Newspaper article International Herald Tribune

Technology Takes on Global Finance ; London Start-Up Firms Tap into Growing Mistrust of Banks after the Crisis

Newspaper article International Herald Tribune

Technology Takes on Global Finance ; London Start-Up Firms Tap into Growing Mistrust of Banks after the Crisis

Article excerpt

As London has developed a vibrant tech community, many of the city's start-ups are trying to take on some of the world's largest financial institutions.

A vibrant tech community is in full swing in the British capital, with social gaming apps and e-fashion start-ups vying to attract venture capital investment.

Yet in a nod to the city's position as a center for global finance, London also has become synonymous for fledgling companies that are trying to use technology to take on some of the world's largest financial institutions.

In and around the city's financial district, small companies are trying to tap into the growing apathy toward banks and other financial companies, which have struggled to regain customers' trust since the financial crisis.

The founders of these start-ups often are former finance types looking to step off the corporate treadmill, while others want to use technology to alter how people interact with financial services.

"There's been a massive dislocation in the financial sector," said Harry Nelis, a London-based partner in the venture capital firm Accel Partners, which has backed a number of local start-ups in the sector. "Banks just can't provide the services that the start-ups are now offering."

One company looking to take advantage is TransferWise, an online foreign exchange start-up that uses peer-to-peer technology so people across the world can swap currencies without incurring large bank transfer fees.

Started in 2010 by Taavet Hinrikus, an Estonian who was Skype's first employee, and Kristo Kaarmann, a former management consultant, the company was born after the two men grew frustrated by losing up to 5 percent of their money to bank charges when they moved cash between countries.

After waiting almost 18 months for regulatory approval from the British authorities, TransferWise helped people to exchange around $10 million of foreign currencies in its first 12 months of operations. The company charges a flat fee that is no more than 0. …

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