Britain’s exit from the European Union served to intensify regional competition for the fintech capital, as scepticism increased over whether London could retain its leading status.
In spite of being entrenched in capital and heritage, access to European markets being diluted is something that was cited as potentially having a major impact on London as the European capital for fintech.
As experts gathered for the PAY360 Conference in the UK capital, a key panel analysed what is next for the fintech hub as they identified the best strategy in order for it to continue to thrive.
Reflecting on how London evolved as a fintech hub, Peter Sugarman, Partner at JRJ Group, emphasised to the audience that the city has a strong history, not just for banks, but also in insurance and shipping, which led to a widespread pool of talent available for the financial space.
He also lauded the benefits of passporting to the EU, which will likely evaporate as the Brexit regulations take hold.
Nonetheless, Sugarman detailed a shift in global momentum as he stated that when he commenced his career London was the place to be, whereas now if you are a young ambitious investment banker then Asia or the US is more alluring.
Sanchit Dhote, Investment Manager at Outward, also cited the long term financial heritage of London – having for decades been the banking capital of Europe as a natural development for it to become a hub for fintech.
Dhote outlined that it has been ‘amazing’ to see the investor pool in the region accelerate as capital and talent have both emerged from the space at a rapid rate.
Nonetheless, he cited Singapore and the Middle East as both investing significantly within their own fintech sectors, as nimble countries with the ability to make quick decisions and have a unified approach as being key to regions unlocking their potential in the space.
The Khalifa Review highlights that the London fintech sector is thriving in spite of Brexit and challenging economic circumstances, according to Charlotte Crosswell, Chair, Centre for Finance, Innovation and Technology.
She did, however, highlight that there are still obstacles that the sector is facing, which need to be broken down.
She cited that other regions are taking a copy and paste approach from the UK, which means the UK needs to ensure it is scaling at a strong and sustainable rate.
The growth of startups is also something that is a natural progression according to Crosswell, not necessarily fuelled by the economic climate of Brexit.
We have never been short of startups in this country and have never been short of attracting talent, as the UK government has announced recent plans to expand on its next-generation of fintech entrepreneurs, with the establishment of several new innovation hubs scattered across the UK.
A new range of startups is a natural progression and there is always a natural evolution of companies embracing a region, something that isn’t necessarily fuelled by Brexit or the current economic climate.The UK remains a thought leader, but what the region has to do is ensure it is scaling, whilst other regions are copy and pasting the approach taken by the UK.
Looking ahead, Dhote detailed that one of the biggest threats to startup investment across all sectors is a change in the capital gains tax rate, because investment in the majority of fintechs is a long term investment.
He added that access to gov data is also something that could be hugely beneficial for firms in the region as they look to build a footprint and grow responsibly.
It comes as domestic competition within the UK intensifies, with a study from Whitecap Consulting detailing that the Greater Manchester fintech sector has contributed to more than £1bn to the regional UK economy, making it the second-largest fintech sector in the region.
Although still in the shadow of the capital, Whitecap’s report underlined the widespread UK strength in terms of fintech, with Manchester employing 10,000 people in the fintech space.
