News Briefing - Crowdfunding, SME And Alternative Finance

London's financial district, pulsing with money and technology, photographed from the air

1.UK – FinTech

Business Money offers predictions of a cloud-based FinTech and banking future.

 

“The use of cloud-based services has been gaining traction amongst a wide range of industries and businesses. According to Gartner, over the last couple of years, cloud companies have noted more than 17% growth. Additionally, as of 2019, 94% of enterprises are already using cloud services and this number is still expected to grow.

As stated by Anton Zujev, head of business development at Fininbox, a Banking Software as a Service (SaaS) provider for financial institutions, cloud-based solutions should be seen as the ‘only way forward’ due to their flexibility and convenience. Mr. Zujev also distinguished three trends for the near future for the banking and fintech sectors in particular.

Extra time for the tasks requiring personal input

Moving operations to a cloud infrastructure may provide a technological edge compared to traditional IT systems. Cloud technology enables to automate routine operations, such as backing up, scaling and monitoring data, thus streamlining the workflow. Around 90 % of IT and data management operations are predicted to become almost completely automated in the next 5 years. This will position cloud-native technology as a go-to solution for faster and cost-efficient information processing.

“Development and performance wise, cloud services are considered to be more accessible compared to traditional on-site servers, so the transition towards nearly-full automation is more likely to happen there than on more traditional platforms,” claims Mr Zujev.

With around 35 % of businesses looking to make the shift to cloud technology, tasks previously requiring human supervision will become automated: this could help gain a competitive advantage, as more time could be allocated to work requiring more personal input. “Basically, there will be extra time for the tasks requiring a more personal touch. More personalised interactions will allow us to invest more in business development, marketing and attracting new talents. Also, such an approach makes any business sustainable and thus – more successful,” says the representative of Fininbox.

Sensitive data may be transferred to the cloud

Future fintech companies will embrace using cloud technology for sensitive data storage, as it mitigates risks by increased accountability. Instead of maintaining their servers independently, businesses will be prone to outsource such service, as third parties may be held liable for any security breach, whereas internal teams may avoid serious repercussions. “Cloud servers belong to third parties, which are legally bound by contracts regarding their customers. In case of a data breach, they become financially liable for any abuse or leaks of client’s intellectual property, whereas internal teams may not bear such accountability. Therefore, strict legal obligations ensure that third parties are committed to maintaining data integrity and delivering excellent service,” explains Mr Zujev.

Additionally, cloud technology provides the possibility to encrypt all data of the latter. Due to the built-in security, fintech companies and banks can rely on the system to protect even the most sensitive data, enabling a wider range of businesses to shift to cloud servers. “For example, government data could be centralised – it would make the performance of various institutions simpler and easier. When it comes to banking and fintech, the confidence of both customers and regulators on cloud services is growing because of recently developed compliance procedures and data protection.”

More diligent cloud provider selection

Throughout 2020, the demand for cloud-native technology will continue to increase as the market is expected to grow to $299.4bn. Choosing the right part partners to entrust your business to could be the difference between reaping the benefits of cloud-based systems or falling behind the competition. In the opinion of Mr. Zujev, providers offering full-service packages will come out on top due to the high demand of catch-all and secure cloud computing.”


2. UK – FinTech

 

AltFi visits an interesting take on litigation funding.

“AxiaFunder, the UK’s first for-profit litigation funding platform, has won its second case last week.

Following this recent win, AxiaFunder says it has now been able to return 94 per cent of disputed funds to investors.

Cormac Leech, CEO and founder of AxiaFunder, said: “We are pleased to announce our second case win, which has produced solid returns to our investors through an Innovative Finance ISA eligible bond which was 83% principal protected via insurance.”

“Despite market volatility in the wake of COVID-19, litigation funding offers retail and institutional investors an opportunity to diversify their investment portfolio.”

Looking ahead the next case for the platform is against an EU Member state for a breach of EU law and AxiaFunder says investors can expect returns of 5.5x if the case wins at trial.

Leech explains: “Unlike equities, litigation funding is uncorrelated to financial markets and the economy, continuing to generate healthy returns to investors while many other assets classes are underperforming in the current economic climate."

AxiaFunder says that it only invests in cases that have a favourable expected outcome for investors of at least 70 per cent.”

 

3. UK – FinTech

 

AltFi reports the launch of a venture funding firm, which is pledging to lend £20m in 10 months and to be "a faster and fairer way" for online businesses to raise money without giving up equity.

“Just Capital will offer online businesses up to £1m in venture debt, by its self-serve platform, with applications completed in minutes and funding approved in 48 hours, says the venture funding company.

 It says it’s on track to lend £20m to online businesses within the next 10 months.

Just Capital uses Open Banking and company data to make tailored offers to businesses wanting funding. 

The funding is to be used to scale up revenues, such as to be used for paid marketing or other means to scale up businesses.

It charges a fee on the capital, which is paid back as a  revenue share, said Just Capital.

The fee starts at six per cent, but might be higher depending on the business.

Just Capital structures the amount it lends and the revenue percentage it takes so it expects to get paid back in six months.”

 

4. UK – AltFi

 

UKTech News argues that healthcare start-ups are set to blossom in the current environment.

“Healthtech is now the second biggest sub-set of the UK tech sector after fintech and there are more than 100 healthtech companies that are on track to become $1bn businesses.

The rapid switch to digital communication and tools across the sector, in the face of the crisis, is likely to have a profound impact on how quickly digital healthcare becomes part of the healthcare system in the next few years.

During 2019 the sector received $2.3bn in venture capital backing, almost double that of France, the next highest recipient. The companies in the sector have a combined turnover of £24 billion and employ more than 127,400 people across 3,860 businesses.”

5. International – FinTech

 

Crowdfundinsider reports:

“Global Ventures, a Dubai-based venture capital firm that recently finalized a $50 million investment round, has released a new report that discusses the state of Fintech in the Middle East region.

Global Ventures’ extensive 59-page report covers the ongoing growth and development of the Fintech sector in the MENA region by sector and solutions offered. It also looks into important financial technology development drivers, government initiatives, regulatory measures, and how the sector is expected to perform in the future.”