The capital’s booming financial technology sector is being driven by record levels of investment and the rapid adoption of fintech products by young and wealthy internet users, according to new research compiled by London & Partners, The Mayor of London’s promotional company, and EY.
Venture capital investment in London fintech has rocketed from £24 millio in the whole of 2010 to £312m in the first six months of this year alone.
Over the last 10 years London has attracted 1000 international tech investment projects — which is not only more than any city, but more than any other country in Europe.
While investment is increasing, data being made available by global professional services firm EY, which is due to be released in full next year, shows that wealthy young Brits are adopting new fintech products at a rapid rate.
In the last six months, 35% of the UK’s online population has used at least one fintech product, and people’s usage increases in line with their income. The highest rate of fintech use is amongst those aged between 25 and 44 and earning over £50,000.
Use of fintech products is growing rapidly - an additional 8% of the UK’s online population is set to start using fintech products over the next 12 months, in particular online payments and investment products - making the UK one of the most advanced and attractive fintech markets in Europe.
Further analysis by MasterCard shows the UK is one of the world’s leading economies for cashless transactions, being driven by financial technologies such as contactless payments on the London Underground. Spending by British consumers on their contactless cards has increased more than five-fold (560%) in the last 12 months.
Mayor of London Boris Johnson, who is on a three-day trade mission to Japan, where he is meeting with senior politicians, business leaders and investors to foster collaboration between London and Japan (and barging into small children whilst playing rugby!), said: “Londoners are embracing financial technology as the use of contactless on the London Underground and mobile payments used throughout the city shows. As our expertise flourishes in this area, I am delighted companies based in London are taking their goods to Japan and we are now sharing that knowledge and experience with our Japanese counterparts to further fuel this innovation and growth.”
Imran Gulamhuseinwala, EY’s head of fintech in EMEIA, said: “At approximately £20bn of revenues, the UK has a world leading fintech footprint. Crucially we estimate that as much as 20% is generated from the high growth "emergent" fintech segment including online payments, online security and marketplace lending.
"Our analysis found that the UK is a very attractive location for fintech startups and that international fintech startups, founded outside of the UK often move here to use the UK market as a platform for internationalisation. We think there’s potential for the UK fintech industry to generate an additional £16bn of revenues by 2020.”526