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  • Chris Gledhill

HMS #FinTech

Lessons from history for UK Financial Services.


It was the morning of 21 October 1805. The day started out peaceful enough but there were the storm clouds gathering on the horizon, perhaps in anticipation of the world-changing events about to unfold. The Atlantic Ocean off the south-west coast of Spain can be a windswept and dangerous place. With the large ocean swells and the multitude of tides and currents, this was not a place for inexperienced mariners.


From Cadiz Harbour, in Spain sailed the French-Spanish fleet comprising of 33 ships armed with 2,568 guns and 30,000 men. Sailing down from the North was the British fleet comprising of 27 ships armed with 2,148 guns and 17,000 men. The British were outnumbered, outgunned and the stakes were huge. The French just needed control of the English Channel and thus enable Napoleon's Grande Armée to invade England. The last obstacle in the way was the British fleet.




The British fleet anchored about 21 miles (34 km) to the northwest of Cape Trafalgar, with the Franch-Spanish fleet between them and the Cape. At 6am Admiral Nelson, commander of the British fleet gave the order to prepare for battle. There were no radios at the time. Communication between ships was achieved through coded flags run up the mast of the 'flagship' vessel. Nelson flagship displayed the now famous flag message "England expects that every man will do his duty".



The prevailing tactical orthodoxy at the time was for basically each fleet to form a line parallel to the other fleet, turn broadside and slog it out with cannon-fire at range until one side withdrew. Nelson had other ideas - he needed a decisive victory. He ordered his fleet into two battle columns, one led by Nelson himself in HMS Victory and the other led by Vice Admiral Cuthbert Collingwood in HMS Sovereign. They sailed directly at the French-Spanish line with the wind behind them.



A battleship at the time was a sight to behold. Made of solid oak, six stories tall and under full sail with 100+ cannons they could reach speeds of up to 11 knots (20 km/h). HMS Sovereign had been fitted with a new innovative copper bottom which allowed for faster speeds yet. As such, Collingwood's ship was well ahead of the rest of the British battle columns when it sliced through the French-Spanish line firing cannons left and right and, like ducks in a row, crippling the enemy ships. What ensued was a bloody melee of cannon fire and close quarters combat.


At the end of the battle the British had taken 22 vessels of the Franco-Spanish fleet and lost none. It was a resounding victory that changed the power balance in Europe. Admiral Nelson was fatally wounded in the battle and took his place in British history - his statue can be seen to this day, placed atop of Nelson's column in Trafalgar square in the centre of London. Admiral Collingwood's story is far less known but not one without interest.


Fast forward to today and the UK finds itself at a cross-roads once more. It's not quite Napoleonic in threat but again the UK faces great challenges as it seeks to re-design its place in global trade and politics post-Brexit.



Planting Seeds of Change

These days the big tech companies can be considered the 'flagships' of the digital world sailing the oceans of cyberspace. Google, Apple, Facebook, Amazon, Alibaba, Tencent, Baidu & Bytedance. Their power and might is undoubtable. As the battlegrounds are drawn up for the future of Financial Services, particularly in London, these big tech companies have set sail to do battle for consumer mindshare, regulatory mandate and FinTech dominance. One might notice the absence of homegrown big UK tech companies in the list. It is not due to lack of incubators, accelerations, sandboxes and investments - the UK have those aplenty. Nor is it absence of talent or innovation. The UK is good at nurturing entrepreneurs and startups, what it perhaps is less good at is growing them from scratch.


Remember Admiral Collingwood? He lived in Northumberland and when he wasn't commanding battleships he liked nothing better than to go for long walks with his dog Bounce. He always took with him a handful of acorns in his pocket and would regularly stop and push an acorn into the ground with his boot. His purpose was to ensure there would always be plenty of grand English oak trees to be made into the ships of the future. Collingwood saw that one simple gesture would ensure the future prosperity of Britain.Some of Collingwood's oak trees are still alive today.



Times change and Oak warships are no longer a relevance but what is still needed in the UK is a Collingwood solution - the UK should be seeding digital acorns. As not every acorn grows into a mighty oak, every startup doesn't become a big company, but if you plant enough acorns some will grow to maturity. The UK should create startup 'seeds' (bundled startup packages containing modest seed investment, tech toolkit, cloud environment, mentor contacts, regulatory sandboxes, connectivity, marketing, manufacturing resource etc). These should be available to school leavers, students, retirees, people on career breaks or with spare time etc. With this the UK could grow a fleet of powerful tech flagships. The UK expects that anyone with an idea should do their 'duty' and make that idea a startup!


Innovation The Differentiator


The battle of trafalgar has been much analysed over the years, and personally I think it's long overdue the hollywood movie treatment (although I guess there's not much of a European market!). What fascinates is the story of how a British force which, on paper, looked much inferior, managed such a resounding victory. Part of the answer I believe is Innovation. The copper-bottomed boats was a relatively new innovation in a world used to entirely wooded vessels and was the pre-curser to the metal warships of today. The semaphore and flag signalling between the British fleet was used effectively to ensure Nelson and Collingwood were able to control the fleet. The strategy was also innovative - instead of standing and facing a foe - the British took the initiative and essentially 'charged' the enemy fleet. Finally, those 17000 British were not all sailors - 3000 of them were highly trained Royal Marines, skilled in ship to ship, hand to hand combat. Nelson knew is team - he knew their skill and he played to perfect hand.


Perhaps the biggest lesson here is playing to one's strengths. FinTech, as it was often described some 15 years ago, was very much a numbers game like the battle of Trafalgar. The big banks had 6-figured headcount, branch networks galore, millions of customers and bulging vaults. For the new fleet of challenger banks to take on the incumbents going face to face them was not an option. Instead the challenger FinTech players have needed to be nimble, utilise their differentiating innovations and outmanoeuvre and outgun the big players!




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