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From powering the staggering growth of e-commerce to smart trade finance contracts on the blockchain, in the last decade fintech has changed forever the way we think about financial services and what we expect from them.
The UK, a world leader in financial services and banking, is at the forefront of the integration of digital technology and financial services and the fintech sector is worth at least £6.6bn in turnover, and employs more than 61,000 people.
London is the natural centre of this activity with roughly three quarters of the fintech companies based there according to various databases (Beauhurst, Pitchbook). But despite being the largest cluster, London definitely does not hold the monopoly when it comes to creating exciting fintech companies. Ecosystems have matured throughout the UK and a new fintech unicorn could now start from practically anywhere.
Thanks to technology, financial services need no longer be constrained to the square mile of the City or East London and the increasing presence of fintech startups outside the capital is evidence of this.
According to TheCityUK, an industry-led body which represents financial services, two-thirds of the jobs the sector provides are already based outside of London, with 30,000 people employed in Birmingham, Bristol, Edinburgh, Glasgow, Leeds and Manchester alone to significant numbers employed in Belfast, Cardiff, Liverpool and Sheffield.
This means there is a natural base of talent for fintech companies that choose to start outside London to draw on. All the evidence suggests that many of them are doing just that.
Worldpay, the payments group, employs 70,000 people in Greater Manchester while rival Adyen, which recently floated, is also based in Spinningfields, in the city. Edinburgh has Money Dashboard, a personal finance app and Nucleus Financial, an investment platform serving 90,000 customers while Crowdcube is based in Exeter and Wealthify, in which the insurer Aviva has taken a stake, is based in Cardiff. Atom Bank, which has raised £149m from investors, is headquartered in Durham, where it employs 300 people.
Increasingly, fintechs are looking for places that offer a deep pool of talent at lower costs than London in order to increase their runway. “North-shoring” – London firms moving operations to Northern cities is a reality. Companies that cast their net outside London and the South East have found that they are able to offer a higher quality of life and lower cost of living to recruits. On top of this, their employee attrition rate is lower.
Fintech is a key tech battleground, globally, but the UK has an advantage: an incredible pool of outstanding entrepreneurs who have already built companies worth billions cumulatively and are now ready to pass on this knowledge.
In order to carry on growing and to stay ahead in fintech we must do three things. Firstly, we must break down the regional silos and unlock the potential that increased collaboration across the whole of the UK holds by becoming one fintech nation. Secondly, we must facilitate the transfer of knowledge from one generation of entrepreneurs to the next. Lastly, we must encourage innovation in areas where digital transformation has only just begun: private wealth management, insurance, tokenisation of assets and capital markets technology are great examples where fintech has huge potential.
One of the ways that Tech Nation will contribute to this is through the Fintech programme launched with the Treasury’s backing earlier this month. There’s no time to lose. Applications for Tech Nation’s fintech programme are now open until 27 July.
We want to see startups from across the country apply to the programme, the first of its kind in the world. Fintech is disrupting financial services and banking at scale, creating huge benefits for consumers as well as bringing new jobs and increasing productivity in areas that have sometimes felt left behind by the march of progress.
When it comes to fintech, no region need be left behind.