BRITAIN CROWNED THE FINTECH CAPITAL OF THE WORLD
In August 2015, Chancellor George Osborne announced the Government’s ambition to make Britain the global fintech capital. To support this objective, the Treasury commissioned a report benchmarking the UK’s fintech ecosystem against California’s Silicon Valley, New York, Singapore, Germany, Australia and Hong Kong. After six months of research, this report was finally released on 24 February.
The report, entitled UK FinTech: On the Cutting Edge, crowned the UK as the fintech capital of the world. Assessing the capital, talent, policy and market demand within each of these fintech hubs, the study stated that Britain’s fintech industry is globally renowned for its innovation, growth and ability to disrupt traditional lending practices. Championing the scale and expansion of the nation’s bustling fintech industry, the government-backed paper concludes that Britain offers a well-supported fintech environment, one which has effectively evolved as a consequence of its rising digital expertise and traditional finance capabilities.
According to the research, the UK’s leading position in fintech innovation and growth stems from three key strengths. First, the nation’s fintech ecosystem is supported by a wealth of talent and expertise across both financial and digital sectors. Second, progressive government policies and regulatory measures proactively nurture and encourage early-stage fintech companies. Finally, the UK benefits from an effective network of fintech hubs, the most renowned being Tech City in East London. These three elements have contributed to a fintech industry that last year employed 61,000 people, experienced a £524 million injection of capital investment, and that reached an estimated market worth of £6.6 billion.
While there is much cause for celebration, the UK’s global standing should not be taken for granted. The British Government must continue to ensure that its policy initiatives are progressive, innovative and representative of leading industry trends. Britain is in the fortunate position of having a diverse fintech industry. Its collection of small and established companies range from the cybersecurity sector, to equity crowdfunding and online P2P lending. To ensure its ongoing competiveness, the report acknowledges the long-term potential of specialising in particular fintech services and/or products. The large injection of venture capital investment into Asia’s early-stage fintech ecosystems also has the potential to challenge the UK’s global position. Thus, while recognising the momentous achievements of our fintech industry over the past five years, the British Government must be proactively engaged with the latest industry trends and develop responsive policy accordingly.
Here at IW Capital, we will continue to deliver industry-leading reports on the trends that are defining British fintech. Our upcoming SME Heatmap, for instance, profiles British fintech in terms of its geographical dispersion and growth potential. We look forward to updating you on the latest fintech trends throughout 2016.