According to George Osborne, the race is on to become the Fintech centre of the world and with a series of new initiatives in place, this is a race he intends to win. This is not simply post-bust bluster and we’ve outlined ten points that suggest the future really does look bright for the British Fintech industry.
- Government backing
In the UK Government’s Summer Budget this year, George Osborne confirmed funding for six new multidisciplinary research centres to nurture the UK’s Digital Economy research, knowledge and skills. Number 10 has weighed in too, with David Cameron backing a manifesto to make the UK a world leader in Fintech by 2020.
For the first time, the UK Government has appointed a Fintech envoy. Eileen Burbidge’s impressive career to date spans Apple, Yahoo, Skype and Passion Capital, who invest in early stage start-ups. Burbidge has called London “the jewel
in the crown of the UK’s Fintech success story”.
In the US, Silicon Valley boasts digital innovation, New York’s Wall Street offers financing heritage and Washington DC is known for setting policy. In the UK, all these sectors can be found concentrated in one city – London – making it a real hotebed for Fintech development.
When the economic crash of 2008 demonstrated the shortcomings of the traditional banking model, there was suddenly an abundance of savvy, yet out of work, entrepreneurs. Many of these were highly qualified finance professionals who had lost or left jobs during banking restructures and could identify what the customer really wanted.
- Private investors
Fintech is a booming industry and investors are seeing pound signs. In the UK, the total investment in London-based Fintech companies so far this year has already hit more than £350 million. This is according to London & Partners, the organisation set up by the Mayor’s office to encourage investment into the city.
Digital is one of the fastest-growing sectors of the UK economy. The Internet is the second-biggest economic contributor after the property sector, and represents 10% of the UK GDP – expected to rise to 12.4% by 2016*.
- Connecting the UK
The non-profit membership organisation, Innovate Finance, has this year launched a regional strategy to connect financial services technology hubs outside London with each other, as well as the Big Smoke.
The Financial Conduct Authority’s (FCA), Project Innovate, recently published plans to implement a ‘regulatory sandbox’ to enable businesses to test out innovative financial products and services without fear of normal regulatory reprisals.
- Corporation tax cuts
Earlier this year, Osborne announced that the tax paid by UK businesses would drop from 20 per cent to 18 per cent by 2020, enabling businesses to be in a stronger position to develop and innovate.
- Scaling up
“Israel is the start-up nation”, Boris Johnson said earlier this year, but “the UK is the scale-up nation”. The Mayor of London was speaking at an event in Tel Aviv referring to the opportunities that foreign Fintech companies are finding in the UK thanks to government schemes, the human capital, and a large consumer-base.
With such initiatives and investment, all eyes will be on London over the next few years to see if Tech City can truly live up to its name when it comes to Fintech. Tweet us your thoughts at @kpmgtechgrowth.
Read more of our words on FinTech trends and topics right here.
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