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FinTech: MBA Entrepreneurs Bring Disruptive Innovation To Financial Services

Throng of business schoolers bank on innovation in finance through disruptive tech

Wed Sep 16 2015

BusinessBecause
In the bowels of office blocks overlooking the redevelopment of London’s Kings Cross sits the architect of Nutmeg, a start-up with ambition to marry digital technologies with financial services.

The business of wealth management appears ripe for disruption by the innovations of Nutmeg, a five-year-old venture that co-founder and chief executive Nick Hungerford says will be a top-10 UK money manager by this time next year. His bright green jacket contrasts with the blue and black suits striding into the basement hall for Fintech Week 2015.

“For 300 years rich people have had two choices: give your money to someone else to manage; or do it yourself,” says Nick, his British accent bearing no hint of the two years he spent at California’s Stanford Graduate School of Business.

“Suddenly this wave of companies has come along and said there is a third way,” he says, combining the services offered by institutional wealth managers with a “DIY” approach online.

Rejected 50 times before securing investment, Nutmeg has raised nearly $40 million in funding from investors including Schroders, Europe’s second largest asset manager, and London VC firm Balderton Capital.

A banker turned entrepreneur who cut his teeth at Barclays Wealth, Nick hit upon the idea for Nutmeg while studying for an MBA in 2010, after being encouraged by Eric Schmidt, the former CEO of Google, who was teaching at Stanford.

Nutmeg offers an online, low-cost service, with professionals who invest money on clients’ behalf, but without the advice that would bring regulatory burden.  

Nick joins a throng of business schoolers who are bringing innovation to financial services through disruptive tech.

Tradable for example, a smart trading platform, is led by CEO and co-founder Jannick Malling, who launched the venture two years after graduating from Copenhagen Business School in 2012.

Jannick says there is a perception that to become a star performer, traders must work 24 hours a day: “If you want to be a rockstar trader it’s really no different than if you want to get into the NBA — you need to be the first guy in the gym and the last guy out.”

But Tradable’s collection of trading tools enable people to succeed without necessarily having to “quit your day job”, Jannick says.

Rising demand for online and mobile services have created the opportunity for these fintech start-ups.

The British Bankers’ Association forecasts that by 2020, consumers will use their mobiles to manage their current accounts 2.3 billion times — more than internet, branch and telephone banking put together.

“Being mobile-enabled is a must, not a maybe, and banks that don’t engage properly with mobile channels risk losing relevance in customer’s lives,” says David Ebstein, head of digital for financial services at EY, the consultancy.

“We have been very focused on our internal operations and technology,” says Nutmeg’s Nick.

For Nutmeg, that has meant overcoming technological barriers. Most of today’s financial IT systems are “horrendous”, Nick says. “Take payments for example: they’re built on 1980s mainframes.”

The service has been labelled as “democratizing finance” because it potentially opens up wealth management to the wider public because it is affordable. The minimum for investment is just £1,000. Fees are as little as 0.6% a year, compared with as much as 7.5% at some traditional wealth managers.

Start-ups such as Nutmeg and Wealth Horizon that have emerged over the past few years are luring customers from some of the UK’s biggest private banks.

Research from Accenture found that 83% of high-net-worth investors are already using digital technology for financial services.

“High-net-worth investors are very savvy about using digital channels and see digital as an essential part of the service they expect from a private bank,” says Alfredo Avila, managing director for Accenture Wealth and Asset Management in EMEA.

Jean François Mazaud, head of Société Générale’s private bank, said in a recent interview with BusinessBecause: “For private banks, the threat is thus to miss the boat and be outdistanced by competitors who would be more efficient at adapting their model to these new trends.”

The exposition of fintech, with investment in the fledgling sector tripling to $12.2 billion last year, has seen entrepreneurs bite at the fringes of banks’ business models.

TransferGo for example, is a pure-play digital remittance start-up for migrant workers who aren’t interested in transferring cash physically.

Daumantas Dvilinskas, co-founder and CEO, who studied business at Lancaster University, says €100 million has already been transferred by its 100,000 users. The remittance market is popular, with market leaders such as Transferwise already established, but Daumantas says: “Few people go for blue-collar workers.”

Another fintech business, Squirrel, partners with employers to enable employees to manage their financial affairs directly from their pay.

“We are looking to make a tangible impact on people’s lives,” says Mutaz Qubbaj, CEO and co-founder. He launched Squirrel in 2014, two years after graduating from the masters in finance at London Business School.

Styled as a “financial well-being platform”, the start-up was incubated in the Barclays Techstars Accelerator. Squirrel has raised £1.1 million in three funding rounds from six investors, and has 17 trial employers signed up as clients, says Mutaz.

For all the innovation in financial services, fintech is still a nascent movement. A big challenge for Nutmeg has been convincing people in wealth management — a centuries old sector — that money can be managed online, according to chief executive Nick.

“Our biggest marketing challenge is not defining a brand; it’s literally defining this category,” he says, before adding: “I don’t know whether that’s going to take five years or ten years or 100 years to develop and evolve, and for people to understand that there is a new way of investing.” 

Student Reviews

Copenhagen Business School (CBS)

Student

Verified

29/09/2019

CBS: efficient international network

CBS has always been ranked among the best universities in Europe and this means that it has become a sign of professionalism and success. The academic level is great thanks to the good teachers and the atmosphere is proactive and challenging. Lots of events are planned every week and this helps you to find your own way. CBS is not only a business school, it is a great and efficient international network.

Stella

Verified

24/04/2019

Good academic career

I did my Bachelors at CBS and their academic excellence and career opportunities led me to pursue my Masters in Accounting, Strategy and Control. I was very lucky to go on an exchange in Singapore for one semester it boosted me to get a career in a global firm. I like that it is super modern and has all the facilities for the business student in 2019. Especially, I liked the library and Bitlab where I spent most of my time studying. However, note that it is very demanding and studying here is no joke. Everything is very competitive and you are among the most excellent business students in the country. The interaction with international students helped me to see different perspectives in business and culturally and I was lucky to make friends from any part of the world. CBS is like a brand in Denmark. Every serious business company prioritizes us over any other Danish university and also it is free for European citizens. Overall, I have a very satisfying experience at CBS and I'm looking to continue my academical career even further.

Student

Verified

13/04/2019

CBS is one of the best!

All I have to say regarding my experience at CBS is that it is AMAZING. Having been tutored by world-class academic staff, I can definitely support that I am receiving the best of quality regarding my studies in Digital Marketing. Staff is very friendly and easy to approach. In addition, the facilities we enjoy are top class and meet any demands. Keep in mind that, EU citizens do not pay any fees. Student life might be non-existent here, but the location of the University in The very center of Copenhagen has a huge variety of choices to offer to students regarding their entertainment. Accommodation might be a problem, but early research of the market can be very useful. In addition, the University promotes diversity. In CBS University you can meet people from the whole world which is quite interesting. I definitely suggest CBS for any student who he's interested in pursuing a career in marketing or business.

Stefani

Verified

12/04/2019

The ideal business school

I have been enrolled in this university for 2 semesters. What I took from this experience is that there is nothing better out there for those looking for professional growth while being guided by some of the top-notch professors in Scandinavia. They have a really strong focus in technology and digital transformation and they are up to date to guarantee you land a job in the modern fast-evolving world. They also embrace diversity which means many students come from any part of the world and it takes the entire learning experience to another level. You simply learn from every other student cause everyone has different experiences and background which makes you open your mind and see the world from a different angle. In Denmark, even businesses prioritize people who graduate from CBS as it's commonly perceived as the most prestigious university for business graduates.

José Pedro

Verified

22/09/2019

A Place of Personal Growth

In CBS you can expect an environment of proactive thinking and growth. The university staff is always open to help and to debate. The teaching methods balance theoretical knowledge and practical skills enabling the student with capacity and confidence to enter the job market successfully. The existence of students from all over the world stimulates discussion and promotion of different cultures, ideas and perspectives. I highly recommend this university for students in business-related areas.

Cathy

Verified

5/02/2019

Environment

The environment here is really great. Despite the well organized buildings and libraries, there are also places for students to just stay and relax also even study in the corners of each campus. The professors are mostly really nice and try to interact with students a lot. So, to sum up, the environment is really nice for studying here.

Philip

Verified

15/04/2018

Quality education

Quality education where it emphazises the importance of academic. No finger to put on this aspect of the school. However, sometimes the administration and IT can be lacking a bit, but in general a really good choice for education!

Student

Verified

27/09/2017

Best Time!

Classes are challenging and conducted in a professional manner. CBS offers a wide range of possibilities to develop outside of the classes! Libraries and other facilities on the campus are very well adjusted to the student needs.

Student

Verified

22/09/2017

A heavily theory-based curriculum combined with an ever-stimulating environment

I am currently a Master student at CBS, but I have also completed a Bachelor's Degree in this university. I am quite satisfied with my studies and the teaching level. However, when compared to other business schools, it becomes apparent that most courses at CBS strive to find a good balance between theoretical insight and real-life examples. Compared to my exchange university, the projects that I have found myself writing at CBS have a far less practical application and also leave little room for creativity. If the teaching is heavily theoretical, on the bright side, the university arranges a number of events throughout the year to encourage students to apply their knowledge, in the form of career fairs, case competitions, and other events organized by student associations. In my experience, teachers are very easily approachable and happy to answer your questions. A foreign student like me will find a more international environment at Master level, since the number of international (or at least non-Scandinavian) students enrolled in the Bachelor programs is quite low. However, all communication (both oral and written) from teachers and the university offices is always in English. Administrative offices, student guidance services, the career center, and the international office are definitely worth a mention. All of the requests that I have had throughout the years have always been met with kindness, promptness and efficiency.

Student

Verified

29/09/2019

CBS: efficient international network

CBS has always been ranked among the best universities in Europe and this means that it has become a sign of professionalism and success. The academic level is great thanks to the good teachers and the atmosphere is proactive and challenging. Lots of events are planned every week and this helps you to find your own way. CBS is not only a business school, it is a great and efficient international network.

Stella

Verified

24/04/2019

Good academic career

I did my Bachelors at CBS and their academic excellence and career opportunities led me to pursue my Masters in Accounting, Strategy and Control. I was very lucky to go on an exchange in Singapore for one semester it boosted me to get a career in a global firm. I like that it is super modern and has all the facilities for the business student in 2019. Especially, I liked the library and Bitlab where I spent most of my time studying. However, note that it is very demanding and studying here is no joke. Everything is very competitive and you are among the most excellent business students in the country. The interaction with international students helped me to see different perspectives in business and culturally and I was lucky to make friends from any part of the world. CBS is like a brand in Denmark. Every serious business company prioritizes us over any other Danish university and also it is free for European citizens. Overall, I have a very satisfying experience at CBS and I'm looking to continue my academical career even further.

Student

Verified

13/04/2019

CBS is one of the best!

All I have to say regarding my experience at CBS is that it is AMAZING. Having been tutored by world-class academic staff, I can definitely support that I am receiving the best of quality regarding my studies in Digital Marketing. Staff is very friendly and easy to approach. In addition, the facilities we enjoy are top class and meet any demands. Keep in mind that, EU citizens do not pay any fees. Student life might be non-existent here, but the location of the University in The very center of Copenhagen has a huge variety of choices to offer to students regarding their entertainment. Accommodation might be a problem, but early research of the market can be very useful. In addition, the University promotes diversity. In CBS University you can meet people from the whole world which is quite interesting. I definitely suggest CBS for any student who he's interested in pursuing a career in marketing or business.

Stefani

Verified

12/04/2019

The ideal business school

I have been enrolled in this university for 2 semesters. What I took from this experience is that there is nothing better out there for those looking for professional growth while being guided by some of the top-notch professors in Scandinavia. They have a really strong focus in technology and digital transformation and they are up to date to guarantee you land a job in the modern fast-evolving world. They also embrace diversity which means many students come from any part of the world and it takes the entire learning experience to another level. You simply learn from every other student cause everyone has different experiences and background which makes you open your mind and see the world from a different angle. In Denmark, even businesses prioritize people who graduate from CBS as it's commonly perceived as the most prestigious university for business graduates.

José Pedro

Verified

22/09/2019

A Place of Personal Growth

In CBS you can expect an environment of proactive thinking and growth. The university staff is always open to help and to debate. The teaching methods balance theoretical knowledge and practical skills enabling the student with capacity and confidence to enter the job market successfully. The existence of students from all over the world stimulates discussion and promotion of different cultures, ideas and perspectives. I highly recommend this university for students in business-related areas.

Cathy

Verified

5/02/2019

Environment

The environment here is really great. Despite the well organized buildings and libraries, there are also places for students to just stay and relax also even study in the corners of each campus. The professors are mostly really nice and try to interact with students a lot. So, to sum up, the environment is really nice for studying here.

Philip

Verified

15/04/2018

Quality education

Quality education where it emphazises the importance of academic. No finger to put on this aspect of the school. However, sometimes the administration and IT can be lacking a bit, but in general a really good choice for education!

Student

Verified

27/09/2017

Best Time!

Classes are challenging and conducted in a professional manner. CBS offers a wide range of possibilities to develop outside of the classes! Libraries and other facilities on the campus are very well adjusted to the student needs.

Student

Verified

22/09/2017

A heavily theory-based curriculum combined with an ever-stimulating environment

I am currently a Master student at CBS, but I have also completed a Bachelor's Degree in this university. I am quite satisfied with my studies and the teaching level. However, when compared to other business schools, it becomes apparent that most courses at CBS strive to find a good balance between theoretical insight and real-life examples. Compared to my exchange university, the projects that I have found myself writing at CBS have a far less practical application and also leave little room for creativity. If the teaching is heavily theoretical, on the bright side, the university arranges a number of events throughout the year to encourage students to apply their knowledge, in the form of career fairs, case competitions, and other events organized by student associations. In my experience, teachers are very easily approachable and happy to answer your questions. A foreign student like me will find a more international environment at Master level, since the number of international (or at least non-Scandinavian) students enrolled in the Bachelor programs is quite low. However, all communication (both oral and written) from teachers and the university offices is always in English. Administrative offices, student guidance services, the career center, and the international office are definitely worth a mention. All of the requests that I have had throughout the years have always been met with kindness, promptness and efficiency.

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