According to the government document ‘UK Fintech: State of the Nation’, London is the ‘global hub’ for fintech. Across the country there are already 1600 fintech businesses in operation, employing over 76,000 people. London, with the highest concentration of financial and professional service firms of any city in the world, is of course where it’s really happening. The combination of big data and the torrent of software innovation has seen fintech start-ups transform the financial landscape of the city, sending the big beasts of the financial world on a feeding frenzy, as they consume the brightest and best fintech start-ups and assimilate them into their institutions.
AI is one element of the fintech revolution that is starting to make its presence felt. There are chatbots on banking apps which will help you with loan and mortgage applications and then there’s Cleo, an attempt to bring the ‘friend you can talk to’ approach to dealing with your bank account. Cleo is a free service which is currently clocking up 1,000 new sign-ups every day. The AI advisor connects to your bank account and analyses your spending. Cleo enables you to check your balance, direct debits and latest transactions, all of which you can do on your internet banking, but Cleo will also provide advice about how to avoid wasting money and streamline your budget. At present, users connect via their Facebook account but a hook up between Cleo and Alexa can’t be far off. Still in its infancy, it will be interesting to see whether this application develops into an omnipresent financial advisor, able to guide you through all your financial decision making.
Founded in 2015 this multi-user expense account brings clarity and ease to the management of company expenses. The system uses virtual prepaid credit cards to give employees access to expenses and employers access to instant real time tracking. Virtual cards operate just like a conventional credit card but because they are a randomly generated number, associated with a credit account, they cannot be hacked, cloned or stolen. Employees take photographs of tickets and receipts and upload them via the app, they’ll then get a PDF at the end of the month, detailing what they’ve spent. Employers determine how much money is loaded onto a card, thereby eliminating the possibility of employee overspending. Not only can the employer then see exactly what is happening as it happens, they can also adjust budgets, impose limits under subject headings or cancel a card, either by using desktop software or a mobile app.
This is fintech with a difference and the difference is that although Nutmeg relies on digital technology to seek out investment opportunities, it also foregrounds the skills of an investment team skilled in macro-economics, market analysis and risk and security selection. Nutmeg will put together an investment portfolio for you, ranging from ‘cautious’ to ‘aggressive’. The investment is diversified into different types of assets, countries and investment sectors, which spreads the risks and increases the chance of higher returns. Dividends are reinvested automatically, and your portfolio is continually rebalanced to stay in line with your risk preference. This cheaper alternative to conventional wealth management services has already picked up 50,000 customers and is continuing to attract impressive levels of funding.