Accelerating Fintech with No-Code

Accelerating Fintech with No-Code

Simon Jenner

Thursday, 15 April 2021

Yes you can build a fintech with no-code. Yes it will be secure and scalable. Plus, the outcome for the founders is faster growth and less equity erosion.

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Earlier this year I was appointed as co-chair of Fintech for the ProfTech super-cluster based in the central region of the UK. It has provided me with a way to ‘keep my hand in’ the innovation agenda within financial services. It’s the sector that formed the backbone of my career. 
I cut my teeth in the dot-com boom at Egg Bank, went on to be head of innovation at Barclays, built and sold a successful business lender and ran a substantial ‘Challenger’ programme for the Russian investment bank VTB. However, in 2018 I left banking behind and now I’m all about the no-code. It’s no surprise then that founders seeking to build a fintech with no-code tend to find their way to my door at Million Labs. The first question they ask is usually, “Can you build a fintech with no-code?” 
The challenge in answering that question is that both ‘Fintech’ and ‘No-Code’ are nebulous and oft debated terms. So, here’s the definitions I’m going to use: 
No-Code No-code tools allow users to build an application , or automate a process, by configuring settings rather than writing code. This allows anyone, whatever their technical skill level, to build and launch a digital product or service.
FintechThe use of software and other modern technologies to provide automated and improved financial services to businesses and consumers.
The Power of No-Code
Since January 2020 Million Labs has helped founders to launch over 500 startups using no-code tools. The generally accepted ‘fact’ that no-code is ten times faster (and therefore cheaper) than ‘code’ is born out in the numbers. If you want to launch a business no-code provides the best way to reduce the requirement for pre-seed investment, increasing the founder’s runway and improving their ability to iterate and meet customers needs. The transformational benefit for startups (and innovative businesses) is becoming well understood. 
However, the most common concerns relating to no-code have delayed uptake in sectors with more stringent regulatory environments. These concerns relate to: 
1. The security of no-code tools;2. The residency of data;3. The scalability of no-code platforms; and4. The ability to ‘access the code’ that powers a no-code application. Adopting New Technologies
My banking career actually began at Capital One. I remember having a meeting with a senior project manager there who told me that the internet would never be used for delivering financial services because it was ‘inherently insecure’. Six weeks later I joined the team that launched Egg Card, the first banking product in the UK where customers could both apply for, and service an account using the internet. Every new technology that has come along since (mobile, cloud, blockchain etc) has faced the same concerns voiced by my Capital One colleague and, as we have seen, those concerns have been unfounded. 
So it is with no-code. No-code platforms allow users to create software with a visual editor. The software that is implemented sits on the same servers, using the same security solutions, as any other coded application. No-code applications are, therefore, no more or less secure than a traditionally coded application. However, it is important for users of no-code tools to ensure that they understand how their application, and the data it captures, is secured. 
The speed of implementation that no-code allows tends to create a culture that expects all aspects of delivery to be equally as fast. This simply isn’t the case. A founder cannot abrogate their responsibility for delivering risk controls to their software provider. They need to ensure that they understand how data is secured both at rest and in transit and how other cyber security threats, from DDOS attacks to social engineering, can be mitigated. 
Where we are required to ‘beef up’ the level of risk control available within a no-code platform, either to mitigate a risk satisfactorily or to meet the standards of security required by regulation, we often use third party service or even a coded solutions in concert with our no-code tools. This doesn’t mean that the benefit of using no-code is lost. Any mature business will use multiple integrated systems to deliver its services.
It also means that we are aware that no-code is not a panacea. 
Of course the security of information and the protection of customers from cyber threat are a small part of the regulatory requirements a fintech needs to meet. Conduct and prudential practice make up the body of the rule book and these are matters for operational design and governance, going beyond simple systems implementation. 
The Ownership of Intellectual Property
It is quite common for our fintech cousins in the US to worry about the ‘ownership of code’. Specifically, intellectual property laws in the US, more so than in Europe, allow code to be protected and, therefore, a common question put forward by investors looking to back a project might be ‘Do you own your own code?’.  
No-code platforms deliver software through configuration rather than code and so intellectual property must be defined through business processes and practices. The code itself is somewhat abstracted from its creator. Often fintech founders ask if this will impact their ability to raise investment.
The answer is no. The toughest mountain a startup in any industry must climb is proving its value proposition. In code the first iteration of a product or service is an, on average, $250,000 delivery. The chances it’s a good fit for users (and therefore an immediate success) is one in ten. The second iteration is likely to cost a further $25k - $50k. It’s a very, very lucky fintech founder that gets to iteration three.
In no-code the first iteration of a fintech is likely to cost $25k or less with later iterations costing hundreds of dollars. This creates an enormous runway to prove a proposition with software no less robust than coded solutions.
Not only is a proven value proposition clearly a more valuable investment opportunity than an unproven stack of code (no matter how well the IP is protected) it also means that the requirement for investment (and therefore erosion of equity) is far, far lower.
The Road to Success
So often no-code is treated as a prototyping tool. This isn’t a bad idea. It’s way better to have innovators create a working prototype than a high fidelity wireframe. The outcomes from research are far more indicative of the final results of a launch.
However, like puppies at Christmas, no-code is for life. We are already seeing no-code fintechs like Dividend, Qoins and BCB Group pushing nine figure revenues which means that a no-code unicorn can’t be far away. 
In less than five years we have seen no-code move from being a backwater of the software industry to the mainstay of rapid development. In 2021 Garter stated that by 2025 around 65% of applications would be created with no-code.
This might seem mad but the maths is based on changing rules: that’s not 65% of the current stock of applications. Applications will proliferate because making them has just become far easier with no-code. We expect to see a much larger cohort of smaller digital businesses emerging. 
Stealthy Stealthy MLabs
My friends and family think I gave up banking to run and agency and teach people to use software. I’m pretty certain they think I’m mad. Certainly startups don’t pay half as well as Russian Investment banks. But Million Labs is not an agency. It’s not an education company either. It’s a fintech. 
As the stock of traditional small to medium sized entities (SME) in the UK collapses the opportunities to lend to them reduces. In the challenger banking community so many startups are chasing this diminishing asset stock that even relatively established players are becoming lenders of last resort. Subprime lenders. You remember them? Think back to 2007. Banking strategy needs to move on. 
The birth of no-code enabled the creation of the digital SME. If a business only requires a few thousand dollars to build its tech, it doesn’t have to be a world dominating entity to justify its business case. It can service a niche, a local market or simply grow to a size that suits its founders. So we are suddenly seeing a boom in digital SME. This is the Uk , and the world’s, new growth market and it’s that market that we are targeting. 
Since January 2020 we have helped to launch 500 digital SME business. We provide both debt and equity funding. We are the only entity in the world to do so and certainly the only entity with a relevant data set in this market. The 500 startups we have helped are part of a much larger cohort of startups that approached us, but we didn’t have the capacity or the products to service. We know no-code works for fintechs because we are a no-code fintech and, so far, things are going well for us. 
Advice to Fintech
My advice to the fintech market is the same as my advice to any startup. Don’t spend months, possibly years, dragging a powerpoint presentation and a high fidelity wireframe around investors offices. Start to build your business with no-code. Create a landing page and capture early interest. Build out tools and services that talk to your proposition but are either unregulated or have low regulatory thresholds. Start to garner real customers and real feedback. Ratchet up through regulations one step at a time. If you don’t believe it’s possible for your business stop and take a look at Monzo’s journey to becoming a Bank. They followed this same path: landing page, PFM tools, pre-paid cards and then trading under restricted permissions from the Bank of England before finally gaining the full deposit taking Banking license they have today. 

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