From the birth of Open Banking, to the vast amount of fintech firms such as Revolut and Stripe calling the English capital home, London has demonstrated time and time again why it is a global leader of the payment industry.
This has, in turn, expanded all across the UK, with major cities such as Manchester, Cambridge and Edinburgh developing their own thriving fintech and payment sectors, demonstrating that startup firms are not limited to a ‘if it isn’t in London, it won’t work’ mentality.
Two firms that have exemplified this the most are Manchester-based fintech BankiFi, and crypto company Zumo located in Edinburgh. Both have helped demonstrate the opportunities that lie outside of the UK capital and the added benefits it can bring.
Nick Reid, Head of Strategic Growth, Europe at BankiFi, and CEO and Co-Founder of Zumo, Nick Jones, spoke to SBC Leaders to gauge the differences between London and the city they’re based in and how they intend to help strengthen fintech and crypto innovation across the country
London has almost become the hub for fintech growth and innovation, but what is Manchester/Edinburgh doing differently to expand its own regional fintech sector?
Nick Reid: Back in 2011 when I graduated from University, I have a distinct memory of a seasoned professional telling me that ‘all the jobs are in London’. I don’t think this statement was true then, but it certainly isn’t now.
One common misconception is that funding is more readily available in the South East. Although it has taken some time, investment is now reaching other cities like Manchester, Bristol and Edinburgh, to name just a few. This investment towards innovation in the North West has created technology hubs, companies setting up headquarters or second offices in the region and has consequently led to thriving communities.
It is important for companies to take a partner approach to their investment where the relationship is more than just about money. This is why at BankiFi, we have a close relationship with our investors at Praetura Ventures, as we believe in combining our missions to help improve SME banking and funding, and working together on implementing this – from our offices in Manchester.
Nick Jones: Scotland has a long history of strength and innovation in financial services and, through its strong and distinct university and education system, has the network in place to deliver the talent needed to bolster its position as a growing fintech hub.
The business support ecosystem is robust and Zumo itself has been fortunate enough to be able to take advantage of some of the supporting initiatives in place, ranging from the TechNation Fintech 4.0 growth accelerator to targeted grant funding via bodies such as Scottish Enterprise.
The fintech boom within the UK has accelerated to heights envisaged by ex-Chancellor George Osbourne when, in 2014, he announced plans to help create the UK as a “global capital of fintech”.
This was highlighted in a Findexable Global Fintech Rankings Report last year, ranking the UK as the second-highest performing fintech sector in the world, falling behind the United States for the top spot.
What was more revealing in the report was that London was the second highest ranking global city for fintech performance for its ecosystem. Manchester ranked 34th, with other UK cities climbing the ladder such as Cambridge (38th) and Edinburgh (109th) as the country continues to spread its growth.
What are some of the challenges of being a fintech firm based outside of London, but also, what are the benefits?
Nick Reid: I genuinely believe that being a successful fintech based outside of London isn’t and shouldn’t ever be a challenge. I have spent my career working as a provider to banks, financial institutions and other financial technology providers and not being located in Canary Wharf has never made our work less visible.
The rise and adoption of technology, combined with remote or hybrid working accelerated by the pandemic, presents opportunities but also challenges. I have noticed a number of my industry connections recently moving on from big corporations to take up new roles with tech companies.
On the flip side, with work no longer being exclusively in-person, some London-based companies are recognising this and luring talent from other regions. Salaries are undoubtedly a factor, but the attraction of working for a big corporation without having to commute every day to London will be powerful for some.
One trend that has become noticeable is employees with specific skill sets are commanding higher salaries. The danger for the UK in general, but fintechs may be especially vulnerable to this, especially in the current macroeconomic climate, is that businesses will be forced to turn to nearshoring or offshoring talent.
Nick Jones: At Zumo, we operate a hub-and-spoke business model which means that, although we are Scotland-based, we also have a London presence and are regularly represented there. It’s one way to strike the balance.
What I would say is that our remote and decentralised workforce is indicative of the industry we are in – from our perspective, it allows Zumo to draw on a wider talent pool and be less subject to the geographical constraints that have previously defined business operations.”
No doubt London deserves a lion’s share of the credit for bolstering fintech and payments growth within the country. Open Banking was established in the capital city and has become one of the pivotal landmarks of innovation within the sector, with API transactions growing from £66.8m in 2018, up to £6bn by the end of 2020.
But now it’s time for other countries to boast on their latest technological breakthroughs. Zumo are enabling customers with new and efficient methods of cryptocurrency payments, whilst BankiFi is tapping deeper into API’s, launching a superapp last April known as ‘Open Cash Management’.
What is your company working on that will move the UK fintech sector forward in its next cycle?
Nick Reid: Supporting and enabling SMEs to do more from their trusted bank’s online and mobile banking channels will help to move the fintech sector forward in its next cycle.
This year, we have been working on a number of ways to help improve our services for SMEs, with one example being our partnership with TSB to launch the Revenu app. The app enables small businesses to get paid quicker and reduce time spent on managing their business’ finances.
In 2023, I think many SMEs will have laser focus on their immediate-term needs in the face of some serious economic headwinds. For some, that will mean getting paid for services delivered as quickly and conveniently as possible. That will mean getting access to capital quickly to fund the assets that they need to grow their business to the next level.
Nick Jones: No doubt, crypto is the sector with the highest risk – and the highest potential. We’re here to build a unicorn business and put a stake in the ground for the next era of finance: go big or go home. Given crypto’s nature as a global product and market, it’s about being at the cutting edge of new technology that goes far beyond the UK.
At Zumo, we’re pioneering that technology and believe it will transform the fintech landscape for the better.
