Is London the Fintech Capital of the World?

Offering capital, talent, an accommodating regulatory environment and the ability to scale up, London is aiming to be the fintech

With its long standing place as one of the world’s most important financial centers, as well as supporting a thriving technology sector, London is also aiming to be the top fintech destination of the world for startups. While the city’s ranking in the global markets can be argued, London is arguably the top European location for fintech startups.

As part of his visit to Israel to promote cooperation between technology startups in Israel and the UK, Mayor of London, Boris Johnson MP, is including an emphasis on the fintech sector. Representing the sector and part of the delegation accompanying Johnson to Israel included UK Government Fintech Envoy and Chair of Tech City UK, Eileen Burbidge.

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Joining Johnson at an event today at Google Campus Tel Aviv, Burbidge moderated a panel titled ‘A tale of two cities’ as well as answering questions about the benefits of establishing a presence in the UK. Below are some the key items discussed at the event and the key factors at play that are providing London an edge in attracting fintech firms from around the world.

Accommodating regulatory environment

Mayor of London, Boris Johnson MP
Mayor of London, Boris Johnson MP

Often noted as a key factor that is providing a boost to London’s fintech scene is the regulatory regime. In her worlds, Burbidge referred to the UK as providing a “progressive regulatory environment”. Her description followed similar comments from eToro CEO Yoni Assia who stated that the UK’s friendly attitude towards fintech firms provides a benefit to foreign companies interested in establishing a presence in the city.

According to Johnson, the accommodating approach to startups isn’t only in reference to fintech, but is a policy that is being initiated by the city of London towards the entire technology sector.  Within the fintech sector, the friendly regulation has allowed the UK to become a global leader for the crowdfunding and digital bank sectors.

Capital ($$ + human capital)

One of the top reasons that fintech firms arrive in London is to raise capital. This includes both from investors and the public markets such as the London Stock Exchange. According to Burbidge, the combination of the aforementioned regulatory environment and access to capital is the main draw of the UK for foreign fintech firms.

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In terms of venture firms, London is home to a growing population of institutional investors. This provides an opportunity for fintech firms to source funding on deals that are typically larger than in their home markets, excepting the US.

In addition, the UK has a rapidly growing individual private investor market. On this, Tom Hatton, CEO of RefMe, explained in the Tale of Two Cities panel that the UK government has initiated schemes that have made it easier for investors to fund technology startups.

Beyond only funds, panel participants also cited the ability to find ‘human capital’ in London- in other words, unique talent. For fintech firms, available talent includes professionals with financial industry experience as well as developers and designers.

Scale-Up

Commenting on the connection between Israel and London, Boris Johnson stated that while Israel is known as the ‘startup nation’, the UK is the ‘scale-up nation’. This description was also shared by others in explaining one of the key benefits for foreign firms when entering the UK market.

eToro’s Assia explained that for most Israeli fintech and technology firms, the local market is probably not their long term target audience. As such, the UK provides a great market for companies to grow, due to the country’s large population and consumer sector which is advanced when it comes to understanding and using new technology.

In this regard, noted investor Saul Klein explained that the UK provides a launchpad for other areas of the world too. Specifically, due to the rising population of non-English speakers from Asia and Africa in the UK, firms that arrive in the UK are able to not only target the local English speaking population, but also to gain a foothold in the fast growing Asian and African sectors.

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