Fintech Week 2016 ranked the UK first amongst the world’s leading Fintech hubs. Last year, professional services firm EY listed the UK as the most fintech-friendly country, with the industry employing over 61,000 people and generating £6.6bn in revenues. For investors, the country provides a fertile ground for fintech entrepreneurs and start-ups. The UK fintech investment growth is driven by the availability of business capital, supportive regulations, tech talent, and position of London as a global trading base.
Availability of Capital
The availability of funds in the UK is good for fintech start-ups. According to a study by Let’s Talk Payments over $5.5 billion of investments were made in the financial technology sector from July 2015 to January 2016. The UK leading fintech investors include Index Ventures, Seedcamp, Balderton Capital, The London Co-Investment Fund, Northzone, Octopus Ventures, Accel, and 83North, Draper Esprit, Anthemis Group, Passion Capital, Notion Capital and General Atlantic.
The fintech industry is served by many angel investors who have the required experience and skills to understand fintech business. Also, private equity investors are many, with more than 130 funds registered.
The UK has the best fintech policy environment in the world, with a very supportive regulatory regime. The Financial Conduct Authority (FCA) has reduced barriers to the entry of new fintech players, with UK-based start-ups benefiting from tax breaks and funding schemes designed to foster growth. For instance, R&D tax incentives are available to firms that employ few people.
Through FCA’s Project Innovate and Innovation Hub, new and established businesses are allowed to introduce financial services and products to the market. This project encourages innovation to promote competition and the interest of consumers through disruptive innovation.
In May 2016, Microsoft praised the FCA for making the UK the most fintech-friendly country. In its letter to the US Treasury’s Office of the Comptroller of the Currency, Microsoft urged the OCC to emulate UK regulators to make sure that innovation is promoted, not stifled.
The UK ranks 2nd for it technical, entrepreneurial and financial services talent, and has unparalleled access to financial know-how, employing about 1.2m people in financial services. The country hosts the world’s leading fintech innovators: start-ups WorldRemit and TransferWise, P2P lending marketplace Funding Circle, forex startup Currency Cloud, online investment management service Nutmeg, as well as digital challenger banks such as Mondo, Tandem, Atom Bank, are just a few of them.
Currently, the availability of talent in the UK is stronger than in many regions. There are 44,000 employees who work in London’s fintech industry and over 155,600 digital tech professionals.
Fintech accelerators, too, play an important role in shaping investment environment in the UK. There are many Fintech start-ups accelerators in the UK willing to give support in the form of affordable office spaces, starting capital and mentorship. These accelerators in the UK include Seedcamp accelerator, Barclays accelerator, and Fintech-Innovation-Lab accelerator, Techstars Accelerator, Level39, Tech City UK and Dot Forge Accelerator.
The UK Governement is making effort to stregnthen trade relationships with countries like India, with a good economic growth and highly skilled Technology experts. This will help keep the UK stronger as a business and investment viable country. Although the UK has been a leading fintech hub, we hope this does not change too much after the Brexit “Article 50”. After Brexit, many start-ups investors and executives considered moving their HOs out of London. We are still waiting to see whether London will lose its crown as the top “fintech” city in the world.