Fintech is only 1% finished | The fintech market ft. Simon Taylor | 11:FS Explores Lightboards

Summary

In this insightful discussion, Simon Taylor, head of ventures at 11s, emphasizes that the fintech industry is just 'one percent finished.' He illustrates the market landscape using a two-axis model, categorizing financial services based on customer numbers and value per customer. Taylor highlights the evolution of UK fintech, particularly in retail banking, SMEs, and wealth management, while also identifying emerging opportunities in the supplier landscape. He contrasts this with the more concentrated U.S. market and suggests that fintech entrepreneurs should explore unique niches or innovative supply solutions to harness future growth.

Takeaways

• 😀 Fintech is only one percent finished, indicating significant growth opportunities ahead.
• 📈 The market can be understood through two axes: the number of customers served and the relative value of each customer.
• 🏦 Retail banks serve a high number of customers with lower profit per customer, while institutional clients offer higher profits but are harder to acquire.
• 💡 The UK fintech landscape includes notable players like Monzo, Starling, Revolut, and others in retail banking and SME spaces.
• 🌱 Despite the growth of digital banks in the UK, a significant portion of potential customers has yet to transition their primary banking needs.
• 🔍 The next growth area for fintech in the UK is likely the mid-corporate sector, targeting 50-100 employee businesses.
• 🤝 The supplier landscape for financial services is evolving, with challenger banks using different suppliers than incumbents, creating B2B opportunities.
• ⚙️ Financial institutions need to explore their suppliers and consider where they can differentiate themselves in the market.
• 💼 Entrepreneurs should look for niches and unique selling propositions (USPs) within the changing fintech landscape.
• 🇺🇸 The US fintech market is more concentrated in the wealth sector, with fewer players in the SME banking space, indicating regional differences in market maturity.

Q & A

What does Simon Taylor mean by fintech being 'one percent finished'?

Simon Taylor suggests that the fintech sector is still in its early stages of development, indicating that there is significant potential for growth and innovation in the market.

How does Taylor categorize the financial services market?

Taylor categorizes the market based on two axes: the number of customers served by a financial services company and the relative value of each customer. This results in an 'S' shaped market distribution.

What examples of companies does Taylor mention in the retail banking sector?

Taylor mentions digital banks such as Monzo, Starling, and Revolut as key players in the retail banking space.

What market segments does Taylor believe fintech has primarily focused on in the UK?

Taylor believes fintech in the UK has primarily focused on retail banking, small business banking (SME), and wealth management.

According to Taylor, what is the potential for growth in the mid-corporate banking sector?

Taylor sees the mid-corporate sector (50 to 100 person businesses) as the next area of opportunity for fintech growth in the UK.

What does Taylor imply about the supplier landscape in the fintech ecosystem?

Taylor implies that the suppliers to challenger banks differ from those used by traditional banks, presenting opportunities for innovation and niche solutions in the B2B fintech space.

What three areas does Taylor identify for potential opportunities in fintech?

Taylor identifies opportunities in: 1) the supply landscape, 2) market growth, and 3) leveraging unique selling propositions (USPs) based on individual backgrounds and expertise.

How does the fintech landscape in the USA differ from that in the UK, according to Taylor?

Taylor notes that the US market has seen more concentration in the wealth space and has not fully developed the SME banking sector, contrasting with the UK’s focus on retail and SME.

What advice does Taylor give to aspiring fintech entrepreneurs?

Taylor advises aspiring entrepreneurs to identify their unique selling points, understand their market position, and look for low-cost ways to test and identify product-market fit.

What is the significance of understanding the supply landscape in fintech?

Understanding the supply landscape is crucial as it allows financial institutions and fintech companies to explore new partnerships, innovate services, and differentiate themselves in a competitive market.