Monday, 24 April 2017 - About The Fintech Times | Rss

The Internet of Money

There’s been a lot of hype about IOT (Internet of Things) but the real action is happening somewhere else. IOM. The Internet of MONEY. I’m talking with Gary Turner, the driver behind Xero’s UK growth since 2009, and it’s insightful.

It takes a particular mindset to target the small business sector.


It’s both massive, with small businesses contributing over £700 billion per year to the UK GDP, but also very granular, comprising of over 5 million individual companies, most of them micro. It’s a churning sector, with 40-50 thousand new UK businesses forming each month and a percentage of those closing as quickly as they’re formed. As a customer base there are no barriers to entry in terms of regulation, compliance, or permission seeking. It’s very easy to nibble at the edges, and extremely difficult to take and hold a big slice.

To engage the sector on an industrial scale requires a number of criteria to be met. The product and service must be ubiquitously required and nothing short of excellent in terms of design, functionality, and price. If you want to take the SMB sector, whatever you’ve got needs to be good enough to sell itself from user experience and recommends. And it needs to scale to millions of users and horizontally evolve with them.

Talking with the MD of Xero, I briefly see it as he sees it. As a collective sector, an industry.
Which leads to the financial web, a subset of fintech, the connecting of millions of companies financially across a single platform. Which, when it is achieved, will bring financial tech opportunities and solutions to millions of SMBs, and in doing so revolutionise business as everyone currently understands it. The financial web will do to money what the internet did to communication.

Xero isn’t just accounting software, Xero is a platform. In five years from now it might also be an automated lending facility, a seamless tax return service, a peer to peer loan facilitator, a crowd funder, a B2B invoice discounter, and a peerless source of insight into the UK’s trading economy. All of these and more, either directly, or through API enabled third parties, like MarketInvoice or TransferWise.

Already Xero integrates with 400+ business applications, so that small businesses can easily sync and streamline their data. Last year alone, $300 Billion in invoices were sent across its platform. They’re fast approaching 100,000 small business customers in the UK, and have recently bypassed 500,000 customers globally, experiencing 80% year on year growth.

Scale that up for five more years and the effect a mega fintech like Xero could have on the UK (and Global) economy is statistically significant. Increasing efficiencies across the SMB sector by a few % is enough to influence the entire GDP in a way that nothing else can.

The SMB sector might not have the profile of the big B2C names, nor the same attention of the media or government. But as a financially connected bulk sector, it is 99% of all UK businesses, nearly two thirds of all employment, and a half of the UK GDP. If it were a single company, it would be the place where a 1% change changed everything. Imagine 5 million small businesses financially connected across a single platform, invoicing and paying each other, lending to each other, it has the possibility to remove banks entirely from the process, or completely redefine what it is a bank is and does.

The financial web. The internet of money. It’s the biggest picture I’ve seen today.

Gary Turner
MD Xero

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