A supportive government, access to top talent and a robust technology infrastructure have all played a part in London’s historical position as a global powerhouse for financial services, and now its modern counterpart, fintech. In the current economic climate, increasingly countries across the world are trying to take advantage of this, and improve their own fintech status in turn.
The collaboration with other fintech hubs has been facilitated by the FCA to reduce barriers to entry, and share innovations across the financial services industry. The ‘fintech bridges’ in Singapore and Korea are now intrinsically linked with the UK, giving our native firms and investors access to the Asian market, while at the same time attracting companies and investors to the UK.
The fallout from the EU Referendum has moved the creation of fintech links up the agenda. In the formation of the UK’s Brexit plans, these relationships with growing, tech-savvy nations such as the Republic of Korea will undoubtedly be imperative, improving our access to talent, customers and funding.
Global upsurge of fintech hubs
With the rise of other areas such as Tel Aviv, Singapore, Korea and San Francisco, we could see a range of fintech hubs develop across continents. China and India have already begun to dominate the growth in the Asia-Pacific region, with smaller, influential markets also looking to build up their strength in this area.
The fintech umbrella has expanded with new terms such as InsurTech, RiskTech and RegTech, which are growing in popularity across the Asian financial markets in particular. These newer technologies work in collaboration with traditional financial services, driving the movement towards collaboration across the entire financial services sector.
The UK’s fintech sector will need to make the most of the upsurge of other hubs across the world for innovation and growth, whilst simultaneously ensuring that it remains the location of choice for fintech start-ups. Cooperation Agreements, such as those with Singapore and Korea, are crucial to foster global fintech growth.
Nurturing fintech at home
Fintech growth in the UK is having a positive knock-on effect across the financial services sector by promoting competition within the national economy. The UK must exploit its current position in the fintech market in order to stay ahead of the competition, with the US and China beginning to develop their fintech links, and closing the gap London has nurtured.
To keep ahead of other contenders, the UK must look to shift its focus outside of London and expand fintech into other areas of the UK such as Manchester or Birmingham. Like Tech City, Manchester and Birmingham also benefit from the GMT/BST time zone which is crucial for trading with both North America and Asia in the same business day. By encouraging start-ups in these areas, employment will spread outside of the capital and strengthen our existing fintech capabilities.
The flexible policy incentives that have allowed fintech programmes to thrive are not limited to London. These government policies have been increasing levels of fintech activity in other cities. The Northern Powerhouse strategy and Tech North have both delivered a number of initiatives to accelerate development of the digital economy in the North, providing the physical evidence to fintech start-ups that growth does not need to centre on London.
As a small nation, travel between the fintech clusters in the UK can be conducted on a weekly, if not daily basis. Business deals can be executed and prospective clients can be met with ease, face-to-face. This is something that must be encouraged, so that we can keep apace with our global rivals.
Nurturing these new ‘fintech bridges’ we have secured with the likes of the Republic of Korea will maintain the UK’s fintech prowess, whilst strengthening innovation for firms across the country. London will of course remain a central fintech hub due to its prominence as a financial centre. However expanding outside of the capital will only be of benefit for young fintech firms who are looking for growth without the commercial rent costs that accompanies the capital. These developments into new cooperative deals at home and abroad can lead to the UK, as a unit, establishing itself as the fintech capital of the world.
By Aamar Aslam, CEO of Funding Invoice