2014 has been a blockbuster year for Britain’s fintech sector but 2015 may well be the year when the sector truly comes of age.
UK fintech is a magnet for investment capital. A recent report from Accenture revealed that in 2014 fintech investment in UK ventures is now growing more quickly than in any other market in the world. It’s like 1999 all over again but now investment is in technology innovation, rather than promising ideas.
The recent injections into Funding Circle (£30m) and the rumoured £50m investment in TransferWise, is just a taster of what to expect in 2015.
And whilst London is the gleaming V12 engine, investment is flowing into regional fintech hubs. Based in Electronic works in Sheffield, at Ffrees we have recently pushed our VC investment to over £5m in 2014.
Why the UK?
But what is attracting investors and entrepreneurs to the UK?
London is the jewel in the crown of the UK’s fintech sector. In a city where one of the world’s largest financial centres is a stones throw away from a thriving startup technology community, London has the ideal conditions for fintech innovation.
The capital is also a hotbed for tech and financial services talent. For the first time this year, London can now boast more fintech workers (44,000) than New York and Silicon Valley.
While the signs are promising, we cannot rest on our laurels.
Since the financial crisis, the financial services industry has come under increasing regulatory pressure. Finding the right balance between regulation and innovation will continue to be a challenge for policy makers and fintech businesses alike.
We must also encourage greater collaboration between traditional financial services providers and the fintech sector. Santander’s recent partnership with Funding Circle and the announcement of fintech accelerator programmes from Barclays and HSBC are early signs that this relationship is changing. Let’s hope that this is progressive, not merely protective.
The future of UK fintech
In 2015, I see an opportunity for the sector to flourish, not just in London but the whole of the UK.
We can promote national growth through strengthening networks between London and our emerging regional tech hubs.
With access to talent from world-class universities and the highest concentration of financial services workers outside of London, cities such as Sheffield and Leeds have the potential to become viable alternatives for fintech entrepreneurs looking to headquarter their businesses outside of London.
Looking further afield, in 2015 there is an opportunity to export the UK’s fintech brand abroad. There is a strong appetite from other global financial centres to work with London, as highlighted by Boris Johnson’s recent fintech trade mission to the Far East.
The stage is set for the UK to become the fintech capital of the world in 2015.
Alex Letts is the chief executive of Ffrees
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