Despite grappling the impacts of Brexit and the virus, 2020 once again saw London cement its place as the undisputed Fintech capital of Europe and start to edge out in front on the global scale.
The UK has long dominated European Fintech investment, and ranks second only to the US in terms of total capital raised. In 2020, there were more deals and more capital invested in UK Fintech than in Germany, Sweden, France, the Netherlands and Switzerland combined.
So, how does London stack up against the other big hitters on the international scene?
The pandemic dealt a blow to many markets, but the Fintech market in London remained resilient throughout the past 12 months. Indeed, UK Fintech investments climbed by 3.8% in contrast to a drop of 9.1% in investment in the US.
Last year, London attracted 91% of all UK Fintech investment, totalling around USD3.8 billion across 310 deals, and while London sits behind San Francisco when it comes to total deal value, more deals closed in London than any other city worldwide (169).
Interestingly, some 60% of London Fintechs received investment through funding rounds with at least one US investor, a figure that was double that of the previous year ($2.2 billion).
This highlights just how attractive investing in Fintech companies in the capital is for investors globally, not just in the UK. It also suggests the level of confidence in the UK’s Fintech sector is high despite the challenges faced, with investors still keen to commit funds to drive this growth and cement its place as the global Fintech capital.
Why has London become such a Fintech powerhouse in recent years?
London’s proposition for Fintech is unique: world-class talent, access to capital, forward-thinking approach to regulations and its proximity to an innovative financial services sector which is open to embracing change.
Openness to innovation
In London, and the UK, Fintech is more than just a subsector. London is taking the lead on delivering innovative products, services and solutions and the evolution of financial services is being championed by more traditional firms as well.
Not only this, technology adoption rates among consumers are the highest in the world at 71%. This goes to show the appetite for new products and services amongst London’s population, as well as give an indication in to the amount of partnership opportunities that are out there for Fintech businesses.
Impressive talent pool
There are thought to be over 45,000 people working in Fintech roles across the capital, a specialist workforce that outnumbers that of Silicon Valley and New York.
This can be traced back to the UK’s traditional strength in both financial services and technology, which has created a breeding ground for Fintech companies and ensured access to large pool of skill professionals.
Perhaps the most important point is the diversity of London’s talent pool. Highlighted in the UK Gov’s Fintech Report, tech talent in the UK is more diverse than any other start-up ecosystem in the world. Start-ups are two and a half times more likely to have a CEO under the age of 36 and also ten times more likely to be from a different ethnicity.
This rich history of talent enables Fintechs to pick the best talent and it’s and it’s this impressive talent that has driven growth and innovation at scale.
Will Brexit have an impact?
London’s Fintech scene relies heavily on overseas talent, and there’s a strong feeling this will be impacted by the barriers thrown up by Brexit. However, in the first 2 months of the year, the prognosis for recruiting talent looks better than at first feared.
The switch to remote working has helped, and for Fintech businesses that are happy to continue to offer this as a viable option, they will no longer have to limit their candidate searches to specific geographies.
In addition, Start-up and Innovator Visas and the suspension of the existing cap on the Tier 2 Visa for skilled workers go a long way to convey the message that Fintech in London is open to international talent.
What’s next for London Fintech?
There’s the sense that things are only just getting started for London Fintech, despite the fact it’s been so dominant for so long.
With its global outlook and its population of rapid, early-stage adopters of new technologies, we’ll no doubt see more and more companies are choosing to launch and global investment will continue to flood the capital.
How Expand can help
We are specialists in helping Fintech companies secure the best talent in the market as they look to grow and expand their product offering on a global scale.
If you’re going through a stage of growth, or you’re looking for a role within Fintech, our experienced team are on hand to help.