Founding Director and CEO Claire Cockerton introduces Britain’s first fintech trade body
Launched earlier this summer by George Osborne, Innovate Finance aims to accelerate Britain’s leading position in the global financial services sector.
Backed by the City of London Corporation and the Canary Wharf Group Innovate Finance aims to be a single access point for the financial services and technology ecosystem connecting members to policymakers, regulators, investors and customers.
We sat down with Founding CEO Claire Cockerton to find out more about the new initiative.
What led you on the path to become CEO of Innovate Finance?
Entrepreneurship has been the central pillar of my professional life. I started my first business in my second year of university while studying at the University of Toronto. I founded Aesthetic Earthworks, a sustainable architecture firm, to pay my way through school, growing it into a multimillion dollar company before selling it to a competitor in the industry.
After managing the merger, I moved to London to do an MBA where I specialised in Innovation, Entrepreneurship and Design, and where I wrote my thesis on accelerators, technology transfer institutions and business incubation. I then went to South Africa to help establish Richard Branson’s ‘Centre for Entrepreneurship’ in Johannesburg.
I returned to the UK to help the Guardian Media Group’s ‘Digital First’ company-wide transformation strategy. Two years ago I co-led the launch of Level39, Europe’s largest technology accelerator for fintech and smart cities companies in Canary Wharf, and founded Pivotal Innovations, a firm specialising in corporate innovation and accelerator programmes in the fintech sector.
At both organisations I advised countless fintech companies on what is needed to take their products and services to market. Through this, I’ve gained in-depth, on-the-ground insight into the precise market, regulatory and entrepreneurial conditions required to grow the UK’s fintech sector to its next level of success.
How did Innovate Finance come about?
In the summer of 2013 the British government asked Eric Van der Kleij and I to document our experiences at Pivotal Innovations and map the opportunities and challenges the fintech sector offered the UK. Our research was followed by a series of roundtables with fintech innovators (many of whom became our founding members), as well as other key industry stakeholders.
This highlighted the enormous potential the fintech sector holds, not only for the UK economy but also for the betterment of society as a whole. Consumers now have access to a whole range of new products and services that help them manage their finances, lend to peers, angel invest, access financing, and bank on their mobile device, and explore the use of new currencies.
Does fintech need Innovate Finance?
The financial services sector is in a period of massive change, driven by new technologies, changes in regulation, new emerging business models and changing consumer appetite to try new products, and for some groups of consumers an under-satisfied, if not negative perception of traditional financial services.
Innovate Finance is designed to be a cross-sector movement to support and accelerate this transformation of the sector here in the UK, by directly supporting the next era of technology led innovators in the sector.
Many of our members have already had an enormous impact independently, and we have seen accelerator programmes, government initiatives and the grit of entrepreneurs drive this sector forward. Innovate Finance is designed to be a coordinated effort across these different initiatives and the various sub-sectors – the unifying voice our members told us they needed.
Fintech entrepreneurs face specific problems when navigating the regulatory environment, gaining access to investors, achieving credibility with consumers or accessing talent.
Innovate Finance will focus on delivering a programme of events that brings together the expertise, market access, and resources of large international corporations with the agility, innovation and technology of startups. We do this through hackathons, accelerator programmes and matchmaking events. This year we plan to run events around the themes of alternative finance and how it can help foster greater financial inclusion for consumers.
What do you hope to achieve ?
In year one we plan to:
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Hold the first annual Innovate Finance forum and industry conference, which allows our members to showcase their technologies on a global stage
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Raise awareness of the innovations emerging from the financial services sector in the UK, as well as the variety of options consumers now have when choosing financial products and services
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Create specialist sub-sector groups which deal with the individual challenges of areas like crowd-funding, mobile payments, digital currencies and financial analytics
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Bring real commercial benefits and business opportunities to our members through partnerships and business opportunities
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Poll our members to surface key issues that fintech companies are facing, and feed into policy thinking. A key focus of our work this year is on policy and regulatory roundtables, working closely with the FCA project innovate team
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Disseminate the latest research and intelligence on the fintech sector, such as the recent report commissioned by UKTI from EY to showcase how the United Kingdom is uniquely well-suited for fintech companies
Why has the UK been so successful in fintech?
There are many reasons why the UK has led in fintech.
We are already one of the world’s leading financial centres. For example, average daily FX turnover in the UK is more than $2.7 trillion a day, more than any other region. Britain is a leading provider of insurance services, and the second largest asset management centre globally.
Our expertise and connectivity in this space is unparalleled, and we have some of the brightest minds in the industry applying their knowledge to startups with ambitions to tackle some of the innovation challenges the industry faces. The time is right for the UK to also become the global leader in technology-led financial services.
Fintech has become such a large sector in tech that it can probably be broken down further into sections itself. Are you seeing any particular trends with growth in particular sections of fintech?
The UK has been one of the fastest adopters of peer-to-peer lending platforms
It is difficult to single out one or two sub-sectors as more noteworthy than others. While mobile payments, crowdfunding and digital currencies get a lot of media attention, of late, there are fintech companies currently driving innovation in many other sub-sectors of financial services: from retail and investment banking to money remittances; from insurance to investor relations; from currency transfers to mobile money.
The recent fintech report from EY, commissioned by UKTI, points out that the UK has been one of the fastest adopters of peer-to-peer lending platforms, and financial platforms now generate revenue of £2bn a year. The payments sub-sector generates revenue of £10bn a year and is also experiencing incredible growth.
Together with financial data and analytics products, these three sub-sectors account for 60% of the fintech market, but there is a huge amount of white space that is ripe for innovation, particularly in the middle and back office of insurance companies and banks, as well as in the areas of fraud and identity protection.
Innovate Finance charges membership fees. Are you worried that some pre-revenue startups that might need the most help will be unable to afford it?
Innovate Finance is fortunate to count the City of London Corporation and Canary Wharf Group as founding sponsors, which have provided financial support to cover our setup costs. However, we receive no government funding; we are an independent organisation with enterprise at its heart, so a commercial membership model is what will drive long-term membership engagement and was an essential part of our founding ethos.
Membership fees will be used to help secure the extensive package of member benefits which Innovate Finance will offer, including events, access to investor networks, international profile building opportunities and supplier networks, and much more.
Everyone will pay for membership, because we value what we pay for. Our membership structure was part of a consultative process with some of the founding members, and has been set to foster inclusiveness, collaboration and competition. All members have one vote, and will have access to the same benefits package, regardless of their size, but will pay a different membership fee, according to their size. The fee structure is tiered, ranging from £1,000 to £50,000, and reflects the member’s revenues and capital raised to date, effectively allowing smaller firms to participate.
If you are a pre-revenue startup there is the option to apply for sponsorship, which will cover half the membership fee during the first year.