The Report titled Landscaping UK Fintech, commissioned by UK Trade and Industry and written by Ernst & Young, is a smorgasboard for those hungry for Fintech data.
They segment Fintech into Traditional and Emergent. From the perspective of Banks, Traditional = “we bring you lunch” and Emergent = “we eat your lunch” (a simplistic view, it is really a nuanced Co-Optition story with Emergent Fintech often partnering with Banks).
Here is how the numbers break down:
“We estimate the Fintech market (as defined in the scope agreed with UKTI) to be worth c. £20bn in annual revenue and growing, the majority of which is generated by what we term Traditional Fintech and in the order of 18% is generated by Emergent Fintech.”
So, traditional Fintech is still a big deal, like 82% of that £20bn (£16.4bn). The Report, like this blog, is focused on Emergent Fintech. Today I want to look at the Traditional Fintech 82%.
Media loves lists. American Banker has a Top 100 Fintech list. The criteria for inclusion is simply revenue. I did not spot a single Emergent Fintech company in the list. Lending Club should certainly be there. So should many other Emergent Fintech companies. The bottom of the Traditional Fintech 100 list only has $12m in annual revenues. I am not aware of any ranking of Emergent Fintech by revenue; I suspect that the data is simply not available.
The UKTI/E&Y Report points that UK is not well represented in Traditional Fintech and a quick check on Location for the American Banker Top 100 Traditional Fintech list bears that out. I only counted 3, of which my old employer Misys is clearly one. The numbers break down as follows (out of 100, so this is a % count as well):
UK = 3
Switzerland = 5
Other Europe = 14 (France is well represented)
India = 9
USA = 56
If you look at the 15 Companies with more than $1 billion annual revenue from Financial Services, it looks like this:
UK = 0 (Misys is #18 with a “mere” $908m)
Note: I put Cognizant in the India category, which I know is controversial. Their HO is clearly USA, but they are usually categorized as an offshore vendor.
In the top 4 it looks like 50/50 USA and India.
In 1994 I was working for a Misys subsidiary and winning deals in India when their Reserve Bank of India opened up competition by licensing new private banks. Infosys at the time was an “also ran” player, but somebody said,
“they have the financial strength and determination to keep at it and will prevail eventually”.
Along with TCS and Cognizant, that is clearly true with over $11 billion in annual revenue from Financial Services between the three firms.
What a lot of smart money is betting on is that the % split between Traditional and Emergent will change. Next year, if somebody compiled a Top 100 that had both Traditional and Emergent, we will see a lot more Emergent.