Will Brexit mean London loses its 'fintech capital' crown?

By Daniel Lanyon on Tuesday 13 June 2017

Alternative LendingSavings and Investment

A financial centre for thousands of years, London existing strength in disruptive financial technologies such as blockchain, robo advice and P2P lendi

A financial centre for thousands of years, London's existing strength in disruptive financial technologies such as blockchain, robo advice and P2P lending faces a number of challenges. 

The UK today faces its greatest period of uncertainty in a generation thanks to a divided electorate, the on-going complexities of Brexit as well as the spectre of further political upheaval owing to the Conservatives’ minority government.

Flash back to this time three years ago and all was very different. The UK and particularly its capital city enjoyed a much-envied economic recovery and the start of a fintech boom.  The likes of Funding Circle, Ratesetter, Zopa, Transferwise and Nutmeg were in full flow and new entrants such as Revolut and Scalable Capital were putting together their plans to launch.  Oh, and AltFi had just launched too!

Since then London has established itself as the European Fintech capital, perhaps even the the world’s, attracting over $3.6bn of investments, more than the other nine major European cities combined. 

London’s Fintech dominance is not only based on large deals as it also attracted significantly more transactions than other cities in Europe. More London-based companies received funding since 2014 than the next five cities on the list combined.

Source: Fintech Global

Berlin, however, is fast on the UK’s heels. While its second place is Berlin in the numbers put together by consultancy Fintech Global - which has raked in only $670m in fintech funding, less than fifth of the amount raised by London-based companies.

The city, which has some key differentiators to London, including cheaper rents,  is capturing an growing market share of fintech investments in Europe. Paris, however, saw the biggest increase in terms of deal share among the top four cities in Europe, Fintech Global adds, growing from 12 per cent in 2014 to 19 per cent in 2016. The trend has also been continuing in the first quarter of this year perhaps thanks to a push by the French government to attract investment. The city received 19 per cent of the deals closed across all four cities. 

Third place is occupied by Stockholm, which was inflated by the large rounds raised by Payments & Remittances giants Klarna and iZettle. Paris is the only other city in Europe to have raised over $0.5bn since the beginning of 2014. Stockholm and Berlin have both seen gradual increases in their deal share between 2014 and 2016; however, in Q1 2017 Stockholm’s deals share fell to 12 per cent.

The challenge for the UK, her government and for the its financial centres will be not just to steady the ship but to see off a growing and competitive threat.

This article was originally published on www.roboadvicenews.com.

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