Investment in UK fintech dropped by 8% in 2022 due to the current economic downturn, reaching £10.4 billion in comparison to £11.3 billion in 2021. But despite this, the UK remains to be the leading nation for fintech in Europe.
The fintech market is well established in the UK; it has been around before you would even suspect. Many suggest the global financial crisis in 2008 was the catalyst for fintech, when in fact it has been emerging since the 1960s. Computers have been assisting the processing of checks and storing information in databases in the banking industry since 1961. In the UK, innovation accelerated in London throughout the late 20th century, creating an established hotspot for fintech. Vast growth and modernisation of fintech has redefined today’s financial services, with no sight of the market slowing down.
Development of the UK fintech market
Several fintech clusters have developed across the UK overtime. As previously mentioned, the most established of which is in London and surrounding areas, including Milton Keynes, Oxford and Brighton. Less established, but still up and coming clusters include Edinburgh and Glasgow, Birmingham, Manchester and Leeds. According to a recent study, Manchester and Leeds accommodate around 7% of growing fintech start-ups. Edinburgh, and a proportion of Glasgow, host the third largest volume of fintech’s in the UK.
But over the years, the industry has seen promising growth in the North of England, an emerging hotspot for fintech start-ups, and at the centre of this growth is Newcastle-upon-Tyne and Durham. The industry has seen a continual rise in new competition emerging in this cluster, resulting in the area having the highest proportion of market growth in the UK. So why has there been so much development in the north?
Factors driving fintech in the north
According to a recent study by HM Treasury, there is a large pool of tech talent in the UK, driving investment and innovation ahead of other nations. And a particular hotspot for growth is areas where there is organic development of tech talent. Newcastle-upon-Tyne, a UK Science City, is host to two world-class universities creating a talent pipeline for growing fintech’s. This, combined with excellent transport links to larger cities, providing cheaper leasing and operational costs, the North of England has become a magnet for aspiring fintech start-ups; consequently, offering more job opportunities for tech talent in the north.
In recent years, several newcomers have appeared on the market accelerating industry growth in the north – many of which are constantly looking for new talent. Kani Payments is an example of a thriving fintech newcomer. Founded in 2018 in Newcastle-upon-Tyne, the fintech start up is scaling up quickly to meet market demands. Aaron Holmes, Kani Payments CEO, told The Fintech Times –
“When you think of UK fintech, your mind likely goes straight to London. But Newcastle, named as an emerging fintech hub in the 2021 Kalifa Review of UK Fintech, has put itself on the global fintech map, in particular for its strong specialism in operations”.
He continues by saying that Newcastle-upon-Tyne stood out as a city for establishing Kani Payments due to its wide reputation for Tech Nation’s Fintech Growth Programme initiative, supporting the growth of fintech start-ups founded in the UK.
Along with many other aspiring fintech start-ups, Bottlepay opened its doors in Newcastle-upon-Tyne in 2018. After receiving a staggering £11 million in capital investment in 2021, they announced they will use the funds to rapidly expand their team in the coming years to support further development of their Bitcoin-based global payments app. They have already grown their team by more than 200% in 2020 and have continued to take on new hires since.
The future of fintech in the north
It’s clear that the UK fintech market shows no signs of slowing down, in spite of the recent dip in funding. With an increasingly competitive and saturated market down south, inspired founders are realising the benefits of establishing companies in a more economically viable location in the North of England. And with a growing number of start-ups entering the market, alongside expansion of more established companies, there are increasingly more career opportunities in fintech in and around Newcastle-upon-Tyne.
However, the rapid growth of the industry has left a gap in technical skills to fill vacancies in emerging, and established, fintech clusters. Even in UK Science Cities with organic skilled worker pipelines, such as Newcastle-upon-Tyne, fintech companies are struggling to find talent with the required skills. To address the shortage, companies are recruiting candidates who can be upskilled, or that have skills which can be transferred to meet their requirements.
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