‘FinTech’ may well be one of those buzzwords that you hear all the time but are still not clear exactly what it means. Well, FinTech is basically the merger of ‘finance’ and ‘technology’ and is applied to any emerging technology that helps consumers or financial institutions deliver financial services in newer, faster ways than was previously available.
In short, FinTech is empowering consumers to take charge of their financial lives by leveraging advanced technology. The world of globally branded banks, rows of suited qualified accountants and very expensive large corporate buildings is being challenged and disrupted by online banking, mobile apps and crowd-funding platforms, to name but a few.
Traditional banking is changing and it is changing quickly. Who does not already use online banking, contactless payments. The more tech savvy amongst you may already be using one of the new online banks such as Monzo or Starling. Monzo started as a mobile app in 2015 with a pre-paid card but last year its UK banking licence restrictions were lifted, enabling it to offer a current account. It is typical of a new breed of app-based ‘challenger’ banks in the UK. Such was the initial demand for new accounts with these banks that you often had to join a waiting list.
For another well-documented example of FinTech, you can look towards Africa. Traditionally way behind the West in banking services, many African countries have completely skipped the ‘bricks and mortar’ phase by embracing mobile banking and making banking accessible to practically everyone.
The development of FinTech is part of the new entrepreneurial spirit that is growing ever stronger in the UK and in particular, London. The UK is the global capital of FinTech, which now contributes nearly $7 billion to the UK economy each year. London is home to 17 of the top 50 international FinTech firms and last year investment in UK FinTech more than doubled. UK firms attracted almost four times more funding than Germany, and more than France, Ireland and Sweden combined.
This is because the UK has built the best modern ecosystem in the world for innovation. It is home to the English language, the global language of business. The UK legal system is the jurisdiction of choice for international commerce and its universities have pioneered many of the breakthrough discoveries powering today’s digital revolution.
The UK also has the greatest tech hub in Europe, Tech City and is home to more than a third of all Europe’s billion-dollar tech firms, with a record £8.26 billion invested in UK start-ups last year. London is home to more than 250,000 software developers – more than anywhere in Europe – and the UK is Europe’s top destination for tech talent. Every hour, a new tech business is founded in the UK.
What you may be more surprised to hear is that the average age for a successful entrepreneur is not 21, or 25 or even 35. It is 42, so there is time for us all. Business and life experience is proving to be key. The UK is starting to have that US spirit – not being afraid of a failure but rather learning from it. And Brexit is not an issue for these innovative technologies or for the multitude of investors that they attract.
And the FinTech revolution is not just creating opportunities for both inbound investment. It is also creating significant opportunities for outbound investment when businesses are ready to expand and roll out their products and services on an international scale. Sovereign has a global office network as well as the expertise and experience to ensure a successful market entry virtually anywhere in the world. Contact us to find out how we can help.