How Ricston's API-led connectivity drives innovation in UK FinTech
In the last 10 years, the landscape of the financial industry in the UK has drastically changed. Such fintech startups as Transferwise, Revolut and Monzo attract millions of users, and - if a few years back, traditional financial institutions were not considering them a threat - today they are forced to rethink their digital strategy and business models.
"We are at an important crossroads with the institutions both protecting their huge investment in IT legacy and trying to innovate services, while challengers, who are looking to leverage innovation and differentiate through speed and agility, entice customers from their traditional thinking," says Mike Randall, CEO at Ricston - an IT consulting company in the UK.
Traditional institutions tend to opt for one of the two strategies - competing with startups directly by launching new brands of services, apps and products, or linking with emerging technologies to become an integral part of the new ecosystem. Although the strategies are very different in their business execution, both require a very similar set of technology tooling to be successful.
While AI, Cloud, Mobile and SaaS might be the first ones to come to mind, there is an 'invisible' layer that connects all of them and enables communication between all internal, as well as third party, systems.
"SaaS has led us away from the thought of power being held 'at the core', showing us that innovation 'at the edge' provides better consumer adoption rates. Now, organisations that can leverage this thinking further and provide connectivity around their platforms and services will be able to best leverage the opportunities for the future. This is what drives the need for API-led connectivity," Mike suggests.
An API-led connectivity approach allows enterprises to incrementally transition from monolith to a composable integration architecture, with underlying connectivity and orchestration services based on discoverable and reusable APIs. "[These] APIs become the foundational building blocks for new services, enabling enterprise agility and seamless customer experience across devices," comments Kevin Jervis, CTO at Ricston. "An experience API layer further enables a company’s customers and partners to have governed access to their data assets, which fosters new acquisition and monetisation channels," he argues.
"Our clients have successfully utilised MuleSoft Anypoint Platform to achieve this; in essence, it is a hybrid connectivity technology with API management capabilities that allows companies to leverage an API-led approach to integration," Kevin explains.
HSBC, Barclays, JP Morgan and others are benefiting from MuleSoft’s Anypoint Platform and the API-led connectivity with tangible results. HSBC has recently rolled out an online banking service, where users can see all their HSBC accounts in one place, even if these accounts were being opened in another country. The bank also launched a Digital Partner Platform to allow third parties to collaborate with HSBC and access their APIs. Furthermore, a UK online lending startup, iwoca, already connects to both HSBC and Barclays via APIs, and, thanks to the API driven middleware, one of the market main challengers - Atom bank - has streamlined the mortgage process, arguably one of the most complicated tasks in retail banking.
“Both innovators and institutions are looking at a future where they need to collaborate and consume each others’ services in order to adapt to the market and bring value to their customers through interoperability; and APIs hold a significant piece of the puzzle to allow ultimate success“, Mike Randall concludes.
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Start-ups receive $60 billion investment, smash 2020 record
Start-ups on the continent have raised a massive 43.8 billion euros ($60.9 billion) in just the first six months of 2021, according to figures from Dealroom, surpassing the record 38.5 billion euros invested last year..
This is despite the fact that the number of venture deals signed so far is around half the amount agreed in 2020. Only about 2,700 funding rounds have been raised so far this year, compared to 5,200 last year.
Prime examples in times of change
Examples are Swedish buy-now-pay-later firm Klarna which has raised more than $1.6 billion in two financing rounds, the German stock trading app Trade Republic received $900 million in May and British payments provider Checkout.com snapped up $450 million at the start of the year.
The figures suggest that European tech firms are pulling in far larger sums of money per investment than in previous years, which defies the economic uncertainty of the pandemic and boosted online services enormously.
The CEO of Checkout.com, Guillaume Pousaz, said start-ups have often been created in times of crisis, citing the emergence of several new financial technology companies in the wake of the 2008 global financial crisis.
He added that big transformational change was often the time when there is the emergence of a lot of new start-ups, sometimes when people are losing their jobs for associated reasons.
UK leading the charge
Scale-Up Europe, a group that includes the founders of UiPath and Wise, proposed 21 recommendations to help the region build “the next generation of tech giants.” Among the suggestions are tax credits to corporates for investing in start-ups and regulatory changes that adapt to new innovations.
Sebastian Siemiatkowski, CEO of Klarna, said the U.K. leads Europe when it comes to tech policy, and that there were a number of regulatory issues needing to be addressed before the European Union can produce tech giants of its own.
Siemiatkowski highlighted EU regulation of web cookies as an example of “poor regulation.” Yet, as the number of $1 billion start-ups in Europe continues to grow, the number of exits in the continent is also increasing.
This year has already seen some notable acquisitions, including Etsy’s $1.6 billion purchase of U.K. fashion resale app Depop and JPMorgan’s takeover of London robo-advisor Nutmeg.
As for stock market listings, a number of notable debuts have taken place in London in particular, including food delivery app Deliveroo, cybersecurity firm Darktrace and reviews site Trustpilot. Money transfer giant Wise, formerly known as TransferWise, plans to go public in the U.K. capital soon.