Aamar Aslam, CEO of online invoice trading platform Funding Invoice, explores how fostering partnerships with other emerging FinTech markets can help strengthen UK FinTech firms.
Historically, London has been a global powerhouse for FinTech. A supportive government, access to top talent and a robust technology infrastructure have all played a part in this, and now more countries across the world are trying to benefit from this.
Two ‘FinTech bridges’ have been created by the Financial Conduct Authority (FCA) this year in order for the UK to work alongside other FinTech hubs with the aim of reducing barriers to entry, and to share information about financial services innovations in each market. Both Singapore and Korea are now intrinsically linked with the UK, helping our native firms and investors access the Asian market, and in turn attracting companies and investors to our shores.
Following the Brexit vote, it has been vital for the UK to bolster its FinTech links. Forming these FinTech bridges with growing, tech-savvy nations such as the Republic of Korea will undoubtedly improve our access to talent, customers and funding – a prospect which will become increasingly important as the UK’s Brexit plans fall into place.
London’s status as a global FinTech hub is undisputed. The rise of other areas such as Tel Aviv, Singapore, Korea and San Francisco, however, could see a movement towards a range of FinTech hubs spread across different continents.
Fast growth in the Asia-Pacific region has been dominated by China and India, in addition to the emergence of the newer buzzwords within the FinTech umbrella – InsurTech, RiskTech and RegTech. These younger technologies work in collaboration with traditional financial services, driving the movement towards collaboration across the entire financial services sector.
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With the rise of other hubs across the world, these partnerships will be key to helping the UK FinTech sector to innovate and grow, whilst ensuring that it remains the location of choice for FinTech startups. It is not just the UK that will benefit, however. Cooperation agreements, such as those with Singapore and Korea, are crucial for fostering FinTech innovation across the globe.
FinTech in the UK
Our FinTech industry is booming. This is not only helping the national economy, but also promoting competition and growth across the financial services sector. The race to be the ‘top dog’ of FinTech is heating up, with the US and China hot on our tail. The UK has a good lead in the increasingly competitive FinTech sector, but it is imperative that we work to stay ahead of the game.
Whilst London does benefit from being a leading financial centre, many of the factors which have helped cement its place at the forefront of FinTech are not city-specific, but country-specific. Like Tech City, Manchester and Birmingham also benefit from the GMT/BST time zone which is crucial for trading with both North America and Asia in the same business day. By focusing on the expansion of FinTech into other areas of the UK, such as Manchester or Birmingham, employment will spread outside of the capital and strengthen our existing FinTech capabilities.
Furthermore, the UK is a market leader in terms of government flexibility for FinTech programmes. There are several examples of policy incentives in the UK which are not limited to London, and increasing levels of FinTech activity in other cities. The Northern Powerhouse strategy and Tech North have both delivered a number of initiatives to accelerate development of the digital economy in the North, demonstrating to FinTech startups that London is not always the key to scaling up successfully.
FinTech businesses must not treat this national expansion as a rivalry between London and other FinTech clusters, but view it as one interconnected UK hub. Size matters here – as quite a small country, travel between these clusters can be conducted on a weekly, if not daily, basis to conduct business deals and meet prospective clients.
Fostering partnerships with other emerging FinTech markets such as the Republic of Korea will not only help to maintain the UK’s FinTech prowess, but also strengthen innovation for firms across the country. Whilst London will always play a key role due to its prominence as a financial centre, it must be considered that expanding outside of the capital may only be of benefit for young FinTech firms looking to scale up, without the commercial rent costs. By working together both at home and abroad, the UK as a whole can be established as the FinTech capital of the world.