Despite Brexit fears, the United Kingdom’s fintech sector continues to dazzle. A report by PwC UK states that since 2008, the UK’s stature as a fintech capital has been growing rapidly – the sector represented £6.6bn in revenue in 2015 and attracted £524mn in investment. The 60,000-strong workforce is more than the number of fintech employees in Singapore, Hong Kong and Australia.

It’s only natural for other countries to seek UK’s innate fintech talent. The Hong Kong government’s FDI arm Invest Hong Hong aims to bring onboard fintech companies from the UK to explore business in Hong Kong, mainland China and Asia by entering the UK Fintech Awards. This year’s winners were regtech startup Mosaic Smart Data, followed by insurtech company Digital Fineprint, blockchain startup AidTech, stockbroking app Revolut and fintech Railsbank.

Winner Mosaic Smart Data and runner up Digital Fineprint are scheduled to visit Hong Kong next month for to attend the Hong Kong Fintech Week 2018, scheduled to run from October 29 to November 2 in Hong Kong and Shenzhen, in addition to other benefits of winning the Invest HK UK Fintech Awards 2018.

International Finance got talking to the founders of the two startups on their victory, their company and the road ahead.

REGTECH

Mosaic Smart Data helps financial institutions in the fixed income, currency and commodities (FICC) market harness their data intelligently to service and predict client needs under new regulatory regimes. It empowers financial market professionals with usable, data-driven tools in the RegTech space.

Its MSX platform aggregates multiple sources of transaction data, enabling financial institutions to easily build a comprehensive view of client, counterparty and prime broker trading activity, and meet regulatory requirements.

 Matthew Hodgson, CEO and founder of Mosaic Smart Data

Matthew Hodgson, CEO and founder of Mosaic Smart Data

Congrats on winning the InvestHK Fintech Awards. What does this victory mean to you?

This award is extremely timely for us as we are actively talking to potential clients in Asia. We are seeking to expand globally to take advantage of the incredible up-swell in interest in data analytics in the FICC markets. Establishing a presence in the Asian markets through Hong Kong will allow us to better meet our current and future clients’ needs.

We recognise the size and diversity of the Asian markets and Hong Kong is a key gateway to Asia. We look forward to working alongside the InvestHK team to draw on its expertise and connectedness.

Tell me a bit about your company and what problems you are aiming to address?

Mosaic Smart Data came out of my experience working in the FICC markets for many years. In the past, I and my teams had no way to answer some fairly fundamental questions about our business, such as, what can we do to improve the service we deliver to clients? Or, what we could do to attract more business from our clients?

We didn’t have the data, the single view over all the business we were transacting which would give us those answers. It was possible to create a historical report to get some information, but that is like driving while only looking in the rearview mirror. What you really need is a real-time view.

So, Mosaic Smart Data was born. We have an ambitious mission to empower financial market professionals with the best data-driven tools to answer the questions they need to ask and provide those answers in real-time and in a visual language they can understand at a glance.

We deliver the platform to sell-side or large buy-side firms in three stages: aggregating and normalising clients’ data to provide a solid data foundation; application of advanced real-time and predictive analytics and an intuitive display to bring those analytics to the sales and trading teams’ desks.

Why is Hong Kong, perhaps Asia, a big market for you?

The FICC markets are becoming increasingly global. A number of Asian cities are quickly catching up with traditional financial centres such as New York and London. Not only are Western banks putting significant energy into their Asian subsidiaries, but many Asian banks are maturing into powerful market actors in their own right. This, coupled with a number of countries really embracing the potential of fintech, makes an Asian presence essential for any company with global ambitions.

We are looking forward to working with InvestHK to strengthen our ties in Hong Kong and use it as a springboard for our further efforts in East Asia.

This is a region with some of the fastest growing economies, doing some of the best research in emerging technologies. It is an incredibly exciting time to be in Asia for a young fintech firm like Mosaic Smart Data, and we are looking forward to making the most of our opportunities here.

What technologies do you believe the next wave in financial investment will focus on?

We are in a really interesting time in financial technology investment. There is clearly a lot of money looking to enter the market and that can mean an increase in speculative investments, vaporware and products which are simply jumping on a bandwagon, rather than truly innovating.

We have to always look at what problem the technology is solving. There is a tendency sometimes to take exciting new technology and then look for somewhere to apply it. That’s the wrong way around. You need to start from a real business problem and then ask what tools are needed to solve it.

For example, artificial intelligence is getting a lot of attention at the moment. Yet, in the FICC markets, banks’ data is distributed across different databases and messaging languages. In that state, any insights from AI are going to be incomplete at best. You have to fix the core problem, the underutilisation of data before you can really create value from machine learning.

The Mosaic Smart Data team has a lot of experience in the financial markets and we work very closely with our clients. We are not taking out-of-the-box analytics and fitting it into the markets, but building a solution from the ground up. We are targeting the questions our clients need answered and delivering results in the way they want to see them.

What do you think about the synergy of data-driven startups and financial institutions?

Financial institutions hire some of the brightest and best technologists. But that doesn’t mean that they want their own people working on every problem and building every tool. Our clients often take the view that their own technologists should focus on ‘technological alpha’ – the highly proprietary tools which are generating value. While some algorithms and machine learning tools fit into that category, the underlying platform that organises the data and generates much of the day-to-day analytics doesn’t.

That’s where we provide value. A bank doesn’t lose out because it is running the same analytics platform as its rival. So, it makes sense to buy rather than build. That way, the bank gets analytics faster and more cost-effectively, while freeing its own technologists up to work on the projects which provide added value.

This kind of relationship provides a perfect synergy between fintech and institution, enabling both to thrive.

As exciting as fintech is, one cannot ignore the threat of cyber attacks. How do you make your product and customers immune from these threats?

Our technology deals with the transaction data within the bank, which is highly sensitive. Therefore, security is our highest priority.

Mosaic Smart Data’s platform, MSX, sits within the clients’ firewalls and security systems so that it doesn’t create new risk exposures.

We also think carefully about the internal securities, so the platform has completely customisable permissions built into it ensuring that no user can see any data that they are not entitled to view.

What are your plans for 2018?

Data analytics is really front of mind for all market actors, buy-side, sell-side, custodians and regulators. Mosaic Smart Data’s platform has something to offer all of them. We are looking to be the gold standard in FICC data analytics and that means we are having to move extremely quickly to meet the global demand for our platform.

This year is all about scaling. We will continue to onboard new clients globally, on both the sell-side and buy-side. We are also releasing analytics for new asset classes and developing new features for the platform in response to customer need. It has been an extremely busy year so far and shows no signs of slowing down.


INSURTECH

An insurance-focused startup, DFP is helping SME insurers and brokers to drive actionable insights from open data by using AI and predictive analytics

Erik Abrahamsson, CEO at Digital Fineprint

Erik Abrahamsson, CEO at Digital Fineprint

Congrats on winning at the InvestHK Fintech Awards. What does this victory mean to you?

We are very excited to win the InvestHK Fintech Award and the possibility of tapping into the Hong Kong market. Hong Kong is a very attractive option and we are grateful for the support of strong local partners such as InvestHK. This competition saw some amazing contestants and it is an honour to be named as one of the two winners. We are looking forward to attending Hong Kong FinTech Week in October this year and establishing our footprint in driving a technological revolution in the industry across Asia and globally.

Tell me a bit about your startup and what problem you are aiming to solve?

The problem we address is underinsurance of small businesses, first in the UK and then in the world at large. To solve it, we started Digital Fineprint, which is now an analytics company that helps insurers and brokers to find new data points to help protect more businesses more completely. We drive actionable insights from open data by using machine learning. We support the entire distribution process of insurance, ranging from identifying new leads and targeting and converting prospective customers, to real-time monitoring of existing business customers and maximising existing customers’ lifetime value.

Since our launch in 2016, we received US$3.1m in funding from Pentech Ventures and Eos Venture Partners, formed partnerships with the world-leading insurers such as QBE, Hiscox, Zurich and built a completely outstanding team.

How does social data revolutionise the lending industry?

Technology and new business models are changing the entire industry. Large, complex and highly regulated entities are being forced to learn how to innovate and roll out new ideas in agile ways. Open source data including social data is transforming insurance in significant ways, from improving customer engagement to providing new tailored products. When the data is used correctly, it can help insurers make more accurate assessments and translate it into better, more efficient service and consequently, a better customer experience.

Do you believe the insurance industry is behind on technology? How can a startup like yours address the gap?

Insurance as an industry have seen a slow start in adopting innovation and agility. Today, however, insurance companies understand the value that harnessed data and technology can play in the value chain, and they are interested in engaging with new business models and collaborating with insurtech startups.

We fill the gap by helping SME insurers and brokers to drive actionable insights from that data by using AI and big data analytics. Instead of spending hours online trying to find out which insurance policy to buy, we use data and AI to create a fully rounded profile of that customer and their insurance needs and offer them tailored product recommendations. Our approach is focused on the customer journey and helping insurers engage with customers on the channels that they want to be engaged on in the most effective way.

Why is Hong Kong, perhaps Asia, a big market for you?

Since Hong Kong is an established insurance hub with several regional HQs for insurance companies, it is the right place to be. In the past three years, the online market for insurance has seen triple-digit growth in China. Innovators such as Zhong An and Ant Financial has helped pave the way for more B2B service providers in the industry. To further quantify the market potential, we have already received interest from insurers in Hong Kong and across Asia, which shows an existing demand for our company’s product offerings. On a personal note, I also attended Hong Kong University (HKU) for my undergraduate degree, so coming to Hong Kong feels like coming home!

What do you think of working with larger insurance corporations to make their processes more efficient?

We find that it differs a lot, nad we have been lucky to work with extremely nimble and innovative insurers such as Hiscox and QBE, among others. Once the corporations not only see the potential benefits but fully committed to embracing the technology, the efficiency can be achieved much quicker. But this approach is difficult and it requires a wider cultural change to embrace innovation.

With regulations like GDPR, cyber insurance is a very real and necessary fix. Your thoughts?

Yes, absolutely. Almost one-sixth of all small and medium-sized businesses suffered a cyber attack within the last year, which is the 80% spike compared to the year before. This put in perspective the scale of the risk and emphasises the importance of data protection online. Those businesses that adopt the right safeguards and procedures can leverage this as a strength and gain an advantage. We hope that our technology can be used to help protect more small businesses, and we are partnering with leading insurers to make it happen.

Tell us about your partnership with Hiscox and the potential to help smaller businesses insure themselves?

Hiscox themselves wrote a great blog post on this topic, which you can find here: https://www.hiscoxgroup.com/blog/hiscox/hiscox-partners-tech-start-digital-fineprint

In a nutshell, small and medium-sized businesses are some of the most vulnerable customers in the entire insurance market. According to one recent industry report, over 40 percent of SMEs surveyed said that if they are faced by an uninsured loss of £50,000, they would go out of business. So our partnership with Hiscox aims at addressing this underinsurance in the commercial lines. As part of the partnership, we developed a solution that provides small businesses that come to Hiscox with a more personalised service and policy recommendations based on the online profile of their business that matched with potential risks exposure. It is been a highly productive and resulting journey and we have learned so much from our partners at Hiscox.