London’s position as a leading global financial centre has naturally led to its current position as the global fintech hub. Able to conduct business with the US markets in the evening and the Asian markets in the morning, its location has been nothing but a benefit to its status in the fintech world.
The rest of the UK is catching up, however. Many of the factors which have been instrumental in cementing London’s place at the forefront of fintech are not specific to the capital, but specific to the UK as a whole. Manchester, Birmingham and other areas such as Leeds naturally also benefit from the GMT/BST time zone and, thanks to the Tech North and Northern Powerhouse strategies, a number of initiatives are in place to accelerate the North’s digital economy.
Growth in the UK
A recent EY report revealed that the fintech sector in the UK has grown to be worth £6.6bn, but the story is very much London-focused at this point. According to startups.co.uk’s list of top 100 start-ups, less than a third were located outside of London, with Exeter’s Crowdcube being the only non-London fintech firm listed as one of the ‘hottest UK fintech businesses to watch’ in September 2015.
The report from EY also made it clear that regional centres of fintech excellence need to be established. By focusing on the expansion of fintech into areas outside London, employment will spread outside of the capital and only serve to strengthen our existing fintech capabilities.
With the government being so supportive of fintech programmes in the UK, there are several policy incentives which cover the nation as a whole. The Northern Powerhouse strategy and Tech North, for example, have each delivered a number of initiatives to speed up the development of the Northern digital economy. This is just another nod to fintech start-ups that being situated in London is not always the key to success.
Manchester is Europe’s second largest business cluster focused on the creative and digital industries, and also benefits from being the largest tech cluster outside of London, according to Tech Britain. Last year, fintech association Innovate Finance sent a delegation to the city to promote technology hubs across the UK, with the aim of creating stronger ties between London and Manchester’s fintech clusters. At the end of the year, Allied London’s co-working fintech hub will also be open in the UK’s second city, aiming to create a melting pot for ‘tech innovation, media and entrepreneurs’. Leeds is also growing in prominence as one of the newer fintech clusters in the UK. With the first FinTech North conference held there earlier this year, it is clear that there is an appetite for this booming sector across the region’s business community.
Whilst not in ‘The North’ as such, Birmingham is home to the so-called ‘Silicon Canal’ which is also giving London a run for its money in the fintech world. The talent pool of software engineers, and the cost effectiveness of running a business from Birmingham rather than The City, certainly leans in its favour for starting an enterprise in the area.
To progress through the seed stage, fintech start-ups (and of course start-ups in general) must have access to a number of basic business structures, including office space and flexible leases which can be a challenge to find in London.
Although there are smaller clusters growing outside of the capital, it is important not to view these as competitors to the London market, but to view the UK as a whole as one inter-connected fintech hub. As we are quite small as a country, travel between these clusters can be conducted on a regular basis to discuss business deals and meet with prospective clients. Whilst London will always continue to have the prominent position in terms of finance, it must be considered that expanding outside of the capital could be a benefit for young fintech firms wanting to scale up, without spending too much of their budget on the cost of office space. By working together, the UK as a nation can be established as the fintech capital of the world.