5 indisputable reasons London is the centre of fintech
At a time in which the whole world was engaged in Brexit debates, discussing whether or not this will ruin London's financial supremacy, Barclays launched what promises to be the largest fintech accelerator in Europe.
Rise London is a purpose-built fintech hub which proves once again that, as Magdalena Kron, Head of Rise London stated, "knowledge and expertise exists in London in a way you can’t instantly replicate elsewhere in Europe". Uncertainty caused by Brexit could have slowed down fintech disruptors, yet Barclays shows that even after the Brexit vote, there were more than 600 applicants for the Barclays Accelerator powered by TechStars which is "pretty hard evidence that the London scene is still healthy." The program is the most selective Fintech Accelerator in the world with an increasing number of participants that are reshaping the financial services landscape.
Even though workers, founders and investors are inevitably struggling to overcome some Brexit bumps, predictions are fairly optimistic. According to online media outlet The Fintech Times, the UK tech and digital sectors received strong endorsements from US tech giants in the months after the Brexit poll, with Apple committing to its GBP 9 billion London HQ project, Google announcing plans to hire 3,000 more people across the UK and Facebook unveiling plans to create 500 new UK jobs in 2017. IBM also said it planned to open four new UK data centres. So, it is safe to say that London will keep its position as the number one spot in fintech, at least for now.
Furthermore, this year's FinTech50 points out that the UK continues to be the home of almost two thirds of the European fintech firms, more specifically 33 companies of the total 50 are located in the UK.
How did London become the core of fintech?
Although there are numerous technology advancements and countries worldwide are jumping into the fintech bandwagon, with Netherlands being particularly well-developed in payments, e-commerce and trading, London's fast-paced fintech world is still miles ahead.
Yet, what makes London the financial capital of Europe?
Market opportunity & financial infrastructure
London is definitely one of the most cosmopolitan cities and anyone will immediately notice the great diversity found within the city. From a business perspective, London has the highest concentration of global financial institutions across banking, capital markets, insurance and asset management in the world. This makes the market highly attractive for business investors and entrepreneurs. With such a large and sophisticated consumer market, there's no doubt that London became the home of fintech in such a short time. London's success is due not only to its infrastructure providers, but to its dynamic participants and openness to innovation.
Open-minded regulators
An open-minded attitude and willingness to innovate can also be seen in the regulatory space. We all know that regulators can sometimes slow down progress by imposing limitations and restrict expansions, yet London never got to deal with this. Policy makers turned out to be real advocates and supporters of fintech innovators.
Talented workforce
Tech-savvy and talented software developers are instrumental for the development of the financial industry and digital progress. Data from 2015 shows that at that moment, there were 71,000 London-based professional developers registered on tech portal Stack Overflow. Moreover, research by Oxford Economics predicted an increase of 22% by 2025.
Financial capital
Results from Fintech Week London indicated that UK fintech companies secured USD 5.4 billion of the USD 49.7 billion of global investment in financial tech between 2010 and 2015, compared with the total USD 4.4 billion raised across the rest of Europe. Although there is a fundamental gap in comparison with the US, London is still way ahead.
Which city ranks second?
Since fintech became a buzzword in the financial services industry, larger cities around the world struggled to be the first to launch innovative hubs that could get them a top spot in the European fintech hub rankings. Although there are currently more cities disputing the second-best place in the fintech world, I would say that Amsterdam has all the chances to become a very important part in the future development of fintech.
The city already has a strong reputation in the financial world, with more than 100 banks operating in the country, among which ING, Rabobank and ABN Amro are the largest and most innovative ones. The banks work together under the auspices of the Dutch Banking Association (Betaalvereniging) to ensure the effectiveness, efficiency, security and reliability of payment services. Furthermore, one of the most disruptive payment technology companies is located in Amsterdam, namely Adyen. Adyen offers businesses an outsourced payment solution, which enables merchants to accept payments from anywhere in the world and is used by the likes of Dropbox, Uber, Airbnb and Netflix.
Apart from Amsterdam, other major cities that are well-developed when it comes to fintech hubs are Lisbon, Berlin and Stockholm.
What do you think? Will any of these cities be prepared to take London’s place any time soon?