Don’t team up with banks just yet, RateSetter’s chief exec warns
FINTECH firms should refrain from collaborating with banks, RateSetter’s chief executive said on Monday, as they would lose more than they would gain from partnering up with the sector they had originally set out to disrupt.
Rhydian Lewis (pictured) said that the peer-to-peer lender had a few “exploratory conversations” with high-street banks, but did not think a tie-up would add enough value for RateSetter.
“There is an emerging consensus that collaboration between fintech firms and banks is the next phase, but it can be a valid business choice not to go down that route,” he said at the Innovate Finance Global Summit in London.
“In fact, every hour spent going down the business-to-business route is an hour lost to the end consumer.”
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He added: “Ultimately, we are competing, so let’s not start relying on [collaboration] as a route to market. You need to have your own route to market and be able to say – that’s what we’re brilliant at.”
However, Goncalo de Vasconcelos, chief executive and co-founder of online equity investment platform Syndicate Room, argued that fintech’s initial goal to compete head on with traditional lenders may need to be revisited to allow both parts of the equation to thrive.
“Reality hits and you realise you can’t kill the banks, but if you can collaborate with them, it actually starts going much better,” de Vasconcelos said.
On the topic of regulation, Lewis said he thought that P2P platforms should be treated more like asset managers.
“They’re not our assets or our liabilities…the asset management industry has a sensible framework of regulations around it,” he said.
Regulating P2P has been a headache for the Financial Conduct Authority (FCA), which has been grappling with how to oversee the variety of business models in the sector. In its interim feedback from its crowdfunding review, it raised concerns about “regulatory arbitrage” whereby some firms’ business models may not fit in to its definition of P2P.
Legal experts have speculated that this is why some of the larger platforms are yet to receive authorisation from the City watchdog.
Lewis said that the delay was because it is more complicated to regulate businesses “in-flight”, rather than from the start, referring to the fact that the FCA only took over regulating the sector in 2014.
“We’re expecting [authorisation] to clear quite soon, which is exciting,” he said.