentially deliver spectacular returns—which can far more than
makeupforthelosses—butthatonlyhelpsifyou’veinvestedinthe
winners.This is why diversification is crucial.Invest across a large
numberofbusinessestoensurethatyourportfolioasawholehasthe
bestprospectsforproducingmarket-beatingreturns.
Traditionally, banksdon’tlendtoyoungbusinesseswithlittlecol-
lateral,venture capital requires traction, and angel investment is
scattered and inefficient.Without wealthy friends or family able to
invest large amounts of high-risk capital,entrepreneurs have had
fewoptions.Equitycrowdfundingchangesthat.Bymakingitsimple
for anyone to invest online,ambitious businesses can access capital
fromawiderrangeofinvestorsthaneverbefore.Andtheycanreceive
morethanjustinvestment,like:mentorshipandadvicefromabroad
investor base; long-term engagement with existing and potential
customers;andinternationalexposureandproductvalidation.
1
Jeff Lynn
CEO AND
CO-FOUNDER,
SEEDRS
Investing as an individual in alternative finance (P2P) is a bit
like ISA investments in shares.Firstly,you need a provider that
gives you access to the stock market. Secondly,you need to de-
cideonthecompaniesyouwishtoinvestin.TheUKhasnowcirca
50 alternative finance providers,mostly platforms,that are very
transparent about the way they operate and how they help you
managetheriskofinvestinginloansdirectly.So,thereisnoshort-
age of options,but I’d recommend to diversify your investments
acrossP2P,cashandshares.
Alternative finance providers are filling a gap created by tradi-
tional banks who (had to) reduced lending to “high risk business-
es”.Theyaddressanunderservedmarket,andatthesametimeuti-
lisebettertechnologytoassesscreditriskbasedontheoftenmin-
imal track record and security on offer from SMEs (such as build-
ings,machinery or equipment).With approx.£2bn lend last year,
alternativefinancewillcontinuetoimprovetheUKfundingland-
scapesobusinesseshaveamorehealthyrangeoffundingchoices,
asisthecaseintheUSforexample.
Rainer Plentl
CEO, FINPOINT
From my experience, both from working in compliance and
beinganinvestorinalternatives,Ibelievetherearetworulesyou
should always follow when looking to invest,especially in alter-
native investments.Number 1,do your due diligence on the firm
andontheinvestment.Neverfeelunsureaboutaskingquestions,
it is your money and your risk.Number 2 is don’t invest in what
you don’t understand. The people that don’t understand what
they are investing in or how it works are the people that run the
risk of losing their investment bymaking thewrong decisions.If
you can invest feeling safe inyour understanding then go for it,if
youcan’tthendon’t.
Alternative investments allow companies to raise capital in a
climate where banks aren’t lending,meaning businesses with no
track record and little funds can get going more easily(just look at
crowdfunding).Butitshouldbenotedthedegreeofriskinessthese
newinvestmentsrepresentcomparedtootherassetclasses.Firms
that are arranging finance for new businesses in this way should
always be open about the inherent risks and only target those in-
vestorswhohavetheabilitytounderstandit.
James Dingwall
DIRECTOR, THISTLE
INITIATIVES GROUP
1 What would be the first advice you would offer to
individuals looking to become alternative finance
investors?
2 How do you see alternative finance changing the
funding landscape for new businesses?
Consider the security provided. Alternativefinancecoversa
wide range of investment opportunities and,as with any invest-
ment,balancing the security and the reward to suit your portfo-
lio is essential.Equity crowdfunding provides the least security
and the highest potential returns,though arguably some losses
are inevitable with funding focused on start-ups and early stage
businesses.Converselymarketplacelendinghaslowdefaultrates
butreturnsstartfromamoremodest4percent.
The big changehas alreadytaken placewith disintermediation
havingopenedupmultiplesourcesoffunding.Asthesectorgrows
itwillbeinterestingtoseeifthe‘hiddenexperts’withinthecrowd
are motivated to support young business in other ways; perhaps
providing sector expertise,business acumen or even introducing
business opportunities.Platforms will need to encourage and fos-
tercommunication.
Angus Dent
CEO, ARCHOVER
Business Loans | Factoring | Invoice Discounting
Money for the real economy.
www.finpoint.co.uk
Asset Based Lending | Commercial Mortgages
Trade Finance | Alternative Finance Platforms

5. ukfintech.com · 5AN INDEPENDENT SUPPLEMENT BY MEDIAPLANET
ThistleInitiativesFinancial compliance experts
As the market matures and investors start to anticipate
successful exits,investors are assigning greater importance
to investor protection.We believe that all investors,however
small their investment,should be able to realise maximum
returns on their investments.We’ve always prided ourselves
on leading the way on this,which is why we operate a nomi-
nee structure for each deal,include professional protections
and rights in all investment agreements, and ensure that
each investee company keeps their investors up-to-date. It’s
nolongeraboutmakingintroductionsbutsharinginsuccess.
3 What has been the biggest development in the
alternative finance space in the last year?
For me the single biggest difference is the fact that
the UK Government is proactive about bringing alternative
finance (P2P) into the ISA fold.Research by RateSetter found
nearlya third of people (31 per cent)would put their own sav-
ings into a P2P platform, if they could do so through a new
ISA.The outcome of the ISA consultation may translate into
making P2P investments ISA-eligible as early as April. Irre-
spectively,this will be beneficial for the sector and for inves-
tors,providing lower associated risk than stocks but higher
returnsthancash.
The world of alternative investment, a vast market al-
ready,has seen great growth in the areas of Crowdfunding and
Peer to Peer Lending.Our firm has helped numerous clients in
these two spaces and with them being disruptive industries
the accompanying regulations are also developing and chang-
ing.Thepastyearhasseenanexplosionwithinthemarket,with
thesetwonewproductsleadingtheway.Ithasbeenaveryinter-
estingyearwith‘older’regulationsbeingshakenupthroughthe
foundation of Crowdfunding.The greatest change is not these
twoplatformsbutratherthewayweinteractwithinvesting,reg-
ulationandtheimplementationoftheoneintotheother.
Our vision is to build a platform that allows businesses with
international aspirations to raise capital from investors any-
where;tobeaglobalplatform.Businessfinancehasbeenrather
slow to adapt to globalisation,and outdated regulations in cer-
tainjurisdictionshavehamperedtherateofglobalisation,toan
extent.However,we have a bright team,andwe have beenvery
successfulatdevelopingamodelthatisincreasinglyglobal.After
launchingintheUKin2012,weopenedacrossEuropein2013.In
2014weacquiredaUSbusinessandwillbeopeningtoaccredited
USinvestorsin2015.
4 Is alternative finance a truly global phenomenon and to
what degree are alternative finance providers bound to
their national/ local areas?
5 In the coming years, do you see forms of alternative
finance and investment becoming more diverse?
The industry has matured, some of our recent innova-
tionsinclude:
●Funds,whichmakeitpossibleforinvestorstospreadasin-
gle investment across multiple businesses chosen by an ac-
celeratororthroughacompetition.
● Convertible equity,which offers a way to raise and invest
moneynow,while deferring the need to place avalue on the
companyuntilthefuture.
●Fundingpublicly-tradedcompaniesthroughequitycrowd-
funding,whichwebelievewillbecomeincreasinglypopular.
Absolutely!Alternativefinanceisatrulyglobalphenomenon
that has caught the attention of many stakeholders: business
borrowers who were let down by traditional banks,individual
investors wanting a better return for their cash,venture capi-
talfirms,financialservicesregulators,etc.
The UK is probably the best place right now to be running a
FinTech business,thanks to the tremendous support from or-
ganisations such as Innovate Finance and the attention we
have from UK authorities, wishing to support this thriving
sectorinternationally.
I’d say that the UK alreadyhas averydiverse alternative
finance sector, which enables P2P-lending to individuals
as well as to businesses.From working with the alternative
lendersontheFinpoint-panel,wecanseesomearethinking
of adding new,complementary finance options to their ex-
isting product range.On the other hand,we have tradition-
al banks on our panel,interested to wanting to get involved
with alternative finance,either by investing in a business,
by co-lending or through referral partnerships. So, watch
thisspace!
The new question is how we take our investments global.
Global accesswill provide a greater platform of clients and op-
portunities,but with this has come age old regulatory ques-
tions of who is responsible, how to assess the risk and how
muchinfluencetheycanhaveintheglobalcircuit.Wehavere-
viewed the international market place and how we can make
offerings to those based overseas,and have found a range of
differentrequirements.Certaincountrieswillallowthesepro-
vidersaccesstopotentialinvestors,withlimitedrequirements
and oversight from the home regulatory bodies but certain
streamsareprovingmoredifficult.
This has already started, with the diversification of
what is being offered and the range of platforms that are be-
ingbuiltinwhichweexploretheseopportunities.Themarket
anditsprovidersisdevelopingeveryday.IntheUKwearesee-
ing the development,with platforms such as Crowdfunding
merging with P2P platforms.The diversity is only limited by
our abilityto implement the changes into the structures and
howweimplementtherequiredoversight.Allnewentrantsto
thefinancialmarketsneedtoprovethattheyunderstandthe
regulations.Although this too can also add to growth as pro-
vidersandinvestorslookforwaystodevelopwithintherules.
Growth and diversification; the phenomenal growth of
the sector and the increase in institutional investment has
led to alternative finance lending appearing in the UK Gov-
ernment quarterly figures for the first time.What really ex-
cites us is the diversification of offerings from innovative
platformschallengingpre-existingfinancemodels.
From Moscow to Brazil and a thousand platforms in-be-
tween crowdfunding is already truly global.However,it is not
yet globalized,as legislation is still playing catch-up in many
markets which means that platforms are often contained
within their jurisdiction.As legislation develops it is inevita-
ble that platforms will expand their operations and become
moremultinational.
Yes. Both investor demand and the desire to be noticed by
fundraiserswillseemanynew‘splinter’platformsdevelop-
ingawayfrombehemothcatchallcrowdsitesthatwerefirst
to market.Already specialist investment sites in technolo-
gy,pharmaandeducationappealingtospecialistcrowdsare
uponusandnewlendingmodelssuitedtospecificbusiness-
esarecroppingupconstantly.

6. 6 · ukfintech.com AN INDEPENDENT SUPPLEMENT BY MEDIAPLANET
INSPIRATION
Bringing fintech innovation
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LISA MOYLE
info.uk@mediaplanet.com
T
he fintech story in recent
years has concentrated
on consumer facing ser-
vices, but the same dy-
namics that have been
driving this change - le-
veraging new technolo-
gies and disruptive business models to
lower costs and barriers to entry - are
enablingdevelopmentofnewproducts
and services for previously underser-
ved insurance markets.
According to Swiss Re,the UK popu-
lation is significantly underinsured,
with a total protection gap of £2.3 tril-
lion.Only 1 in 3 households with inco-
mes below £20,000 have life insuran-
ce, one third of households have no
contents insurance,rendering vulne-
rable households exposed.
The insurance sector shares chal-
lenges with banking in the provision
of affordable, appropriate products.
Incumbents are hindered byoutdated,
inflexible legacy systems and pricing
mechanisms too complex to adapt to
the underinsured.The typical product
offering is too expensive for low-inco-
me groups. The pricing of risk, using
standard models,cannot assess these
market segments.
Technology is creating the poten-
tial for insurance companies to ser-
ve low income consumers. Advances
in a range of technologies; data ana-
lytics, biometric identification, psy-
chometric testing and the rise of mo-
bile are now being applied to the insu-
rance sector, broadening the range of
consumers to whom it is profitable to
supply insurance products and enab-
ling the creation of new,personalised
insurance products.
At the heart of insurance is pricing
risk. A number of online platforms
that use big data analysis to calculate
risk are broadening the pool of people
who can be assessed and provided
with suitable products.Using both av-
ailable and unorthodox sources of da-
ta,platforms can analyse pools of data
that allow for more accurate,targeted
pricing of risk.
Driving change in finance
The data generated by telematics al-
lows for a finer assessment of risk
and reduces insurance premiums.
Discounts in life or health insuran-
ce can be offered to those who are ab-
le to demonstrate healthy lifestyles
using wearables, rewarding and in-
centivising low risk behaviour.
The growth of fintech will continue
to drive change across financial servi-
ces,and the insurance sector will not
be immune from disruption.The need
to meet changing customer demand
will force the challenges of legacy
systems to be addressed. Potenti-
al competitors, spurred by the evo-
lution of technology, may emerge.
A Forrester Research report Trends
2014: European Digital Insurance,
noted that European companies are
falling behind and startups and com-
panies in the manufacturing, utility
and telecoms markets could take bu-
siness from traditional insurers.
With that disruption comes the
opportunity to meet the additional
challenges of incorporating millions
of would be clients into the financial
system and provide them with insu-
rance products that have the potenti-
al to protect them from the impact of
life changing shocks.
The need to
meetchanging
customer
demand will
force the
challenges
of legacy
systems to be
addressed
Lisa Moyle,
HEAD OF FINANCIAL
SERVICES
& PAYMENTS
PROGRAMMES
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INNOVATION IN FINANCE
The innovators in fintech
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NEWS
How is fintech
innovation benefiting
payment services?
Payments is a hot space in
European FinTech. And it’s
getting hotter.
Payment innovators account for just
under 25 per cent of this year’s Fin-
Tech50 and VC investment in Euro-
pean payments and transaction pro-
cessing companies reached an all-
timehighin2014.
In fact, such is the abundance of
innovation,it’sbecomingsomething
of a challenge to find a space that is
not being disrupted bythe ingenuity
ofFinTechpioneers.
Fintechrevolutionisingpayments
According to Index Ventures’ Jan
Hammer,“Payments is moving from
the domain of the banks to next gen-
eration platforms that can combine
acquiring, processing and payment
gateway services under one roof,
acrossallchannelsglobally.”
Indeed.Not only are fintechs revo-
lutionising cross-border payments,
stripping out costs, time and com-
plexity,they are also giving consum-
ers unwilling or unable to secure
credit card services access to elec-
tronic payments.They are assuming
credit and fraud risk for e-stores and
they are transforming the multi bil-
liondollarglobalremittancemarket.
They are also being viewed as the
solution to financial inclusion. In a
world where millions of people do
not have access to traditional finan-
cial services, mobile solutions and,
increasingly, digital currencies, are
transforming not just the way in
which money is transferred,but the
natureofmoneyitself.
A recent feature in CityAM ex-
plored the impact FinTech can have
(is having) on the distribution of
international aid,with its potential
to reach thousands, without the
need for bank accounts,internet or
even power.
Payments have always been about
trust, convenience and simplicity
- how to reliably transfer value be-
tween two unknown parties,” says
payments expert Roy Vella. “Tech-
nology is now deeply embedded in
our daily lives and it is allowing that
transfer to happen more seamless-
ly than ever and granting entry to
many new and interesting compa-
nies. As such, FintTech has become
the space to watch where the speed,
agilityandinnovationofstartupsare
challenging and transforming the
statusquo.”

8. 8 · ukfintech.com AN INDEPENDENT SUPPLEMENT BY MEDIAPLANET
NEWS
AssetManagement:
Thenextfrontierforfintech?
In regards to asset management,
the UK is the largest fund manage-
mentcentreinEuropeandthesecond
largest globally, accounting for over
£6.2trillionnofassetsundermanage-
ment.Furthermore,ofthetotalassets
under management, some £2.2 tril-
lionarenowmanagedonbehalfoffor-
eign clients,making the UK the lead-
ingglobalcentrebythismeasure.
Globally, the UK is fast becom-
ing recognised as the fintech capi-
tal of the world.According toAccen-
ture,the UK and Ireland is now the
fastest growing region for Fintech
investment with deal volumes here
having been growing at 74 per cent
a year since 2008,compared with 27
per cent globally and 13 per cent in
SiliconValley.
The Cloud
Cloud-based service providers have
helpedlowerbarrierstoentryacross
many industries by reducing opera-
tional costs and seed capital needed
tostartabusiness.
Investment management is no
different and even in this highly
regulated environment there are
many opportunities to improve op-
erational efficiencies by moving ac-
tivitiestothecloud.
Advances in various academ-
ic fields like behavioural sciences
have created an opportunity to in-
troduce performance enhancing
techniques into the investment de-
cision making process.In much the
same way as athletes training pro-
grammesarenowsupportedbydata
analysis,ground-breakingdatadriv-
en tools developed by companies al-
low managers to track, measure
and improve on their performance
taking into account input across
multipledimensions.
Big Data
Big data and powerful analyt-
ics tools have also helped a new
breed of real time investment
strategies appear.
Theage-old-artofsectorresearch
and analysis is complemented by
tools that can analyse anything
from the number of specific job ad-
verts on global online job boards,to
the price movement of hotel rooms
in New York as a proxy for the
health of a sector.
Investmentopportunitiesandstrat-
egies which not long ago were only
available to high-net-worth individu-
alswithaccesstoprivatebankingser-
vicescannowbereachedonone’sown
smartphonedevice.
Developments in fintech
As the second largest global market
for assets under management,situ-
ated alongside what is probably the
hottest hub for the development of
fintech businesses, UK Trade & In-
vestment — the economic devel-
opment arm of the British Govern-
ment — anticipate further growth
inthissegment.
Developments in financial tech-
nology, and the innovation pio-
neered by the companies compris-
ing the sector,have the potential to
make a big difference to investors
and long-term savers. Increased
competition will bring lower costs
across the investment process.Cou-
pled with better distribution and
greater efficiency,one could argua-
bly expect that to be translated into
highernetreturns.
The UK is a leading global
financial services centre,
and the most internationally
focused financial
marketplace in the world,
with more overseas financial
institutions and investors
choosing to do business in,
and with, the UK than any
other country.
SHAUL DAVID
info.uk@mediaplanet.com
ABOUT
UK Trade & Investment is the
Government Department that helps
UK-based companies succeed in
the global economy and helps
overseas companies bring their
high-quality investment to the UK’s
dynamic economy, acknowledged
as Europe’s best place from which to
succeed in global business.
Shaul David
Fintech
Specialist, UKTI
Financial Services
Organisation
PHOTO: THINKSTOCK

9. With investment your capital is at risk. The value of your pension can fall as well as rise and
you may get back less than you invest. Eligibility to invest in a pension depends on personal
circumstances. Tax rules may change in future. If you need help with pensions, seek
independent financial advice. Authorised and regulated by the Financial Conduct Authority.
Launching today at nutmeg.com

10. 10 · ukfintech.com AN INDEPENDENT SUPPLEMENT BY MEDIAPLANET
BCS DATA CENTRE SPECIALIST GROUP
info.uk@mediaplanet.com
NEWS
Data centres at the heart
T
heUK,mainlyinand
around the M25, is
home to more than
50 per cent of Eu-
rope’s data cen-
tre estate. Much of
which is operat-
ing systems and applications for
the Financial Sector. Businesses
are no different from the popula-
tion at large when it comes to ‘al-
ways available, instant service’
and so data centres are designed
and built with high levels of re-
dundancy so that even very bad
events cannot easilydisrupt the IT
service in question. Things such
as grid blackouts are shrugged off
even by the lowliest facility with
batteries and diesel generation
standing by to supply all the ener-
gy that the user needs.
Data centre energy
effectiveness
Of course data centres consume
ever increasing amounts of power that
hasattractedthecriticalattentionofgov-
ernments,both national and European
–althoughthemaindriveristhepopu-
lations’ demand for social networking,
gaming,gamblingandphoto/videoser-
vices.Mindyou,thegovernmentsofthe
world haven’t yet woken up to the fact
that rolling out ever-faster broadband
onlyservestoacceleratepowerdemand,
butthatisanothermatter.
So data centre energy effective-
nesshasbeengettingbetteroverthe
lastfewyearswiththelikesofGoogle
publishing their PUE (an energy
metric describing the ratio of ICT
energy to facility input energy) as
if it is some kind of marketing cam-
paign. They now run at 1.12 – so the
electrical and mechanical systems
thatpowerandcooltheICTloadrep-
resent 12 per cent of the ICT energy
itself. Clearly ‘1.0’ would be perfect
butlevelsofsecurity,availabilityand
maintainability without shutting
offtheservicemakethatimpossible.
The financial sector has some
very special needs that make
a Google-like PUE target of 1.12
almostimpossible–however,thisshould
notbeanexcuseforeitherenergyorfi-
nancialinefficiency.InLondonaPUEof
1.25isaperfectlyreasonabletarget,even
for a bank and growing cost efficiency
pressuresareslowlycuringthehabitof
runningevendevelopmentserversasif
theyarecritical trading platforms.
DataCentresareattheheartoftheUKeconomy–toalargeextentbeingourfactoriesforthe
digitalage—andmost,ifnotall,largebusinessescannotoperatewithoutICTand,asadirect
consequence,adatacentre‘somewhere’.
DATA CENTRES: CRUCIAL TO LARGE
BUSINESSES
PHOTO: THINK STOCK

12. ukfintech.com · 12AN INDEPENDENT SUPPLEMENT BY MEDIAPLANET
New entrants to the market, new
business models,changing custom-
er expectations and fragmentation
oftraditionalservicesareallcontrib-
uting to put traditional banks under
pressure. Metro, mBank and others
are all demonstrating that focusing
on the newexperiences and needs of
their customers is driving increased
loyalty and revenue.Meanwhile ser-
viceslikeBarclays,PingItandPaypal
demonstrate that disruptive servic-
es can significantly move customers
awayfrom traditional banking offer-
ings.Theappetiteforsuchservicesis
clearly there, and the maturity and
takeup of them can only move on an
upwardtrajectory.
Indeed, changes are afoot and
the physical manifestation of these
changes is apparent.At a macro lev-
el, the branch appears to be in de-
cline with most established brands
reducing their footprint. Cash is no
longer king,mobile payments are in-
creasing in popularity and no longer
is the current account the onlything
one uses to manage money. Bank-
ing is becoming more democratised
by technology and new services are
changing the way we think about
banking,our moneyand the applica-
tionandcapabilityoftechnology.
So is the branch dead? Well who
knowsforsure,butthereceivedwis-
domandtheempiricalevidencecer-
tainly indicates that the purpose of
the branch is changing. With tra-
ditional branch banking services
moving online,the high streets are
seeing branches of the most estab-
lishedbanksdisappear.Infact,2,000
branches have been wiped off the
map over the last decade and many
moreclosureswillfollow.
The good news is that this is not
thedeathknelloftheindustry,more
anevolutionthatseesthefocusshift
from the noun to the adjective,from
banks to banking. One where cus-
tomer satisfaction, convenience
and new services will feature more
prominently. Where the commit-
menttodigitalbankingandthesup-
port for new channels and services
make it easier for financial institu-
tions to build relationshipswith the
customer.
Differentiation through
added value services
So howwill the banks compete in
this new world of banking? The an-
swer is in how they deliver servic-
es and products.No longer will it be
competitive to just show account
balances on a page or to provide on-
linefacsimilesofpaperapplications.
Customerswant a more holistic and
engaging experience that can span
channels and be supported in by
themall.
Customerswillexpecteverything
that can be done in the bank to be
available online or through mo-
bile — they will see no reasons to
be forced down any particular route.
Customers will increasingly look for
personalised products that have a
simple application and acceptance
mechanismsuchas‘oneclick’tobuy.
Additionally, customers will in-
creasingly look for value added ser-
vices,to help them manage their fi-
nances and to help them to under-
stand their spend. There will be a
need to deliver tools that offer ad-
ditional budgeting services and run
alongside the capabilities they al-
ready have at their disposal to man-
age their finances.For example the
establishment of the newchildren’s
banking service from Halifax is
just one indicator of the direction
in which banks are heading. They
are gearing their services towards
a more expectant, tech savvy cus-
tomer base with growing numbers
ofdigitalnatives.
Forthehighstreetbanksthatwill
continue to operate in traditional
bricksandmortarsettings,theneed
for a free flow of services between
channels is hugely important. Om-
ni-channel retail banking will see
customersinteractingwithservices
in branch butwill be given access to
information and services they can
research and interact with further
while they’re on the go.Tablets and
mobiles will be the delivery system
but the services they will use will
need to be user friendly, genuine-
ly useful and provide full fidelity of
service.
The right strategy, people
and innovation will drive
success
The majority of established banks
already have the platforms to de-
liver new services — the challenge
is in the exploitation.The abilityto
join the product centric thinking
into a more customer centric and
focused set of offerings will chal-
lenge traditional operating mod-
els. It requires the skills of an IT
department that takes a holistic
approach to change.
The first consideration should be
the needs of the business to better
serveitscustomers,whichisinclud-
ed in the brand strategy and digital
strategy.The last thing a bank needs
in this new age of banking is a glut
of tech-led solutions that leave cus-
tomers puzzled and frustrated. It’s
the reason why the technology im-
plementations driven by Avanade
begin with the vision of the compa-
ny.The exploitation of banking plat-
forms to do more should be a posi-
tiveexperiencethatprovidesvalue.
From our experience,we see that
the most successful banks are deliv-
ering a range of channels offering
a full spectrum of services.In addi-
tion,they’re starting to expose new
services to drive innovation and dif-
ferentiation.Examples include Bar-
clays,which recently enabled some
of the Barclays PingIt application
programmable interfaces (APIs) to
be used by third party developers in
theprovisionofbankingservices.As
aresult,customersweregivenmuch
more functionality and the base of
potentialuserswasexpanded.
Todeliverinthisnewera,success-
ful banks are looking outside of the
traditional banking fraternity.They
are hiring designers, customer ex-
perience professionals, retailers
and innovators who have an under-
standing of customers’ needs and
expectationsfromnon-bankingsec-
tors.Thisstrategycoupledwithflex-
ible product innovation is providing
a formula for success in traditional
banking environments which if fol-
lowed will enable banks to compete
with the new entrants and disrupt-
ersinthemarket.
In a customer-led era of banking,
Avanadeworkswithitsclientstode-
velop the strategy that helps banks
reach their desired end goal of im-
proving interactions theyhavewith
their end customers.We work with
firms to help define the customer
experiences,the journeys and tech-
nologytodeliverthenewexperienc-
esneededtosucceed.
Today’s digital customers have
higher expectations than ever.To be
fruitful,companies need to harness
new innovative approaches to at-
tract and retain customers through
highly relevant and personalised
experiences across multiple chan-
nels.Although customers now have
the freedom to switch banks more
quickly than ever,it’s the job of the
banks themselves to unlock added
services and ultimately put the cus-
tomers firmly at the centre of what
they do.Working with the suppliers
that can get them there is a positive
steptowardsthisgoal.
Frombankstobanking
—aneweraofcustomer
focusedinnovationin
financialservices
Nic Merriman
info.uk@mediaplanet.com
Bill Gates once said that
banking will always be
needed but banks as we
know them could easily
disappear. How profound
this statement proves to be
will become clearer over the
coming years, however the
current landscape certainly
appears to support the
sentiment.
COMMERCIAL FEATURE
Nic Merriman
UK CTO OF FINANCIAL SERVICES,
AVANADE UK
“The majority of
established banks
already have the
platforms to deliver
new services — the
challenge is in the
exploitation”