The rise of Britain as a fintech power
Investment is pouring into London’s fintech scene.
It is perhaps predictable given financial innovation is ingrained in the City’s identity. Yet today’s boom is about young start-up companies that are forcing traditional players to change tactics.
The total value of financial technology deals in London, including acquisition, stock market listings and direct investment, is $18.4bn, according to research from consulting firm William Garrity Associate.
It proves fintech’s allure has never been so strong, with the first half of 2015 accounting for 25% ($12.7bn) of total global investment ($49.7bn) since January 2010.
William Garrity Associate released its research on global fintech investment as part of London’s FinTech Week (14 September – 20 September). The analysis marks Britain as the second top location in the world for financial tech entrepreneurs and investors, with $5.4bn of investment flowing into the country over the last five years. Only the US surpassed Britain, as it managed to secure a mammoth $31.6bn worth of investment over the same 5 year period. This figure represents 64% of total global fin tech investment ($49.7bn) from January 2010 until June 2015.
It is impressive stuff, considering Europe’s total investment hit $4.4bn, while China secured £3.5bn, and India $2.2bn.
Popular fintech platforms
In the report entitled ‘Landscaping UK Fintech’, Sue Langley chief executive officer of UKTI financial services organisation, wrote:
“We believe the UK has an international market leadership position in peer-to-peer platforms, aggregator platforms, and the data and analytics products.
“Two potentially attractive areas where the UK could build an international market leadership position are risk management/compliance/fraud software and online payments.”
Peer-to-peer lending and online payments, which fintech businesses in the UK adopt as independent and complementary strategies, have never been so popular.
Financial instituions like Santander, Barclays and the Nasdaq announced plans to integrate these kind of technologies. It comes in the hope of remaining relevant to a client base that are choosing cheaper, faster, and online only services. Fitting this description, TransferWise is arguably London’s best known fintech company. It received a $58.8mn investment in January 2015, bringing the money transfer business’ value to $1bn.
Similarly, the peer-to-peer lender Funding Circle received a £150mn investment in April 2015, proving the pull market disruptors have to dicate the financial narrative.
Mobile penetration and the internet have revolutionised the payments space. Tech geniuses have grasped this opportunity, with mobile-only banks like Mondo, Atom and Starling trying their best to enter the British market. Interestingly, Germany’s Fidor bank, also without a branch presence, bet its British counterparts to the punch and opened irts virtual doors on September 18. Amongst the German challenger’s list of innovative financial products, it will offer a flat fee on money transfers.
Challeneger banks, fintech operators and the FX aside, London has a concentration of digital entrepreneurs that rival the whizz kids of Silicone Valley.