Like Toronto and New York, London is a thriving fintech hub at the heart of a global financial centre. And yet, UK fintechs can innovate in areas currently unavailable in North America and other countries across the globe – thanks to progressive British open banking legislation. It’s creating an effervescent ecosystem that’s ripe for investment and development. Consequently, North American investors and innovators should be looking east to London and the UK regions for palpable opportunities in a sector that’s flourishing.
Take Collision attendee Onfido[i] – an identity verification and authentication company, that digitally proves people’s real identities using photo ID and facial biometrics. This means people can verify themselves ‘anywhere, anytime’. Its AI-based technology allows use of services and products with ease and speed, while stopping identity fraud in its tracks and protecting customer privacy. The UK’s progressive regulatory environment has helped the business flourish.
"The UK’s financial services industry is the world’s leading innovation hub thanks in large part to having such a progressive regulator - the Financial Conduct Authority - who, for example, run sandbox initiatives that allow companies to test innovative propositions under regulatory conditions," says Husayn Kassai, CEO and Cofounder of Onfido. He adds, "This has led to many success stories from challenger banks that are able to offer their customers faster, more convenient solutions and to more advanced contactless payment solutions. As the current pandemic continues, we are seeing many traditional banks accelerating their plans for digital transformation as foot traffic to physical banks continues to fall[ii] and as interest in a cashless society gains more momentum."
It can be argued, perhaps, that the UK’s approach to regulation is the biggest driver behind fintech growth stories like Onfido’s. The FCA’s ‘Project Innovate’ supports firms to tackle regulatory barriers to innovation and enables policy changes to give businesses the flexibility to disrupt in the interest of consumers. This highly collaborative approach has propelled the market, as well as the opportunity to prosper internationally – even in the face of the global Covid-19 pandemic.
“The 2008 financial crisis instigated an entrepreneurship boom in the UK, with companies such as TransferWise, Ebury and Greensill securing significant VC investment, as they responded to the change in customer habits and the development of new technology,” says Antony Phillipson, Her Majesty’s Trade Commissioner for North America. He adds, “The tech sector is built on a decade of consistent growth and despite challenging macro conditions, in 2020 UK tech continues to outperform our European neighbours in VC investment.”
What’s more, UK fintech firms have grown by 500 per cent in the past three years, compared to 170 per cent for the United States, according to some market analyst experts.[iii] In Canada, last year there was approximately $1,295 million in fintech funding across 57 transactions[iv]; in comparison, the total number of deals in the UK in 2019 were allegedly 96, bringing in a staggering $48 billion worth of investment.[v] Against this backdrop, departing the European Union will allow Britain to make bolder, unprecedented policy steps to support its fintech sector further.
It’s part of the democratisation of financial services. This, combined with the innovation that emerges in times of crises are creating a heady combination for investors and start-ups alike.
“As in 2008, we are seeing fintech companies respond to the current economic crisis with products and services that help businesses and consumers navigate this uncertain time. The partnership between industry, regulators and the UK government has contributed to the UK fintech sector’s dynamism in this rapidly evolving environment,” adds Antony Phillipson.
With agility and versatility from innovators and investors alike, the UK is perfectly poised to stay ahead of consumer thirst for fresh financial solutions. Now is the time to act: to invest, as the fintech sector is forced to disrupt and to strike while the iron’s hot by creating cutting edge enterprises. All this, in a land of opportunity - that has both a history of innovation and talent, and an exciting future ahead as a global technology leader.
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