The document provides an overview and analysis of trends in the FinTech sector in 2015-2016 based on applications to Startupbootcamp FinTech London and UK FinTech funding data. Some of the key trends highlighted include: - Investment management became a major focus of FinTech innovation and investment, with many startups and new technologies emerging in areas like robo-advising. - Blockchain technology garnered significant attention but real-world applications were still limited, with full deployments expected to take more time. - Payments innovation declined as a focus for startups and investment relative to other areas as the market matured, though mobile payments saw growth. - Incumbent financial firms struggled to

1. ACCELERATING CHANGE:
LONDON FINTECH
2015 - 2016

2. CONTENTS
1. Executive summary
2. The year in FinTech, 2015
3. The partnership challenge – Corporates and FinTechs
4. What to look out for in 2016
5. A closing word from Nektarios Liolios

3. 1. Executive summary
FinTech in 2015 will be remembered for four main trends. Payments, once the main focus for financial technology innovation, has
now reached a certain level of maturity and other areas are starting to gain ground. Investment management was the biggest Fin-
Tech growth area in 2015, with very high representation in Startupbootcamp FinTech London and Finovate Europe 2016. However, it
was blockchain technology which won the most attention in 2015. Blockchain technology has yet to drive significant change in finan-
cial services but a number of high-profile startups and consortiums focused on exploring distributed ledger use, especially in capital
markets, were formed in 2015 and their impact will be felt in the coming years. Despite the many opportunities that FinTech presents,
though, corporates are still struggling to partner with FinTech startups.
Payments innovation – the end of the beginning?
One of the biggest trends of 2015 was the decline in the prominence of payments as the main innovation area in FinTech. In 2014,
over 50% of US FinTech investments were in payments, and the UK Government estimated that payments FinTech was worth £10bn
to the UK economy. This relative share dropped in 2015: 30% of the 2015 applications to Startupbootcamp FinTech London were
payments related and 25% of funding rounds were raised by payments-related companies.Nevertheless, this relative share illus-
trates the size of the target market the payments industry represents, which includes everything from paying for your coffee using
your mobile to a redesigned international remittance system.
This report uses market intelligence, gathered over the last 12 months, as well as our experience accelerating companies,
to draw out some key trends and patterns in FinTech. When comparing application data, funding data andour qualitative
understanding of the market we can begin to identify consistent and contradictory patterns which
suggest emerging and maturing trends.
“ “

4. The explosion of investment management FinTech
2015 was the year investment management staked its claim in FinTech. With the exception of a few well-known companies such as
Betterment and Nutmeg, up until now the industry as a whole has seen relatively little disruption and innovation. That looks set to
change. At Finovate Europe 2016, over 20% of the companies presenting were investment management-related businesses.
There are many reasons for this. The industry as a whole is facing cost pressures as fees continue to be pushed downwards and
regulation is forcing a clear delineation between fund costs and corporate costs. At the same time, machine learning is coming of
age and its incorporation into trading and portfolio management is growing rapidly, which in turn is encouraging the development
of robo-advice. All of these factors are driving change in the industry and creating investment management FinTech opportunities
for entrepreneurs.
Startups focused on investment management made up 20% of Startupbootcamp’s FinTech
London 2015 applications and represented five of the nine startups that were accepted
into the final cohort.
20%
APPLE PAY TAPS UK TO SHAKE UP CONSUMER SPENDING
FINANCIAL TIMES, 13 JULY 2015
MR ROBOT, YOUR NEW FINANCIAL ADVISER
FINANCIAL TIMES, 19 FEBRUARY 2016

5. Blockchain – the calm before the storm?
Blockchain probably occupied more column inches and speaking spots at conferences than any other FinTech trend this year. But
this excitement and enthusiasm hasn’t yet been matched by real change in the markets. Crucially, with the exception of Bitcoin,
we’ve yet to see a major deployment of the technology in financial services. Many companies are struggling to grapple with the
fundamental practicalities of using blockchain technology. 2016 is going to be a crucial year, as companies start deploying the tech-
nology in a wide range of test scenarios.
BLYTHE MASTERS’ STARTUP SEEKS
$35M FINANCING ROUND
NEW YORK POST, 14 DECEMBER 2015
12 MORE BANKS JOIN BLOCKCHAIN CONSORTIUM R3
COINDESK, 17 DECEMBER 2015
One indication is the relative lack of blockchain - related applications to Startupbootcamp.
10% of applications were blockchain-enabled, and half of those were cryptocurrency businesses.
In funding terms the technology was even further underrepresented, with only four blockchain
companies securing funding in 2015.
10%

6. Corporates are still struggling to work with FinTech companies
Incumbent financial services firms have used a wide range of approaches to engage with FinTech companies and innovate within
their own businesses. But across the market we see corporates struggling to execute and keep pace with the innovation of FinTech
startups. Many FinTech companies are using cloud solutions, AI, machine learning, new platforms, big data, and other technologies
to deliver more efficient and effective capabilities for companies – but corporates are struggling to work with them. Legacy IT sys-
tems, regulation, procurement, sales cycles and many other factors are acting as brakes on corporates’ ability to innovate within
their businesses.
Some corporates are belatedly recognising this and trying to streamline their processes or create workarounds, but the heart
of the problem often lies in a big corporation’s inherent culture of slow and steady. Those that are able to successfully tackle these
challenges, while building an ecosystem of FinTech companies around them, will reap the rewards that FinTech offers.
PWC HIRES EX-UK REGULATOR FOR
NEW BLOCKCHAIN CONSULTANCY
COINDESK, 16 FEBRUARY 2016
2. The year in FinTech, 2015
We analysed two contrasting data sets in order to understand the main FinTech trends of 2015: Applications for Startupbootcamp
FinTech London 2015; and total investments (not just venture capital) raised by FinTech companies in 2015.
Startupbootcamp received over 400 applications for its London FinTech programme in 2015. The applications were incredibly di-
verse, coming from all over the world (54 countries in all), illustrating the unique attractiveness of establishing a FinTech company in
London. It was also a very good year for FinTech funding in the UK; annual investment rose by 35% to US $901m across 72 deals in 2015.

7. Applications to Startupbootcamp FinTech London, 2015, % of total
Funding rounds for UK FinTech companies, 2015, % of total
Cashless World
Empowered Investors
Cloud Solutions and Improved Processes
Smarter, Faster Machines
Emerging Payment Rails
Shifting Customer Preferences
Alternative Lending
Crowdfunding
New Market Platforms
19%
11%
17%
6%
14%
6%
12%
15%
11%
15%
11%
14%
6%
20%
6%
13%
4%
0%

8. Applications by geography:
It’s interesting to contrast the industries which saw the most
fundraising activity (as measured by volume of deals rather
than value, which is skewed by large deals) against the appli-
cation data for Startupbootcamp’s FinTech programme. In
our analysis of the two datasets we followed a similar struc-
ture to that established by the World Economic Forum for
categorising startups in its FinTech report, published in 2015.
In 2015 five fundraising rounds were in excess of $50m:
» Funding Circle (an alternative business lending company) $150m » Atom Bank (a challenger retail bank) $128m
» WorldRemit (a global remittance company) $100m » Ebury (a global remittance, FX and lending company) $83m
» Transferwise (a global remittance company) $58m
Rest of Europe
UK
Middle East
Rest of America
Asia
AfricaUS
44%
11%
7%
7%
7%
2
%
22%

9. Interestingly, Starbucks avoided this problem by launching its own proprietary solution, Mobile Order & Pay, which
went live in 2015.
“
“
In contrast, there was a major market shift in proximity mobile payments in 2015 after announcements from two titans of the indus-
try: the launch of Apple Pay and Google’s Android Pay. This suggests the market has reached a certain level of maturity. Payments
innovation as a whole is also declining in relative terms compared to other trends.
Recognising the success of NFC as a proximity payments standard, 2015 cohort startup, WoraPay is establishing a stan-
dard in remote mobile payments. It integrates with a merchant’s point- of-sale system, which then allows the merchant
to accept payment from any remote mobile wallet.
“
“
Cashless World (19% of applications: 11% of funding rounds)
Existing payment systems are being adapted to enable new payment methods and customer behaviours.
Smartphone adoption is driving changing payments behaviour and innovation.
The biggest category of applications was from businesses which are trying to change the way payments are made at the point of
transaction. Lloyds Banking Group (one of Startupbootcamp’s corporate partners) sees a lot of opportunity for innovation in this
area: “Payments is at the heart of how people and businesses operate day-to-day. In a fast-changing digital world, partnerships and
collaboration across the industry will enable us to better meet consumer and business needs.” However, the market is challenging
for startups to crack for a wide range of reasons. The most obvious is scale; payments is a business which requires a very large
volume of transactions in order to build a viable business, and both payers and payees are drawn to payment solutions that have
the biggest scale and reach.
This is particularly apparent in remote mobile payments solutions (for example, allowing customers to pre-order their coffee as they
leave the Tube). A large number of companies are trying to corner this market but a dominant player has yet to emerge. As a result,
consumers and merchants face a difficult challenge in choosing which payments platforms to use.

10. In 2014 over 50% of US FinTech investments were in payments.
Only 25% of UK FinTech funding rounds were for payments companies in 2015.
25%
Empowered Investors(17% of applications: 6% of funding rounds)
New technologies are transforming the way institutional and retail investors make investments.
Investment management FinTech exploded in 2015. Startupbootcamp received a wide and diverse number of applications in this
category, encompassing B2C and B2B companies, robo-advisers, equity research, automated portfolio selection, machine learn-
ing, big data, and many other technologies. It’s an exciting time for asset and wealth managers and individual investors as a wide
range of innovations and potential disruption are appearing in the market.
The ‘advice gap’ is one of the hottest subjects in this area; a large portion of the population – those with investable assets of
less than £100,000 – are not served by traditional wealth offerings.
“…two thirds of financial products are now sold without professional advice.”
Financial Times (13th October 2015)
Many startups are targeting this market, including Nutmeg in the UK. This large potential market is very attractive to startups
but is also very difficult to serve cost-effectively – robo-advice (the provision of investment advice and services via an automated
digital solution) is seen as the key. However, this automated provision of advice has raised concerns with UK regulators, who want
to make sure that consumers are protected, while recognising the benefits of innovation and increased access to investment advice.
The FCA recently published their Financial Advice Market Review, which will catalyse further development of innovative investment
advice models.

11. BondIT specifically targets the complexities of bond portfolio construction using deep machine learning expertise com-
bined with broad experience in trading to change how investment managers construct and manage their portfolios.
What used to take hours, if not days, now takes 90 seconds.
StockViews are crowdsourcing knowledge from a diverse and experienced global analyst community to create a market
place for independent equity research, riding the wave of disruption in the industry caused by MIFID II.
Retail investors aren’t alone in being empowered by FinTech. Institutional investment is also being transformed, driven by tech-
nological advancement, margin and cost pressures, and regulatory change. The proportion of passively-managed funds continues
to grow, fees across the industry are being pushed downwards and the regulatory burden is increasing. This is forcing asset man-
agers to find savings in their business, and many are now looking to FinTech companies to try and achieve these.
Machine learning is one of the most important new developments for asset managers. It has the potential to radically alter many
different aspects of an asset management firm’s activities, from trading and portfolio allocation to cybersecurity. Regulatory change is
also affecting the way in which asset managers consume investment research.
At the moment, funding is lagging behind new companies entering the market (this category only accounted for 6% of successful
funding rounds in 2015). But the market is ripe for innovation and disruption: global assets under management continues to grow
year-on-year and the market remains relatively dispersed (although there are a number of giants, there are an estimated 80,000 asset
managers worldwide). We expect the number of startups entering the market to continue to grow in 2016.
FinTech is going to transform the way the industry operates and empower investors to make better informed decisions about
their assets, whether they’re retail investors or global asset managers.
20% of companies presenting at Finovate Europe 2016 were investment management related.
“
“ 20%

12. Cloud Solutions and Improved Processes (14% of applications: 6% of funding rounds)
New technologies are helping financial services companies to improve processes and make efficiencies
by outsourcing them to FinTech providers, often using the cloud.
One of the little talked about areas of FinTech are those companies that try to help existing financial services companies improve the
way they operate , rather than disrupt financial services. These companies are varied and diverse but biggest by far are Software as a
Service (SAAS) solutions delivered over the cloud.
Asset management is one of the biggest opportunities and markets for these companies. Many small companies are focussed on
delivering investment returns, with the result that their middle office operations are often still based on Excel and Powerpoint. These
represent a ripe opportunity for startups as asset managers face increasing margin and cost pressures and the regulatory burden
continues to grow.
We’re seeing a wide variety of applications in other sectors, from credit risk management to client risk profiling. All incumbent fi-
nancial services companies are facing increasing cost pressures, not least because of the rise of low-cost FinTech competitors, and it’s
these kinds of innovations which will allow incumbents to remain competitive.
However, incumbents are struggling to take advantage of the potential these FinTech companies offer. Execution remains difficult,
for a wide range of reasons. As a result the sales cycle is slow and frustrating for many FinTech companies, and is most likely the reason
why funding lags behind the number of companies entering the market. While the opportunities for these technologies and compa-
nies are vast, realising the potential remains extremely challenging.
Obsidian Solutions integrates with fund management platforms and automates the creation of investor reports for both
existing and prospective clients, which can be viewed live at any time.

13. Smarter, Faster Machines (12% of applications: 15% of funding rounds)
Blockchain, machine learning and artificial intelligence have been made possible
by the increasing power and decreasing cost of computing.
Tradle is leveraging blockchain to change the way customers exchange their KYC data with different financial services
organisations.
Sheer computing power is radically changing the way financial services companies operate. Blockchain is the most exciting and
potential-filled technology to emerge. The technology has occupied thousands of column inches this year and there’s undoubtedly
a lot of hype around it, but that doesn’t detract from its potential to change the way large parts of financial services operate. From
clearing and settlement, foreign exchange, to know your customer (KYC) requirements, blockchain could transform the industry.
One of the biggest challenges is combining the technological knowledge of how the blockchain creates, stores and transfers
data in a secure way, with the commercial conversation about how it can be used in practice to create business benefits. With the
exception of cryptocurrencies like Bitcoin, there’s yet to be a full-scale deployment of the technology in a financial services company.
However, there are signs that this is changing. A number of breakthroughs and pilot programmes were announced in 2015: the
first share was sold on the NASDAQ in 2015 by Chain.com; Digital Asset Holdings announced a project with the Australian Securities
Exchange; and Goldman Sachs patented its SETL technology.
There seems little doubt that blockchain is going to continue to grow in importance in 2016 but full-scale deployments of the
technology seem some way off. That’s no doubt reflected in the comparatively small number of successful funding rounds for block-
chain companies last year – investors are still uncertain how fast the trend will develop.
Smarter, faster machines are having a radical impact elsewhere though, particularly in the fields of artificial intelligence and
machine learning – and this is being backed up by significant funding and investment. Lloyds Banking Group sees this is one of the
most exciting trends in FinTech: “There has been huge progress in machine learning, which is a really exciting growth area. We’re
seeing more tools to help our data scientists manage the quality and volume of data, innovative ways to wrap open source methods
in ways that help the enterprise and a maturing of methods that could help our customers directly, like natural language processing
or generation.” A number of innovative new startups are demonstrating that machine learning came of age in 2015, and its applica-
tions are far-reaching and dramatic.

14. Cybertonica deploys machine learning to tackle transaction fraud in ecommerce. Its algorithms enable card providers to
identify when a transaction is fraudulent with a much greater degree of accuracy. This reduces the verification steps that
a consumer has to go through and consequently increases the sales conversion rate for ecommerce companies.
Algorithmic trading is becoming increasingly important to fund managers as the trend in asset management continues towards
passively-managed funds and higher cost pressures. A number of the large asset managers have made significant investments in
artificial intelligence and machine learning already, and this will undoubtedly continue.
Walnut Algorithms leverages computing power and their own proprietary machine learning algorithms to produce
highly effective, profit maximising and loss minimising trading algorithms.
“
“
Emerging Payment Rails(11% of applications: 15% of funding rounds)
Cryptocurrencies and other new technologies are transforming the way individuals
and companies make payments.
Payments continues to be a focus of FinTech innovation and disruption, but an important distinction should be made between
Cashless World, which is innovating on existing payments infrastructure, and Emerging Payment Rails, which is transforming the
payments plumbing itself. This is creating new opportunities in the payments market while eroding many incumbents’ most profit-
able businesses.
Probably the most famous example in the UK (and indeed worldwide) is Transferwise. It should be no surprise that London – the
largest foreign currency exchange market in the world – is this company’s home. Foreign exchange is an enormous and profitable
business, and entrepreneurs are harnessing new technology (as well as anti-bank sentiment and the general perception that banks
are exploiting their customers) to enable new ways of transferring currency around the world. The potential in the market is huge,
but even successful FinTech companies like Transferwise are struggling to perfect their business models.

15. Cryptocurrencies like Bitcoin and their underlying technology, blockchain, are the most well-known drivers of the technological
change creating new payment rails (but isn’t what Transferwise relies upon). Ripple (based in the US) is one of the most well-known
FinTech companies looking to revolutionise foreign exchange using the blockchain. It is using its own blockchain technology and
combining it with the ancient Hawala system (a money transfer system built on a network of trusted intermediaries) to create a
new way of transferring currency around the globe. Although the blockchain has the potential to erode fees in foreign exchange, as
long as fees remain similar (and higher) than traditional payment rails, FinTech companies will struggle to seize a significant market
share. The relative maturity of some of the FinTech companies and the sheer size of the target that foreign exchange represents –
which is reflected in the funding figures – means that this will continue to be a hot area in 2016. But we’re already seeing a tailing-off
in new companies entering the market.
Shifting Customer Preferences(11% of applications: 14% of funding rounds)
New challengers in the banking market are changing the way consumers interact with their
banks, driving change throughout the industry.
For some, 2015 could be described as the year of the retail challenger bank in the UK. Four in particular have been making waves in the
news throughout the year: Starling, Mondo, Tandem and Atom. None have yet been able to formally launch, such is the complexity of
regulation and depth of fund raising required to launch a retail bank in the UK.
Obstacles remain for the retail challenger banks. Data on the UK’s current account switching service was disappointing for those who
had hoped it would catalyse the market, and this is going to be one of the biggest hurdles for challenger banks – how do they prise cus-
tomers away from their existing financial relationships, which historically have been statistically stronger than marriages? The challenger
banks see a low friction, radically different experience as the key to winning customers; they envisage interactions between consumers
and the bank being as simple and quick as possible, self-service being the default mode and all enabled by a slick, user-friendly, digital
interface.
There’s a proven customer need in one market: SME business credit. One of the UK’s first challenger banks to launch, OakNorth,
has targeted this niche. It charges a higher premium for credit than some of the high street banks, but it’s hoping to gain market
share fast by focussing on customer service, making credit more accessible to those businesses it deems credit-worthy and keeping
costs low with a specialist back office function in India.
Challenger banks are only one response to shifting customer preferences. Personal finance data aggregators have had a lot of suc-
cess in the US and other markets, but have so far failed to penetrate the UK market successfully. The British public’s security-conscious

16. Alternative Lending (6% of applications: 20% of funding rounds)
New ways of assessing credit-worthiness and issuing credit are transforming the lending markets.
nature is one reason for this. It’s anathema to most people and companies to hand over a multitude of usernames and passwords to
one app, acting as a single point of failure, and it’s certainly so to the regulator – especially after the long list of cybersecurity incidents
in 2015 (most notably Talk Talk). Personal financial data is extremely valuable and so entrepreneurs and investors are seeing lots of
opportunities, but it remains to be seen if and how fast they can succeed. 2016 will be a pivotal year.
MONDO BUCKS BANKING PROTOCOLS WITH RELEASE
OF FIRST ‘ALPHA’ CARDS
FINEXTRA, 2 NOVEMBER 2015
It’s been a dramatic year in alternative lending. The headlines paint a very negative picture: Lending Club’s shares have fallen over 60%
since its IPO at the end of 2014; there’s been increased regulatory scrutiny after TrustBuddy filed for bankruptcy after serious financial
misconduct; and the previous head of the FSA, Lord Turner, has suggested that in the long term alternative lending will eclipse the bank-
ing mistakes of the financial crisis. But these headlines mask the major progress that has been made. Enlightened regulation has allowed
the industry to establish a strong foundation in the UK and Lloyds Banking Group believes it will continue to grow and mature. “Volumes
are likely to increase with incremental origination through incumbents’ partnerships, more institutional monies and higher growth in
specific propositions such as at the point of sale financing, asset backed lending and investment wrappers. At the same time there will
be consolidation driven by the scale of the winners and by regulation.”
There were very few applications in this category in 2015, which suggests the market has matured in entrepreneurs’ eyes. The market
is arguably saturated with participants and platforms – Rabobank (one of Startupbootcamp’s corporate partners) believes the next stage
in the industry will be a market consolidation and global expansion. Although total credit issued remains a drop in the global credit market
ocean, the concept is mature enough that even banks like JP Morgan are investing capital through them. Investors certainly see the market as
a good bet – in 2015, over 20% of funding rounds were for these businesses.

17. Entrepreneurs also have new avenues to pursue. One is ROSCA – Rotating Savings and Credit Associations, a business model that is
thousands of years old, recognised worldwide, but which remains almost entirely offline.
Regulation is going to continue to be a key issue. Although alternative lenders continue to grow at a rapid clip, growth is in the context
of an expanding and improving economy. Would the loan books of these companies survive a significant market downturn? The compa-
nies themselves believe they have risk models which are as good as the industry standard, if not better – but they recognise that these
questions won’t go away until they’re tested through a market downturn.
MoneyFellows is bringing ROSCA online by creating a unique, digital offering, initially targeting immigrant communities
in the UK, with ambitious plans for global expansion to traditional markets like Egypt and India.
Crowdfunding(6% of applications: 13% of funding rounds)
New ways of raising and investing capital are changing the landscape
of the capital markets, particularly for SMEs.
MOBILE CHALLENGER BANK MONDO RAISES £5M FROM
PASSION CAPITAL AND PLANS £1M CROWDFUNDING
CAMPAIGN AHEAD OF 2016 LAUNCH
CITY AM, 15 FEBRUARY 2016
The market for crowdfunding grew throughout 2015. There were a number of high profile raises, the most famous being the ‘burrito
bond’ raised by the Chilango food chain on Crowdcube.
Crowdfunding has rapidly diversified the sources of capital available to companies, as well as the total pool of investable capital,
but at the cost of investors who have a stake large enough to drive effective shareholder governance. Are companies finding raising
capital easier, but at the expense of an effective shareholder base? This will be interesting to watch over the next few years.

18. Delio is creating internal digital market places in universal banks for private market investments (both debt and equity).
New Market Platforms (4% of applications: 0% of funding rounds) – Regulation and technological
advancements in the capital markets has resulted in a number of new trading platforms emerging.
The rate of innovation and change in capital markets is slow because of its complex and incumbent nature. Even the potential
of blockchain is unlikely to cause rapid change. For the most part, innovation is in the form of new platforms, bringing markets that
previously relied on telephone broking online, or creating new market places which are currently dominated by in-the-know per-
sonal relationships.
There was a lot of focus in 2015 on the digitalisation of fixed income markets because of concerns about market liquidity. One of
the key challenges, which isn’t limited to fixed income, is how platforms will achieve enough scale to allow the market to operate ef-
fectively. Without enough supply and demand the market won’t be liquid enough. These network effects are recognisable elsewhere
(often associated with platforms like Uber and AirBnB) and are especially crucial in financial markets where market movements can
put enormous strains on liquidity in a short period of time.
Other markets are being digitalised for the first time. Currently, many banks operate informal investment clubs, linking deal flow
from their investment banks to their investment arms. For the most part these mechanisms are ineffective. By bringing the process
online and, crucially, making compliance an integral part of the platform, Delio is hoping to capture a market which transacts billions
of dollars every year. Real estate investment and distressed debt markets are other such opportunities for digitisation which haven’t
yet been tackled.
Despite the exciting opportunities and potential, this was the smallest category of applications for Startupbootcamp. This was
probably due to a number of factors. The pre-requisite level and depth of experience for entrepreneurs to enter the market, for
example, doesn’t necessarily align with the typical applicant for Startupbootcamp. Similarly, many entrepreneurs may be put off by
the nature of the market and the scale required to succeed.
In much the same way as alternative lending, crowdfunding has been one of the hottest topics in FinTech over the last few years,
but our application data suggests we may have seen a peak or plateau in the number of new companies entering the market. The
market is seen as relatively mature and consolidated, particularly when compared to other FinTech sectors. As a result it’s a chal-
lenging area for new entrants, which is reflected in the number of applications. In contrast though, funding was lively for crowd-
funding businesses in 2015.

19. 3. The partnership challenge
Corporates and FinTechs
Incumbent financial services companies haven’t ignored these trends, but the strategies they have adopted for tackling this wave
of innovation and change are as varied as the FinTech companies entering the market. Across the spectrum one thing is consistent:
we see incumbents struggling to execute FinTech projects and programmes at the pace required.
Most companies recognise not only the potent threat that startups pose to the industry, but also the myriad opportunities. “We
believe that collaboration between the actors will support the development of innovative and accessible products and services for
customers, bringing together the experience and scale of banks with the agility of start-ups. We mobilised 100 mentors across the
group which engage with the Fintech community such as mentoring the Startupbootcamp cohort and enabled the creation of doz-
ens of startups in the UK ecosystem, some of them being our clients.” (Lloyds Banking Group)
Companies are adopting a wide variety of approaches to try and harness this potential. The traditional route was acquisition but
there are signs that this has fallen almost entirely out of fashion, particularly when the relationship with the startup is relatively new.
Many companies found that by bringing the startup into the sphere of a major corporate entity, they drained the value they’d tried
to acquire. Corporate venture arms are one popular alternative, while others have established ‘green field’ entities which nurture
FinTech companies. Some companies have innovation arms or their own accelerators, while others are trying perhaps the hardest
method: making innovation a core part of the culture.
Only 45% of UK corporate respondents felt that their company was putting FinTech at the heart of their strategy. 45%

20. But despite the tangible benefits, only 35% of companies surveyed are engaging in joint partnerships with FinTech
companies, and even fewer (27%) have purchased services from FinTech companies.
Arvato-Bertelsmann, a financial services solutions provider (and one of Startupbootcamp’s corporate partners) is keenly aware
of the advantages of working with FinTech startups. “Startups lead us off the trodden paths and challenge us to re-think what we
have learned. Working with them helps us to become nimble and remain at the forefront of technological development.”
PwC believes the best approach lies in reorienting the company to be the dynamic centre of a FinTech ecosystem. Companies
should use their position of trust with customers, access to customer data and knowledge of the regulatory environment to part-
ner with the best FinTech companies, rather than trying to manage the entire customer experience. They will succeed by working
together. Companies should focus on what they do best — for instance, identifying investment themes, assessing credit exposure,
managing counterparty risk, or executing and settling financial transactions — and then tap into the FinTech pool for innovation
that can support this strategy and put it into practice. But companies must overcome some internal hurdles first.
There’s no doubt that regulation and IT security seem daunting to many people within a financial services organisation, particu-
larly from a front office perspective. But how real are they? In PwC’s experience, many of the compliance and regulatory challenges
that people foresee can be forestalled. The solution is to make sure that all of the key decision makers are around the same table
at the very start of a relationship or partnership with a FinTech company. This has to include compliance, regulatory experts, legal,
and sourcing, as well as the business and IT experts. By understanding the opportunities and limitations up front, companies can
make sure the execution process is well understood by all stakeholders.
In many ways, IT is the bigger challenge. The IT legacy of most financial services companies has been written about extensively
and there’s no doubt that it poses a significant challenge to the CTO of a FinTech startup. Even so, financial services companies can
create an environment for testing new technologies and innovations by building test environments that use simulated business
data while remaining separate from the main business’s IT. The obstacles to working with FinTech companies are certainly real, but
they’re definitely surmountable and not necessarily as big as they might first appear.
“
“Survey respondents cited two big challenges to working with FinTech startups: regulation and IT security.

21. 33%of respondents thought that FinTech companies would help them to meet their customers’ needs, whilst another
22%thought that the biggest benefits lie in collecting and analysing data to generate deep risk insights.
The benefits of collaboration will remain unrealised as along as cultural, strategic, regulatory, IT and procurement challenges
continue to stop companies from executing projects. For Rabobank, “collaborations enable us to undertake an essential business
model transformation and realise a sustainable future-proofed business model for the bank.”
FinTech is changing the world of finance, and financial services companies are trying to change with it. The question is, can they
do it fast enough?
Technologies like blockchain have the potential to revolutionise the way financial services functions, yet only 47% of UK
respondents to PwC’s survey felt they have at least a moderate understanding of the technology.
4. What to look for in 2016
The FinTech market changed dramatically in 2015, but what is yet to come will have an even bigger impact on financial services.
Here are the areas to watch in 2016.
Challenger banks – the early adopters’ year
There seems little doubt that 2016 will be the year when one or more of the digital-only challenger retail banks launch in the UK.
Tandem and Atom have both been given their banking licences and are gearing up to launch (dates remain elusive). Similarly, Star-
ling and Mondo banks both have their banking licence applications in the pipeline, and George Osborne has committed to issuing
15 new customer-facing-banking licences by 2020. The implications in the short-term are likely to be limited but the challenger
banks hope this will mark the beginning of a sea change in retail banking.

22. The growth phase – investment management FinTech
It’s also going to be an important year at the other end of the consumer banking spectrum, in investment management. The FCA
has just published their Financial Advice Market Review, which will fuel further disruption, and UK banks have already begun mak-
ing announcements about developing their own robo-advisors. More broadly, the future for asset management FinTech is harder
predict, but if the sheer volume of companies entering the market in 2015 is an indicator, the sector is likely to keep developing and
maturing and more partnerships between startups and incumbents will emerge.
InsurTech – a new frontier
Although we haven’t talked about InsurTech in this report, it’s going to be an interesting area to watch over the next year. Insurers
from across the spectrum are starting to engage with InsurTech companies, the world’s first InsurTech Demo Day is happening in
April, and 2015 saw the first major investment in a European InsurTech company (Knip raised 15m CHF in November 2015). Keep a
look out for Startupbootcamp’s InsurTech trends report in the second half of this year.
Blockchain – the tipping point
2015 saw a lot of noise about blockchain but also the first indications of some substance. In 2016 we’ll see lots more financial ser-
vices companies launching pilot programmes using blockchain technology. Arvato-Bertelsmann says: “As more companies explore
the potential of this further, some of the challenges that an adoption of the blockchain technology presents will be uncovered and
addressed.” But the really important developments may come from consortiums of institutions, working together to build innova-
tive financial markets infrastructure. Rabobank thinks that developing the wider blockchain ecosystem and establishing standards
for the technology will be key developments in 2016. Many of the potential benefits of blockchain lie in market efficiencies and in
order to realise them companies must work together. Banks have a good track record of symbiotic cooperation though – SWIFT and
MasterCard being two good examples. Blockchain is here to stay.

23. 5. A closing word from Nektarios Liolios
Co-Founder and Global CEO, Startupbootcamp FinTech and InsurTech
Show of hands: Who wants a brand new bill-splitting app? Let’s turn it up a notch: Who needs a bill-splitting app on blockchain? Let
me guess: Nobody! It’s 2016 after all. But only last week two young guys were pitching exactly that to me.
FinTech startups emerged because people felt a genuine pain and set up to solve it themselves, because nobody else would. This
explains the emergence of improved user experiences, cheaper cross-border payments, fairer credit scoring, loans for those reject-
ed by the banks, and much more. All of this was made possible by new technologies.
As FinTech matures as an industry we see more and more professionals leaving their jobs in banks and technology firms to solve
problems only they know about. They tackle processes and products that are so niche that they can only be addressed by experts.
Yet, processes and products that are inefficient, costly and risky have not been touched by technology innovation in decades. Cor-
porate actions, anybody?
In parallel, the financial industry is slowly waking up to the inevitability of the change around it. Some are really good at it, others are
still very much ‘headless chickens’, especially when it comes to blockchain. But more and more banks and other financial institutions
are doing the right thing; looking at FinTech as an opportunity to experiment, learn and collaborate, ‘outsourcing R&D’. On the other
side, despite all the talk about disruption, most FinTech startups recognise they need the industry as a partner, a distributor, or a
customer.
What does this mean for the evolution of FinTech? Are we entering FinTech 2.0? The startups we see are certainly more mature,
more investment-savvy, and they’re addressing the next level of problems that need solving. The regulators are looking to facilitate,
rather than hinder, and the financial services industry is managing legacy systems whilst trying to reinvent itself.
How will the next stage of disruption in payments be addressed? Who will tackle the mess in securities clearing and settlement?
Where will the next startup addressing the democratisation of investments come from? There’s so much work to be done and nei-
ther banks nor startups can do it alone. Despite all the talk about a FinTech bubble, 2016 may be the year where we see FinTech
stepping on the gas. And yes, blockchain might just play a part in it.

24. PwC FinTech
PwC works with financial services companies to implement Fin-
Tech innovation,
from strategy through execution, and helps FinTech startups
accelerate and scale
their businesses to reach their full potential.
Steve Davies
UK and EMEA FinTech Leader
PwC
steve.t.davies@uk.pwc.com
Simon Horner-Long
FinTech Partnerships Leader
PwC
simon.horner-long@uk.pwc.com
Robert Churcher
FinTech Partnerships (report author)
PwC
robert.churcher@uk.pwc.com
Startupbootcamp FinTech
Startupbootcamp FinTech is the leading accelerator focused on
financial innovation. We provide funding, mentorship, office
space in the heart of London and access to a global network of
investors and VCs, for up to 10 selected FinTech startups across
the globe.
Nektarios Liolios
Co-Founder and Global CEO
Startupbootcamp FinTech and InsurTech
nektarios@startupbootcamp.org
Francisco Lorca
Managing Director
Startupbootcamp FinTech London
francisco.lorca@startupbootcamp.org

25. This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice of any kind. You should
not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or im-
plied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PwC does not accept
or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information
contained in this publication or for any decision based on it.
PwC UK is a sponsor of Startupbootcamp FinTech London.
For further information please contact:
Áine Bryn
Global FS Marketing Director, PwC UK
+44 207 212 8839
aine.bryn@uk.pwc.com
visit www.pwc.com/fs
Elizabeth Lumley
Director Global Ecosystem Development, Startupbootcamp FinTech
+44 711 554 654
elizabeth@startupbootcamp.org
visit http://www.startupbootcamp.org/accelerator/fintech-london.html
© 2016 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please
see www.pwc.com/structure for further details.
© 2016 Startupbootcamp FinTech. All rights reserved.