So far Britain’s drive to be financial technology capital of the world has not gone that swimmingly.
Worldpay was floated in London as a global champion in digital payments, but in the time it takes to tap a credit card it was sold to US rival Vantiv.
Wonga promised to transform the image of payday lending. It substituted baseball bats with fake legal letters before being killed off by Britain’s compensation culture.
Alex Brummer says so far Britain’s drive to be financial technology capital of the world has not gone that swimmingly, with Wonga being a prime example
The peer-to-peer lender Funding Circle, we are assured, is not remotely anything like Wonga, or Lending Club and On Deck in the US, both of which hit hard times.
All of these fintech creations have been focused on personal borrowers, whereas Funding Circle (FC) makes loans to small and medium-sized enterprises.
The marketing advantage that FC enjoys in Britain, Germany and the US is that it caters for small businesses which are often too tiny for commercial banks such as Royal Bank of Scotland to bother with, but are reliable credit risks.
The fact that Oxford-educated founder Samir Desai and colleagues have been able to attract some £300million of new money, putting a value of up to £2billion or so on its platform, does suggest confidence in the model.
But it shouldn’t be forgotten that FC was a firm which began life in the depths of the 2009 recession and has built its £5billion loan book during a recovery – largely funded by saver-lenders earning above-average returns.
What happens when the economy tanks again is less clear.
Brummer says previous UK fintech creations have been focused on personal borrowers, whereas Funding Circle (FC) makes loans to small and medium-sized enterprises
Funding Circle says savers/lenders will get their money back if default rates start to rise. But how confident can stock market investors be?
One certainty is that a good-quality loan book can turn rotten very quickly and those savers/lenders could be panicked as a consequence.
Real stress testing is still to come.
Doubtless Mark Read, hand-picked successor to Sir Martin Sorrell at Britain’s leading advertising giant, is a splendid fellow. Even if he were to achieve all the bonus goals in his contract, with a payout of £7million and a capped expense account he will look like a boardroom pauper in comparison with his predecessor.
But Sorrell, for all his peccadillos, was a brilliant entrepreneur who survived all manner of crises, including a debt crunch, to build a creative champion.
Even though he would never win a popularity contest in the commercial department of national newspapers, he showed foresight in recognising how the Silicon Valley giants would change everything in his world. He is an enormously hard act to follow.
Brummer says doubtless Mark Read, hand-picked successor to Sir Martin Sorrell at Britain’s leading advertising giant, is a splendid fellow
In seeking to cast a golden glow over Read, WPP’s chairman Roberto Quarta has overdone the rhetoric.
Read, we are assured has an ‘intimate understanding’ of WPP, has respect and endorsement from clients and played a successful role in investments and initiatives.
Shareholders might ask whether he also walks on water. There would be far less pressure on Read if Quarta skipped the Paul Pogba-style expectations and let him get on with the job.
What is absolutely clear is that after the Sorrell years, when WPP bought every ad agency and digital enterprise in sight, Read’s job will be to simplify and focus.
WPP may have embraced the digital world but change is so fast that some of its oldest clients could soon be eating its cake.
As a trainee economist at J Walter Thompson (several decades ago), I was responsible for providing context to market research reports for Unilever and carting huge film reels of data to the Anglo-Dutch’s giant’s HQ at Blackfriars overlooking the Thames.
Unilever is still a WPP client but, in markets such as China, the food-to-beauty behemoth has ditched the agencies and creates its own direct-to-the-consumer online commercials. Read’s challenge will be to disrupt the disrupters.
Well-travelled new Royal Mail boss Rico Back has lost no time expanding his global parcel service GLS by snapping up Ontario-based Dicom Canada for £214million.
With Britain’s postal service in decline the Swiss-based chief executive is following the example of utility bosses in seeking to make his company less dependent on regulated business. It is good to see a UK company showing global ambition. But it would be nice if a first-class birthday card posted in Dorset two weeks ago had arrived in London more promptly.