Be it the Blitzkrieg or Brexit, if there is one word to describe “The City’s” spirit -its Resilience. A lot of what I see with London’s resilience reminds me of the spirit of Mumbai after torrential rains and terrorist attacks. Since the Brexit vote last year, UK Fintechs have raised over £1 Billion and Q3 2017 set records with over £825 Million in Fintech investments, which was double the amount from the same period in 2016.
Months following the EU Referendum saw a lot of scepticism amongst investors. While most investors felt the economy had legs in the long run, they were worried about the market sentiment and the political drama that ensued didn’t help their appetite.
This resulted in investors putting off committing capital to deals in the UK and funding dried up by more than a third last year. However, London has clearly bounced back from those lows, and is expected to set record highs by end of the year.
Investec’s research identified that over a third of the investments flowing into London’s Fintech was from overseas. While some of this could be attributed to Sterling weakness post the vote, the rebound in Q1 2017 followed by a strong Q3 is validation to the UK’s Fintech ecosystem.
It demonstrates that a robust Fintech ecosystem that receives quality skills and talent from world class universities into the most sophisticated financial services hub in the world, well supported by a open minded and futuristic regulator, is hard to replicate elsewhere.
UK FinTech continues to enjoy a highly supportive combination of regulation, talent and market opportunities. The UK is world leading in financial services and regulatory policy. Open Banking, which will go live in 2018, will facilitate secure sharing of data between banks and FinTechs. It is a genuine world first and will be yet another catalyst for innovation and customer adoption within UK FinTech.
Imran Gulamhuseinwala, Global Head of FinTech, EY.
With Wednesday’s news on UK’s economic growth beating forecasts, and interest rates expected to be raised at the next MPC, market sentiment seems to be upbeat. This should help investor confidence in the UK Fintech sector.
With open banking regulations coming into play from Jan 2018, the data boom should create a new wave of innovation. The FCA earlier this month opened the application process for Fintechs to register as Account Information Services (AISPs) or Payment Initiation Services (PISPs).
London is one of the world leaders of fintech. The dynamism and creativity is world leading and we have to push forward in saying ‘
‘Brexit or not, we are still going to be a leader in Fintech‘.
Russ Shaw, Founder, Tech London Advocates
Apart from these activities, there is momentum building for an industry wide push to ensure Fintech in the UK stays intact through and post Brexit. The industry has added about £6.6 Billion to the economy last year. Level39 in Canary Wharf is leading the efforts across Banks and Fintechs to ensure there is enough government support for Fintech through the Brexit process.
Momentum is clearly there for UK Fintechs and it would take an extremely incompetent Brexit negotiator to hurt the flourish. But from what we have seen from the past 18 months – anything is possible but pragmatism would/should prevail.
Arunkumar Krishnakumar is a Fintech thought leader and an investor.
Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email.