There’s no doubt that the swelling success of London’s fintech ecosystem has helped put the capital’s tech scene on the global map. From early outriders like Zopa, which was the first peer-to-peer lending platform in the world and the billion-dollar businesses like TransferWise and Funding Circle that came after the financial crash in 2008 to challenger banks like Atom, Mondo and Tandem: London is the European capital of fintech.
The sector has benefitted, massively, from the government’s support of tech startups and especially financial tech startups. Both the chancellor, George Osborne, and former mayor Boris Johnson personally spearheaded initiatives to boost access to funding, regulatory support and raise the profile of UK tech businesses abroad. While this might sound logical, the UK government's progressive approach to technology and innovation, especially in financial services, has set the country apart in not just Europe but the wider world. This has all been crucial in helping drive growth in UK fintech, with many businesses from Europe choosing to have an office or their headquarters in the city as they look to grow.
But unless the city’s new mayor Sadiq Khan addresses a number of key hurdles facing companies it will stunt the city’s tech community and make it harder to launch, execute and scale the next TransferWise, Funding Circle or Nutmeg. Of course, the potential of the UK leaving the European Union is probably the biggest threat facing the UK startup scene and not just in fintech right now.
Ahead of the mayoral vote, Khan said: “Perhaps the biggest potential issue facing London’s businesses is the prospect of the UK leaving the EU…I believe our interests clearly lie with Britain remaining in Europe and, as mayor, I will do everything I can to persuade Londoners that we are better off staying in.”
He’s made good on that promise, joining prime minister David Cameron to launch a “Remain” battle bus and campaign for voters to vote to stay in Europe. But this is just the most pressing issue facing the sector.
So far, so promising. Speaking at a mayoral hustings with the tech community ahead of the election that bobsguide attended, Khan quipped that he “knows his FTTP (fibre to the premises) from his HTTP (hypertext transfer protocol)”. Meanwhlie, in a piece ahead of the vote Khan promised to be the “most pro-business mayor yet”:
“From day one, my approach will be to form a true partnership with business,” he said. “I will take an active role in helping to break down the obstacles holding London’s firms back and affecting their competitiveness. As someone who helped to run and grow a business before becoming a MP, I know the challenges many in the business community face and the importance of politicians working closely with business.”
UK fintech and tech companies recently (and unsurprisingly) came out unanimously against leaving the EU. “We believe it would be crazy for the UK to leave the EU, both for businesses and consumers,” Taavet Hinrikus, the co-founder of TransferWise, told the Guardian. More worryingly Hinrikus also said that if Britain does vote to leave Europe, the business may leave Britain in what would come as a big blow - especially if more followed suit. Funding Circle said a successful, well-functioning Europe is crucial to fintech companies like itself and such a Europe must have the UK in it.
Another key issue facing the sector – and one that anyone that lives, works in and visits London will be familiar with is – the city’s poor broadband and internet connectivity. As the city’s population rises and more businesses relocate here, that’s only becoming more acute – especially in the FinTech space. While there is super-fast broadband available in the city, access is patchy and uneven creating ‘not-spots’. Speaking at the hustings Khan said: “We can’t afford not to do it” and suggested future-proofed (i.e. not likely to need updating soon) ultra-fast broadband needs to be baked into planning permission for any new commercial and residential property.
Another part of the infrastructure issue facing the UK and London in particular is the availability of affordable office space – not just for small teams but throughout a company’s lifetime. From a fintech startup point of view, London might have the advantages of a powerful finance sector, fast transport links to New York and Singapore and strong access to funding but if they don’t have anywhere to accommodate growing teams it will choke growth.
Talent, Immigration & Visas
Meanwhile, access to the best talent, ideas and entrepreneurs, is essential if London is to sustain its tech and fintech credentials moving forward. A manifesto compiled by Tech London Advocates, Tech UK and think tank Centre For London, published earlier this year cites a study from O2 which suggests the UK will need to fill 766,000 new digital jobs by 2020 and train 2.3m digitally skilled workers. It’s worth noting, of course, that one of the city’s most high-profile FinTech startups, TransferWise, was co-founded by two Estonian entrepreneurs.
The manifesto also called on the next mayor to be “bold” on visas, saying London’s tech companies need a mayor who will advocate to central government that talent routes like the Tier 2 skilled worker visa be left unrestricted. Khan backed the policy, saying at the hustings that he would take a stand on “unfair visa rules” that hold back companies from bringing in top global talent that benefits not just the economy but the Brits who work alongside them.
“You can’t with one hand encourage people to invest in our country and then have really unfair restrictions when it comes to Tier 2 visa requirements. We’re going overseas to ask foreigners to invest in our businesses but make it so hard for skilled labour to come to London.”