The Challenge of the Fintechs

Date: March 19th, 2018 | Author:

Sometimes a single fact delivers a knockout blow to your sense of world order. We all know that big business is under threat from its own inability to innovate, but the scale of this self-destruction is brought home by the prediction that in half of all companies listed on the S&P, 500 will not be here in ten years’ time.

Many may doubt the accuracy of this forecast by the global consulting firm Huron, but few would bet against it. The signs are all there: the collapse of household retails names like Toys R Us and the UK gadget store Maplin; the relentless rise of challenger banks and the record investment in technology start-ups.

There is no doubt we live in turbulent times, particularly those of us who operate in the financial services sector where the rules of engagement have been torn up to create a fintech jamboree on an unprecedented scale.

We’ve done a quick trawl of the big noises on both sides of the Atlantic to create the Atoma Ten Fintechs:


Fintech companies in the U.S. raised $3.5 billion in the first half of 2017, according to KPMG, as investors rushed to place bets in buzzy sectors like insurance and digital currencies.

Stripe, the online and mobile payments platform, founded in 2010 is valued at $9.2bn.

SoFi, the student loan business is worth $4.3bn after just seven years.

Credit Karma which offers free credit scores is valued at £3.5 billion.

The cheekily named Robinhood joined the billion dollar club after only four years with its free stock trading app.

GreenSky has attracted a $4bn valuation by providing on-the-spot financing for home-improvement projects via its network of contractors.


The UK fintech scene is home to a whole raft of challenger banks which, whilst yet to attract notable returns, are winning customers with the click of a mouse.

Atom Bank has raised over £400m in equity capital since 2014 and has taken £1.3bn of deposits and loaned over £1.2bn to SME businesses and homeowners in the UK.

Monzo gained its full, unrestricted banking licence from UK regulators in February 2017 and shortly after passed the 500,000 customer target. Interestingly, some of its funding comes from Stripe.

Transferwise, which offers online international money transfer, has moved $3bn since its launch in 2010.

Tide – the challenger bank for small businesses – is worth watching as it aimed to mimic the success of Monzo.

Revolut, the foreign exchange app, has raised £62 million to date and even thought it does not have a banking licence it is running its own version of current account, complete with IBAN numbers. It has just passed the 1 million customer mark.

This tidal wave of competition has not gone unchecked by established players who, according to according to analyst firm IDC, are spending more than $1 trillion on digital transformation in 2017.

AI technologies are playing a much bigger part in the digital reformation of the banking industry where the focus is as much on back-end as it is on the user experience.

According to Bobs Guide AI is having several major impacts on  the software development process:

It has the potential to enable developers build cognitive software, using AI technologies such as advanced machine learning (ML), deep learning, natural language processing, and business rules. Leveraging these technologies, developers will be able to program algorithms or configure them to self-learn, instead of relying on coded rules to program applications to be smart.

Automation is also making it easier to test software. Today, in DevOps world, the teams spend significant time on mitigating issues rather than preventing them. AI can bridge that gap by enabling developers to test for functional correctness, ability to perform under expected load, and resilience to foreseeable failures, thus making the testing process smarter and faster and improving time to market.

It remains to be seen whether the old guard, armed with new weapons, will meet the challenge of the Fintechs or whether they will become a fond memory of the good old, bad old days.