“Banks are not ready for a model where you convert into a crypto and then convert back again,” Leibbrandt said. “It’s not clear to us that blockchain is better than what we have today.”
This week, the hot fintech jargon was “Banking-as-a-Service.” A more apt moniker might be “Bank-in-a-Box”: these ventures create digital versions of products ranging from debit cards to money transfer to account-management tools, which customers can rebrand as their own. Antony Jenkins, the former CEO of Barclays Plc, runs an outfit called 10x that has made inroads in this space.
“We’re commoditizing everything that a bank does,” said Brad van Leeuwen, head of partnerships at London-based Railsbank Ltd., as he showed a menu of offerings to prospects. Railsbank, whose slogan is “Banking in Five Lines of Code,” is capitalizing on the spread of inexpensive open source software and cloud computing.
Some ventures, like solarisBank AG, obtained bank licenses so they could make loans through partners and sell software to support payment cards and other products to upstarts. “Traditionally, banks are not good at dealing with clients, so we enable those fintechs to move in on their turf,” said said Roland Folz, the CEO of Berlin-based solarisBank.
Things were less rosy in the online lending space. The underwhelming initial public offering and share slump by Funding Circle Holdings Plc, the No. 1 peer-to-peer loans outfit in the U.K., cast a pall. Then, there’s Brexit.
Christian Faes, the CEO and co-founder of mortgage lender LendInvest Ltd., said his firm is originating between 20 and 30 million pounds ($39 million) per month in loans to residential landlords after moving into the market in 2017, with funding from Citigroup Inc. He’d like to expand into mainstream mortgages, too, but it’s harder to attract backers right now. “Brexit is not ideal,” said Faes, nursing a glass of red wine across from the exhibition hall. “The market for institutional money has been shut down until Brexit is sorted out.”
No Defaults
As investors scrutinize the stress to the British economy, Rishi Khosla, the CEO of an online lender called OakNorth, drew guffaws of disbelief when he said his firm had never recorded a default or late payment, thanks to its machine learning capabilities. He might be “not lending enough,” said Olivier Goy, the CEO of October, which originates loans for small businesses, said on a panel the next day.
There was a feeling that European fintech is maturing, though retaining its dynamism. German digital bank N26 GmbH recently garnered a valuation of $2.7 billion. Mastercard and Visa Inc. are battling to buy a London cross-border payments firm called Earthport Plc, and Adyen NV, the Dutch payment processor that went public last year, has minted three billionaires as its stock has nearly tripled.
Looser times are over, said Benedetta Arese Lucini, the founder and CEO of Oval Money Ltd., a startup based in London and Turin that lets consumers manage their spending and saving. Wrapping up her spiel in a pitch contest, she said she was swearing off attending more conferences. And she’s done with spending her time taking part in pitch contests, too.