As the penny finally drops with investors that banks aren’t quite the one-way-bet they thought they were when borrowing rates started to rise, interest is growing in non-bank financial stocks.

Fortunately, the UK market is blessed with a number of established, well-run, well-capitalised and profitable fintech firms like foreign exchange and banking services provider Alpha (ALPH:AIM).

It has two businesses, risk management and alternative banking solutions, with two completely different customer bases.

In risk management, Alpha provides strategies and technology to corporate and institutional customers who need to buy and sell currency for commercial purposes, such as buying or selling goods or services overseas, or from the underlying value of an asset or liability.

These customers are regularly affected by swings in exchange rates, which can create material risk but can also provide opportunities for profit if managed properly.

In 2022, Alpha’s risk management revenues increased 22% to almost £70 million, but the firm estimates the global opportunity could be as much as $170 billion meaning it is barely scratching the surface.

The alternative banking solutions business serves alternative investment managers and the corporate service providers and fund administrators who support them and is much more complex.

Investment managers typically need local accounts in key investment jurisdictions for their private equity, private debt, venture capital, infrastructure and real estate funds, for example.

In addition, the firm is seeing growing interest from the fund administrators and service administrators who look after these assets and need Alpha to open and manage accounts, send payments and deal in foreign currencies, with accounts ranging from 2,000 to 30,000 entities, each of which needs its own local account.

In 2022, revenues from this business grew 41% to £28.8 million but again the firm has an absolutely enormous opportunity in front of it.

Alpha isn’t waiting for business to come to it – it has brought forward investment plans to accelerate growth from this year.

Trading since the start of this year has been positive with the added bonus of accrued interest on client balances thanks to higher interest rates compared to last year.

The firm’s operations have been unaffected by the banking turmoil as Alpha safeguards 100% of its clients’ cash in segregated accounts with four global counterparties – Barclays (BARC), Citigroup (C:NYSE), Goldman Sachs (GS:NYSE) and Lloyds (LLOY).

And while no-one is celebrating Silicon Valley Bank’s misfortune, Alpha could stand to benefit if clients of the former look for a new provider.

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