A hi-tech tale of two cities: Ex-bankers are ditching the pinstripes to launch start-ups

Ian Burrell meets these new Silicon Roundabout stars

"I'm in flip-flops and shorts at the moment," says former City consultant Tom Blomfield, speaking from the premises of GoCardless, where mountain bikes rest against the wall and colleagues are not discouraged from spending their downtime on the office pool table.

This is a new and emerging branch of Britain's financial services industry, the "FinTech" sector as it's known to insiders. It's where young graduates have eschewed their pin-striped destiny in the Square Mile in favour of the alternative working lifestyle of the internet start-up – but are building dynamic companies based on their specialist knowledge of business.

On the fringes of the City of London, a string of digital firms are exploiting the efficiencies of the internet to offer financial services in cheaper and simpler formats. The fact that the traditional providers of those services – banks – are suffering from low levels of trust is only helping these businesses to grow.

GoCardless is symbolically situated in London's Finsbury Square, midway between the Bank of England and the new-media hub known as "Silicon Roundabout". The service offers a simple way for businesses to collect payments online, improving cash flow and reducing the need for paper-based accounts payable departments.

Blomfield is one of three co-founders, all former consultants who wanted the "sense of ownership" of running their own business (which has grown to 11 staff). Although it has adopted the "informal" office environment of the start-up, it is not a job for slackers and "people work all hours of the day and at weekends", he says.

And an advantage that FinTech companies have is that they can be much quicker in generating revenue than a clever idea for an app. "If you build the next breakout photosharing iPhone app you might get bought by Facebook for a billion dollars but it's pretty rare and pretty competitive," says GoCardless co-founder Hiroki Takeuchi. "[But] if you are solving a business problem, small- and medium-sized businesses are pretty open-minded about trying new stuff out and they don't mind paying £30 or £40 for these services. So you can get paid from day one."

Many of the British FinTech companies work in partnership and see themselves as part of a new ecosystem. In the heart of Silicon Roundabout, or Tech City as it is also known, is another groundbreaking finance company –MarketInvoice – which is helping small companies overcome the reluctance of traditional banks to loan money.

Firms auction off their invoices to MarketInvoice's investors to improve their cash flow. The investors get a better return than they would do at the banks. For example, entrepreneur Jessica Witenberg of Jessnic & Co handbags attracted five investors for a £25,000 invoice from Sir Philip Green's Arcadia and instantly released 88 per cent of the money without having to wait for the payment period to elapse.

Such auctions have enabled MarketInvoice to channel more than £21.5m into businesses, enabling them to thrive in the downturn. Charles Delingpole, 29, set up the company after leaving his job as a mergers and acquisitions specialist at the investment bank JP Morgan. His partners are Anil Stocker, 28, who formerly worked at the collapsed Lehman Brothers, and Ilya Kondrashov, 26, who was at Goldman Sachs.

Delingpole had previous new-media experience, having founded the successful (and still popular) The Student Room website from his bedroom as a teenager before going into banking. "JP Morgan was very intense, with very long hours and high pressure – you'd work on Saturday nights until 2am," he says. "Here we have 13 staff and the work environment is more entrepreneurial and relaxed. But we are in finance and we still have to have accuracy and attention to detail – there is real money at stake."

Another of the stars of the FinTech sector is Duane Jackson, 33, who grew up in care and spent time in prison before The Prince's Trust helped him to turn his computer acumen into a successful business, Kashflow. Founded in 2006, it now employs 23 people in the UK and nine in India. His partner in the venture – which gives small businesses constant access to clear analysis of their ongoing financial position – is David Cameron's enterprise adviser Lord Young of Graffham. "That's a nice bridge to the old world because he used to be chairman of Cable & Wireless," says Jackson. "The world of software has changed drastically but a lot of the fundamentals of business still apply. He's got 50 years of experience of business."

TransferWise was a FinTech company which grew from necessity. Co-founders Taavet Hinrikus and Kristo Kaarman, both 31, had come to Britain from Estonia and were experiencing currency problems. Hinrikus was employed by Skype and being paid in Estonian kroons. Kaarman needed to send money home for his mortgage. So they started switching money between their own bank accounts to avoid commissions charged by money transfer agents. "Pretty soon we had saved each other thousands of pounds," says Hinrikus.

Their business model, based on this experience, is so simple that they only charge £1 for transactions of less than £300. TransferWise transferred over £10m in its first year and saved customers more than £500,000 in fees.

Hinrikus believes it is responding to a growing demand for a new approach to banking. "As more companies are providing services instead of the banks, and the banks are under fire, the message is being reinforced that these services can be provided by other people in a better way," he says. "The banks have missed out a little bit on the technology revolution and stayed behind the curve for way too long."

Suggested Topics
Start your day with The Independent, sign up for daily news emails
New Articles
tvDownton Abbey Christmas special
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)
tvOur review of the Doctor Who Christmas Special
peopleIt seems you can't silence Katie Hopkins, even on Christmas Day...
Arts and Entertainment
Left to right: Stanley Tucci, Sophie Grabol and Christopher Eccleston in ‘Fortitude’
tvSo Sky Atlantic arrived in Iceland to film their new and supposedly snow-bound series 'Fortitude'...
Arts and Entertainment
Jenna Coleman as Clara Oswald in the Doctor Who Christmas special
tvForget the rumours that Clara Oswald would be quitting the Tardis
Arts and Entertainment
Japanese artist Megumi Igarashi showing a small mascot shaped like a vagina
The Queen delivers her Christmas message
newsTwitter reacts to Her Majesty's Christmas Message
Arts and Entertainment
Life and Style
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all