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Silicon Round-up: Santander’s new $100m FinTech fund a drop in an ocean of banality?

banalWhat constitutes big news around the Silicon Roundabout is unlikely to cause much of a stir in the Square mile, Mayfair or Canary Wharf.
Santander UK’s announcement that they intend to launch a $100m FinTech fund, aimed at addressing a perceived imbalance of investment, whereby mainstream lenders have accounted for only 10% of funding for companies providing innovative financial solutions, will have many start-ups scrambling for the attentions of the banking giant’s chief cheque writers. The UK is, after all, with the government’s help, attempting to position itself as the number one global FinTech hub, and Santander, having lent over £1 billion to SME’s in the first quarter of 2014 alone, does a passable impression of a “white knight” investor.
But look here, is there something a little bit rotten in the state of Shoreditch? In my view Santander UK’s chief exec Ana Botin’s comments are telling: “The UK is a global leader in financial innovation. The Santander Fin-Tech Fund builds on our philosophy of collaboration and partnership with small and start-up companies at Santander. In this case our aim is to provide fin-tech companies with much needed capital, whilst we gain knowhow and our customers benefit from the latest thinking.”

So the main beneficiaries as far as Botin is concerned are: founders of start-ups looking for a quick sale, Santander, and Santander’s clients. FinTech companies are mostly skint, she seems to be saying, but if we lend them some cash they might make us richer, plus we get to look like a caring, socially responsible Company.
A quick glance at the 2014 FinTech 50 does little to alleviate the suspicion that FinTech is unlikely to impact on the day to day lives of the ordinary consumer in the same way that a Just Eat, What’s App, or Airbnb has, unless that consumer happens to be a compulsive day trader with a penchant for wiring money around the world, and a borderline paranoia about keeping his data secure.
Look at it this way: a company specialising in micro payments is preparing a pitch for the powers that be at Santander; staff arrive at their shared office space in Hackney Wick on their bicycles, unpack their lunches and find a convenient corner to discuss their presentation. Meanwhile in Cabot Square a meeting is being held to review the business plan and discuss a cash injection; taxis wait outside watching the meter growing, whilst pizzas are delivered to consultants charging hundreds of pounds per hour for their services. Spot the disconnect?
These are two distinct cultures, and at first glance they make somewhat uneasy bedfellows. In order to work together sacrifices will have to be made, as two separate economies create what exactly? Yes it’s important that multi-billion dollar trades are carried out as efficiently as possible, portfolio risk is managed appropriately, and communications made in a secure and not misleading fashion, but how big does the bandwagon have to be?
sound and furyThe government, sensitive about how the UK is perceived abroad, is developing an unhealthy obsession with being the world’s number one at something, which risks becoming detrimental to the infrastructure which has grown up organically around the Silicon Roundabout. Right, they seem to be saying, we’ve tried funding the new Facebook and it hasn’t worked, so what now? We can’t knock New York off its perch as number one for finance, and we can’t get close to Silicon Valley for technology and new ideas, so let’s hedge our bets and do both. The trouble with hedging strategies, however, and we may soon have a plethora of small companies that can present this information to us using nifty diagrams, algorithms and Monte-Carlo simulation, is that they are risky, and sometimes the correlation just isn’t right.
The Royal Society’s annual Summer Science exhibition begins today, featuring some of the most exciting and cutting edge science and technology in the country. Amongst the exhibits are Creative Cameras, which can see round corners, a new study of immune-bacterial interactions, and Ionic Liquids, which can be programmed not to evaporate and therefore not damage the atmosphere. What a pity if next year’s event featured nothing but new Compliance technology, a revolutionary new trading platform that is one giga-second faster than the existing models, and a trade management system capable of storing 40,000 more unnecessary records than its peers.
I exaggerate, but if the future is to be Fintech, a hybrid of banking and technology that potentially benefits nobody whilst attracting some of the most talented technologists and entrepreneurs, it is a rather gloomy one. Will Cameron et al, after winning a third straight election in 2020, be celebrating the fact that “We stopped investing in our creative and ideas industries, pulled out of Europe, but boy can we “carry the one”. Who needs disruptive technology when 45 members of staff can triple-check a simple transaction in just 20 minutes? We all do.
labradoodle and bulldogAnd the investment? Enough to turn the heads of creatives, not nearly enough to overhaul our competitors on the global financial stage. It could be argued that living in the shadow of the City has encouraged the creative community to find new ways of getting by, of living lives to the full and embracing innovation in the face of austerity; it could also be argued that this has all happened in spite of the growing gap between the financial haves and the have-nots. But what seems clear is that attempting to cross breed the two will result in something resembling a Labradoodle. Kooky, sweet, and probably a little confused, but hardly evocative of the bulldog spirit.
Here is a final point to mull over whilst preparing your porridge oats, or taking your place in the queue at Pret a Manger. By 2017, according to research, it is likely that CMOs will spend more on IT than CIOs. That is, more attention will be being paid to marketing services to consumers than storing data and “maximising efficiency”. This is glorious news: more products and more services that directly benefit us, society, making us think, forcing us to make choices, challenging people to re-evaluate what they are doing and how they are doing it. Collaborative, progressive, creative. Stick that in your ivory tower!

 

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