"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."
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