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  1. Analysis
July 20, 2022

CTO Talk: Q&A with Malcolm Leach of Funding Options

Has Brexit hurt UK fintech? Funding Options' CTO weighs in

By Eric Johansson

Malcolm Leach is the CTO of Funding Options, the fintech startup. The venture launched in 2011. The company has raised $17. 8m in investments since then, according to Crunchbase. The venture has also expanded from its native UK. It now also operates in the Netherlands.

Leach joined as CTO of Funding Options in April 2022. He has previously held roles at Universal Music Group, Cap Gemini, Swiss Life AG, Virgin Media and iCrossing. He joined Funding Options after three years at cash deposit fintech Flagstone.

While the CTO is reasonably new in the industry, he believes Brexit hasn’t hurt the UK’s fintech industry yet. As an example, he points towards Funding Options’ own recent European expansion.

However, not everyone paints an equally rosy picture of the economy. The think-tank Centre for European Reform recently estimated that Brexit had cost the UK £31bn in GDP losses by the fourth quarter of 2021.

The UK tech sector worth passed the $1tn mark in March 2022, according to data by Dealroom analysed for the UK’s Digital Economy Council. Digital minister Chris Philp leaped upon the opportunity to celebrate the industry’s achievements. However, market stakeholders we spoke with at the time believed Blighty would’ve passed that milestone much earlier if it hadn’t been for Brexit.

The markets have been merciless for fintechs this year. A barrage of bad news has pummelled the sector. Headlines about investment cooldownsmass layoffs and plummeting stock valuations have beaten fintech entrepreneurs in the face for months.

Fintechs also have reason to be worried when it comes to funding. Fintech funding dipped slightly at the start of the year. In 2019, VCs injected over $32.1bn into the fintech industry across 1,821 deals, according to data from research firm GlobalData. That figure surged over the next two years. Fintech ventures raised over $84.5bn across 2,356 deals in 2021. The industry has raised $23.9bn across 750 deals in 2022 so far.

In this latest instalment of our series of CTO Talks we also discuss what people get wrong about SME funding and if artificial intelligence (AI) is finally realising its potential.

Eric Johansson: Tell us a bit about yourself – how did you end up in your current role?

Malcolm Leach: It's fair to say that working within fintech is still a relatively new thing for me. Prior to joining Funding Options, I spent three years at Flagstone, a leading fintech in the cash deposit space. During my time there technology revolutionised from being a blocker to an enabler of growth, due the hard work from across the business to focus on scale. We didn’t only change the tech but also the way the company was structured, from departmental to mission teams. Our first major win for our new platform was a cash deposit partnership with Revolut followed by many other partnerships.

It felt like the right time to move on, and when this role at Funding Options came along it ticked all the boxes. Having both founded a business before and experienced a number of corporate working environments, I know the size of a company I like to work in – not so small that you wear 50 different hats, but not so big that your impact is limited. I loved [the CEO] Simon Cureton’s vision for the company and where he wanted to take the business, so it was pretty much a done deal following that conversation.

Funding Options is one of the earliest players in the UK's fintech boom. As such, how do you think Brexit has affected the industry?

Having only been in fintech since 2018, I don’t have as much of a comprehensive view of the market prior to that. At Flagstone, I don’t think Brexit affected things at all as it was a mostly UK-based business in the same way as Funding Options is. If we were pan-European then there would have been a much more significant shift.

Funding Options obviously has expanded to the Netherlands but there weren’t huge impacts on us. I feel that’s one of the major advantages with fintech, Brexit hasn’t affected us as a sector or limited our potential for expansion in the same way it has with others.

What is the biggest challenge you will face in your new role?

The biggest challenge for CTOs is always landing big fish on light tackle. We’re generally not short of ideas but we do have a commercial business to run, so we have to make choices. You need to work out where to place your bets to ensure the important aspects of the platform are built to improve the position of the business.

Beyond this, the ongoing challenge for every manager is motivating your team and helping them to work cohesively. This is a challenge for everyone, regardless of sector, and it consumes a considerable amount of time. There is no organisational design or cookie cutter solution when you are trying to get the best out of a team of individuals. Individually, people aren’t a ‘challenge’ but keeping them aligned, motivated and engaged as a team is.

What one piece of advice would you offer to other CTOs?

Focus on people more than tech. Earlier in my career, when I was coding and writing systems, I was very much focused on architecture and functional design, but there is so much more to it than that. The real foundation for tech succeeding is to actively design the context in which people work, through systems thinking, to maximise their chances of success.

What’s the most surprising thing about your job?

To be honest, the most surprising thing about my job is how much I love it already. Despite only being six weeks in, I feel at home here and there is a great culture with a lot of energy. Usually, I feel like it takes a few months to really settle into a new company so that’s been a pleasant surprise.

What's the biggest misconception people have about SME funding?

There are different perspectives on it, whether you are a person in the industry looking in or running an SME yourself, but the reality is that it isn’t easy for SMEs to get access to the most appropriate funding for their business. For the most part, the big banks aren’t terribly interested in SME funding so businesses have to find the right financing option themselves which is a tricky proposition in a market with plenty of lenders and diverse lending criteria. Some never find funding due to this complexity and consequently struggle unnecessarily.

This is the pain point we are addressing as a business, but there is still a long way to go. Although Funding Options connects SMEs with the appropriate lenders for their needs, there is, even more, we can do to enable these lenders to make better data-driven decisions and improve their products. In turn, we can also prevent promising SMEs from going unfunded.

Where did your interest in tech come from?

I come from a family of engineers, both my dad and grandad were engineers. I chose software engineering when I saw a ZX81 in the window of WHSmith in 1982 when I was only 13. Immediately I was hooked and I remember thinking that I had to have one of those boxes. I’d often come straight home from school to type-in programs. There is just so much to learn with tech and I’ve always liked all aspects of it, from operations to machine learning.

What’s the strangest thing you’ve ever done for fun?

Swimming in a semi-active volcano when I visited Iceland. We trudged through the snow to get to it but, when we reached the crater, the water was steaming and boiling in certain parts. It was fun but very odd, especially as we did it in July so even at midnight, it was still light!

What's the most important thing happening in your field at the moment?

In terms of tech, AI is one of the last great frontiers, and everyone has been talking about it over the last few years having had a comeback from the disappointing progress of the 70’s and 80’s. Although it seems like buzzword bingo now, in that most companies have to mention it whenever they talk about their products, it really does have the power to transform everything.

It’s been used very practically for mundane things such as optimising data centre power consumption and voice recognition, but also in healthcare for, amongst others, spotting pre-cancerous growths on scans that beats experts with decades of experience. Another is quantum computing which will completely rewrite the rules on whole classes of problems. For example, the cryptographic techniques we use to secure everything will be nullified which means we have to develop new ones that are “quantum resistant”.

In another life you’d be?

A psychologist – my other passion. The human brain is the most complex thing in the known universe and I find that even more fascinating than tech. It's interesting to think about why we do the things we do because even though we think we are perfectly logical beings, we often don’t make rational decisions. Cognitive biases are particularly interesting to me because, even knowing them isn’t a route to overcoming them.

GlobalData is the parent company of Retail Banker International and its sister publications.

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