Despite remaining the centre of European fintech investment and attracting more funding than any other country in the EMEA region, London has witnessed a
57% decline in fintech investment in the past year.
According to data compiled by KPMG, investment dropped to
£4.6 billion in the first half of 2023 compared to the £10.8 billion witnessed in 2022.
Is London’s position as a global ‘superhub’ for fintech really under threat? Not if the UK government has anything to do with it.
Paving the way
To counteract this stalling in investment, the UK Government recently passed the Financial Services and Markets Act 2023 to enhance the UK’s competitiveness in the fintech and financial services space, and make the UK more attractive as a place to IPO.
Commenting on the legislation in its recent Pulse of Fintech report, KPMG’s John Hallsworth, a partner within financial services, open finance, and fintech, shared his insights:
“The UK is working hard to become a leading global centre for crypto and digital assets, building on its natural advantages––the legal and regulatory environment, the availability of skills, the quality of the universities and the language and time zone
positioning.
“While the UK may not be first out of the blocks with its crypto and digital assets regulations, they’ll likely come into force in early 2024, it is working to create the right regulatory environment to support a sustainable crypto and digital assets ecosystem
and make it an attractive location to participants, while also protecting consumers.”
It also has the tech talent to support this growth and according to recent research from
Indeed, searches for tech roles in the UK outnumber their EU equivalents, meaning the UK remains a desirable market.
Growing pains
Additionally, an investment fund of £1 billion, designed to inject some fresh capital into the market, has been launched by the London Stock Exchange, Mastercard, NatWest, and Barclays.
Named the Fintech Growth Fund, its aim is to offer strategic financial support to companies in their growth phase while also giving them access to the resources necessary to get to the IPO stage.
Additionally, former Chancellor of the Exchequer, Philip Hammond, will sit on the advisory board and executive team members include Angel Issa, former global head of corporate development and strategic investments at Nomura, Joe Parkin, former Managing Director
at BlackRock, Kaushalya Somasundaram, former UK head of payments, partnerships and industry relations at Square, and Phil Vidler, CEO of FinTech Alliance.
This is a non-profit digital platform launched in partnership with the UK government, to boost access to market, capital and talent within the UK’s fintech ecosystem.
Speaking about the launch of the fund, Phil Vidler said: “The UK has always been at the forefront of innovation in fintech but there is a very clear and well-evidenced growth funding gap.
The fintech growth fund will address the lack of available growth capital by providing a first of its kind domestic, growth-stage, fintech focused venture capital fund backed by strategic investors.
“Our aim is to not only provide the capital needed for founders to scale their businesses, but to also engage with stakeholders across the nation to support the wider ecosystem. In doing so, we believe we can ensure the UK remains a global leader in fintech.”
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