UK FinTech
State of the Nation
About Department for International Trade (DIT)
DIT secure UK and global prosperity by promoting and financing international trade and investment, and
championing free trade.
We are an international economic department, responsible for:
bringing together policy, promotion and financial expertise to break down barriers to trade and investment, and help
businesses succeed
delivering a new trade policy framework for the UK as we leave the EU
promoting British trade and investment across the world
building the global appetite for British goods and services
About HM Treasury (HMT)
HM Treasury is the government's economic and finance ministry, maintaining control over public spending, setting the
direction of the UK's economic policy and working to achieve strong and sustainable economic growth.
Responsibilities include:
public spending: including departmental spending, public sector pay and pension, annually managed expenditure (AME)
and welfare policy, and capital investment
financial services policy: including banking and financial services regulation, financial stability, and ensuring
competitiveness in the City
strategic oversight of the UK tax system: including direct, indirect, business, property, personal tax, and corporation tax
the delivery of infrastructure projects across the public sector and facilitating private sector investment into
UK infrastructure
ensuring the economy is growing sustainably
About Innovate Finance
Innovate Finance is an independent membership association that represents the UK's global FinTech community.
More than 250 global members have joined the Innovate Finance ecosystem to date. These companies range from
seed stage startups to global financial institutions and professional services firms. All benefit from Innovate Finance's
leading position as a single point of access to promote enabling policy and regulation, talent development, and business
opportunity and investment capital.
About the
document and
acknowledgments
The FinTech State of the Nation is a comprehensive summary of the UK's FinTech industry to
help inform stakeholders for trade and investment and demonstrate the UK's attractiveness as a
FinTech destination.
The brochure convenes knowledge and perspectives from industry leaders across the domestic
FinTech ecosystem. This collection of expert views broadly covers the UK's past successes,
current state, and future objectives in key areas that include: demand, capital, regulation and
policy, and talent.
The editors are thankful to all contributors to this document. The time dedicated to sharing their
knowledge and experience of the sector is of huge value to the UK and the FinTech community.
Chief Editors:
Tomas Helm
Head of FinTech at the Department for International Trade
Alex Low
FinTech Specialist at the Department for International Trade
Joshua Townson
Policy and Membership at Innovate Finance
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UK FinTech State of the Nation
Preface
The Rt Hon Liam Fox MP
Secretary of State for International Trade and
President of the Board of Trade
UK FinTech State of the Nation
4
The positive impact
of technology on the
financial services
sector in the
United Kingdom is
unprecedented globally.
Technology has the power to increase transparency and efficiency,
reduce cost, and give the most vulnerable access to financial
services. Society and businesses both stand to gain from these
changes, as incumbents are challenged by the new wave of
digital innovation.
The UK has long been at the forefront of financial services. However,
in more recent times, the sector's positive response to the fourth
industrial revolution has truly set us apart. The perfect storm
caused by growing technology demand, right touch regulation,
and customer empowerment in financial services, coupled with the
sectors response to the financial crisis, has fuelled FinTech's rapid
growth in the UK and its expansion globally.
The UK is the leading global FinTech hub with a thriving ecosystem
and international talent pool spanning the whole country. With an
increasing number of FinTech firms exporting globally from the UK,
we are continuing to set the global standard on the application of
technology, and more broadly, innovation in financial services.
Using key stakeholders from across the UK's FinTech ecosystem,
this document tells us the story of how the UK's FinTech sector has
emerged as the global leader it is today, and why this will continue in
the future.
5
UK FinTech State of the Nation
Foreword
The Rt Hon John Glen MP
Economic Secretary to the Treasury
I am proud that the UK
has been recognised
as the best place in
the world to start and
grow a FinTech firm,
and I am committed
to ensuring that this
remains the case.
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UK FinTech State of the Nation
The foundation of our success lies in our leading international financial
services sector, combined with a strong consumer appetite for innovative
products and services and a regulatory environment that leads the world
in the support it provides for innovation. So, it is no surprise the UK is a
leading global FinTech hub, and one that promises to go from strength to
strength in the coming years.
As the FinTech sector matures, on the back of an increasing demand for
technology in financial services, the importance of the sector in sustaining
growth will increase further. The UK government recognises the positive
impact that FinTech has had on financial services, making it easier, cheaper
and faster for consumers and businesses to access products that better
meet their needs. FinTech also addresses the needs of underserved
markets, including the financially excluded, and it helps to tie together an
increasingly interconnected world, promoting trade and global growth.
This document describes the actions that the government, regulators and
industry have taken to stimulate and sustain the growth of our FinTech
Sector. I hope you'll agree with me that all of this creates a compelling
rationale for entrepreneurs to set up their next FinTech venture in the
UK and for investors to choose a UK-based FinTech firm for their next
major investment.
7
UK FinTech State of the Nation
Contents
8
UK FinTech State of the Nation
PREFACE
4
FOREWORD
6
AN OVERVIEW OF THE UK FINTECH SECTOR
10
THE UK AS A TECH CENTRE OF EXCELLENCE
15
REGIONAL ANALYSIS - FINTECH ACROSS THE UK
17
THE UK'S INVESTMENT ENVIRONMENT
23
FINTECH INVESTMENT IN THE UK
25
A VIEW FROM THE REGULATOR
28
REGULATION: THE BUSINESS PERSPECTIVE
30
FINTECH TALENT & SKILLS
33
THE POWER OF DIVERSITY IN FINTECH
35
FUTURE TECHNOLOGY TRENDS
38
PARTNERSHIPS, CULTURE & INNOVATION:
42
THE KEY TO FUTURE SUCCESS
MAKING THE UK THE BEST PLACE IN THE WORLD
45
TO START AND GROW A FINTECH BUSINESS
MAKING UK FINTECH MORE COMPETITIVE GLOBALLY
48
KEY MILESTONES
50
CLOSING REMARKS
52
CONTRIBUTORS
54
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UK FinTech State of the Nation
An Overview
of the UK
FinTech sector
UK FinTech State of the Nation
10
Innovation in finance has marked a new way of providing
consumers and businesses with the technological tools
they require to widen their access to new products
and services - today we call this FinTech, the future
of finance, but it is as much about the 'Tech' as it is
the 'Fin'.
FinTech has driven significant and wide-reaching
innovation throughout the UK's finance industry.
From the latest innovations in insurance to more
available products in the crypto-asset space. Or, from
the increased availability of open banking platforms to
the use of artificial intelligence across the industry, we
are seeing how the FinTech sector plays a significant role
in encouraging innovative change across our economy.
Disruption from FinTech continues to drive change,
innovation and inclusion at both a local and global level.
The organic growth of the tech sector, especially around
what became known as "Silicon Roundabout" in the
2000s and subsequently endorsed by the government
in 2011 as "Tech City", has had far reaching implications
for more established sectors of the economy such as
finance. Coupled with the rise of the digital economy,
increased consumer appetite for digital services and the
fall out of the 2008 financial crash that saw a growing
mistrust towards traditional financial service providers,
the environment was fertile for a technology-driven
disruption of more traditional sectors of the economy.
The UK is a global FinTech leader, building on the
commanding role London holds as a financial services
hub. Investors put more money into UK FinTech than any
other European country in 2018. The UK's deep pools of
entrepreneurial and tech talent, progressive regulators
and policy makers, capital and professional expertise, and
its vibrant startups are driving the digital economy.
FinTech thrives where capital, tech and talent connect
with regulators and government. The Financial Conduct
Authority (FCA) is a key influence in setting standards of
regulation globally. The UK government's current FinTech
Sector Strategy aims to maintain the UK as the best place
to start and grow a FinTech business - through supporting
competition and removing barriers to entry and growth.
This State of the Nation is a strong reference point for
UK FinTech with contributions from a number of key
stakeholders and strategic partners, all of whom have a
deep understanding of the UK FinTech sector. Innovate
Finance is grateful to the Department for International
Trade and all the contributors for making this document
possible and we hope it provides the reader with a clear
vision as to why the UK will continue to be the global hub
for FinTech in 2019 and beyond.
Charlotte Crosswell CEO at Innovate Finance
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UK FinTech State of the Nation
UK FinTech overview
+1600
FinTech firms in the UK,
estimates suggest this will more
than double by 2030
42%
UK's FinTech adoption rate.
Global average is 33%
82%
of incumbents expect to increase
FinTech partnerships in the next
three to five years
UK FinTech State of the Nation
12
89,000
finance and insurance firms
in the UK
$3.3bn
of VC, PE and CVC investments
into UK FinTech in 2018
42%
of workers in UK FinTech
are from overseas
56%
of traditional financial
institutions have put disruption
at the heart of their strategy
64,000
London has the world's highest
concentration of financial and
professional service firms
76,500
people work in FinTech UK-wide,
this number is set to grow to
105,500 by 2030
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UK FinTech State of the Nation
Technology demand
UK FinTech State of the Nation
14
" The UK has emerged as the dominant force of
technology-driven innovation. Together with the right
regulation, policies and business environment, it has
enabled Worldpay to grow from a UK start-up into
a global market leader in FinTech worth over $35bn.
FinTech has never been this exciting and by continuing
to partner with the government, it will lead the way
in creating global opportunities for UK consumers
and businesses."
Ron Kalifa, OBE - Executive Director & Board Member at Worldpay
The UK as a Tech
Centre of Excellence
" TRAction opened its first international
office in London as there is strong
demand for technology from financial
firms to assist them with meeting
regulatory requirements. Following
our successful launch in Australia, we
found that many of our clients had head
offices or subsidiaries in the UK and
Europe which we could leverage our
connections to build up a client base."
Quinn Perrott Owner at TRAction
Over the last year, the performance of the UK digital
tech sector has been world-leading, with British firms
attracting more capital than any other European country.
Our great strength in technology and innovation, built
on the UK's excellence in R&D and creative thinking, is
demonstrated by the breadth of tech activity right across
the country, and the powerful networks being forged by
the next generation of entrepreneurs.
The tech sector has experienced rapid growth over recent
years, both across the UK and beyond. At each stage of
growth, ecosystems experience shared challenges and
find shared strengths. But each ecosystem has qualities
unique to its location and culture.
The digital tech industry is powering the growth of
local economies across the UK. However, it is not the
sole preserve of larger metropolitan cities. Areas such
as Guildford, Aldershot, Slough and Heathrow have
significantly higher digital tech density and the highest
levels of employment and tech turnover, suggesting
that the UK has emerging digital suburbs. The value of
domestic networks must not be underestimated. Physical
proximity often aids collaboration, as evidenced by the
number of tech clusters around the UK.
Global connections are key to domestic
success
Digital tech companies in London are the most connected
in Europe, second only to Silicon Valley for international
connections. 25% of entrepreneurs across the world
report having a significant relationship with two or more
entrepreneurs in London, compared to 33% for Silicon
Valley. These connections extend the UK's market reach
and drive innovation in a process that is inherently
collaborative.
The value of domestic networks must not be underestimated.
Physical proximity often aids collaboration, as evidenced
by the number of tech clusters around the UK.
Connectedness whether local or global drives
innovation, and also extends the market reach of all
players in an ecosystem. Since the success of firms in the
knowledge-based economy is increasingly dependent on
their ability to innovate, the importance of these global
networks to the performance of the UK tech sector cannot
be overstated.
The UK is a global leader in digital tech
investment
The UK was in the top three countries for total capital
invested in digital tech companies from September 2016
to August 2017, behind only the US and China. Only the
US has a higher number of deals, suggesting that the UK
does more small deals than China. This may indicate one
of three things:
1. The vibrancy of the nation's startup and scaleup
landscape;
2. Appetite for risk on behalf of tech investors;
3. Smaller scale, speculative investments in emerging
tech, like AI.
Total investment and number of deals in digital
tech companies have risen significantly since 2012.
From 984 million in 2012, spread over 870 deals to
3.3 billion in 2016 over 2645 deals.
Ambitious tech companies increasingly seek out smart
capital. This investment comes hand in hand with support
from people who have experienced the challenges
of accelerated growth and understand how to help a
company develop from initial proof of concept to mass-
market growth. International investment acts as a catalyst
for global connections bringing together companies
and investors from across the world. This stimulates
worldwide network building, which in turn contributes to
the emergence of ground-breaking global companies.
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UK FinTech State of the Nation
Tech transformation in financial
services
Financial services is being disrupted in a number of ways
by technology. This section explores the impacts of tech
talent, and emerging tech adoption.
Tech skills are being used across a diverse range of
sectors aside from technology, including financial
services, professional services and architecture and
engineering. Using LinkedIn data from the UK's 23 million
members showed that 2.2 million people claimed to have
tech skills in their profile. Tech Nations' research found
that tech skills are highly transferable 36% of members
now working in tech moved from non-tech jobs. 7% moved
from professional services, 5% from financial services and
insurance and 3% from media and entertainment.
For a long time London has been the European capital
of finance. In the East of the city, hundreds of financial
institutions dominate the skyline and the economy.
However, FinTech is not the exclusive preserve of
the capital.
The next largest regions for FinTech are the South East
and East of England, which surround the capital. When
broken down, this geographic bias is unsurprising.
London has always been home to the UK's and Europe's
most dominant financial services. It is also the centre
of governance and financial regulation nationally. In
an industry so dependent on legal rules, being close to
regulators is invaluable.
Equally, almost all of the UK's premier FinTech
accelerators are based in the East End. It is therefore
unsurprising, that 85% of the accelerators attended by
UK FinTech firms are in London. These pull factors add
up, and go some way to explain London's dominance in
the field.
Yet some firms are blossoming outside the capital.
Durham-based Atom Bank is revolutionising commercial
lending. Its customer-centric approach to banking makes
getting a personal mortgage or loan easier for consumers.
Even more geographically surprising is Penarth-based
Wealthify, an investment platform for everyone. Last year
the company expanded from the UK having raised 2.14
million in investment. Initiatives like FinTech North have
also sprung up to showcase the best FinTech companies
the Northern Powerhouse has to offer.
Tech Nation's FinTech programme -
supporting UK growth
Tech Nation's sector-specific FinTech programme is
aimed at company founders. In 2018, through a 24 hour
induction, series of in-depth learning sessions, networking
events and a three-day international showcase trip,
founders became part of the very first Tech Nation
FinTech cohort.
Last year was an exceptionally strong year for investment
in the UK FinTech sector as it attracted a record 2 billion
in VC funding, including many weighty deals, indicating
a maturing ecosystem. But nearly half of the UK's high-
growth FinTech firms are still at seed stage, and we need
to feed the pipeline. This is why Tech Nation has decided to
target this programme at 'bridge-stage' startups.
Gerard Grech CEO at Tech Nation
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UK FinTech State of the Nation
Regional Analysis -
FinTech across the UK
The UK is the undisputed FinTech
capital of the world. This position
has been built on 3 key factors: the
strength of the UK in financial services,
the nature of UK consumers and the
UK regulatory environment.

FinTech businesses in the UK benefit from its skills in
financial services, its network of supporting service
businesses, and its draw as a place for international
investment and capital raising. These factors have turned
the UK into an incredibly attractive place for innovative
businesses like Zopa to grow.
UK consumers are also some of the most digitally savvy
in the world, sitting behind only the US in terms of their
uptake of digital commerce. UK customers, in general, are
very open to trying new and innovative financial services
products and services that take advantage of new
consumer technologies.
The UK benefits from a unique combination of one of
the most advanced and robust regulatory regimes in the
world, but one that is also very supportive of innovation
in financial services, fostering competition in the sector
and providing consumers with more choice. Zopa has
benefited from this approach - through both the FCA's
bespoke peer-to-peer lending regulations, and the PRA's
new bank startup unit. The FCA's regulatory sandbox the
concept of which I worked closely with the regulator on in
the Blackett Review on FinTech, commissioned by George
Osborne has become a blueprint for fostering innovation
around the world."
Giles Andrews OBE Co-Founder & Director at Zopa
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UK FinTech State of the Nation
England:
FinTech clusters developing across England have created
real value for people, firms and local communities. Local
Enterprise Partnerships (LEPs) and partnerships between
leading firms, local government and higher education
institutions are driving growth across the Southeast
and beyond.
In the East, the Financial Industry Group (FIG) in Norwich
is one such partnership tasked with developing a
supportive ecosystem recognised internationally as a
centre of excellence of FinTech. The support and proximity
to leading global universities and established tech centres
like Cambridge and Oxford will undoubtedly drive further
growth in this already well-established region.
Further afield, the Midlands is one of the largest UK
regions for business, professional and financial services
outside of London and for tech companies servicing their
requirements. The strength in Birmingham's Business,
professional and financial services sector can be seen
on its skyline. The FinTech cluster is seeing significant
growth, with a 20% increase in the number of companies
driven by cyber security firms in particular since
2010. Birmingham is emerging as a global BPFS hub,
with firms such as HSBC, KPMG, PwC and Deutsche Bank
expanding their presence locally. Other major cities
where professional and financial services / FinTech are
prominent include Nottingham, Leicester, Coventry
and Stoke. To the West, the Bristol area is also developing
fast and FinTech West has recently been formed to help
build the community in this region, which has close
proximity to the South Wales corridor.
We need to recognise that the strength of the industry
in the capital and in other areas across the South such
as Cambridge, has been vital to establishing the UK's
leadership position in FinTech and the strength of the
UK FinTech brand internationally. However, it is also
right that we ensure that all parts of the country benefit
from the growth of the FinTech sector, both in terms of
the economic growth derived from businesses building
FinTech products and services, and the benefits that
FinTech delivers to financial services customers through
better products and services.
Myself and my fellow envoys are focused on how to make
this a reality. For me that's about levelling the playing
field and ensuring that a FinTech's ability to succeed is
dictated by the strength of its business proposition and
not by geography.
David Duffy - Regional FinTech Envoy for England &
CEO at CYBG
Northern Powerhouse:
"It's great up North. Atom chose Durham
as its home and headquarters. With
excellent transport links, a growing
digital economy, talented and ambitious
people and proximity to prestigious local
universities, it's been a great place to
build our business."
Mark Mullen CEO at Atom Bank
According to World Bank data, the North of England
(Northern Powerhouse) would be the 9th biggest country
in Europe by financial services Gross Value Added (GVA),
making it larger than 30 other countries. The region
employs 11 times as many people in financial services as
Frankfurt, and twice as many as Paris. Although there
are no official statistics, the Northern Powerhouse is
also likely to be the largest FinTech community in the UK
outside London.
Leeds and Manchester are widely acknowledged as being
the main FinTech hubs in the region, although Liverpool
and Newcastle have established financial services and
digital scenes and there is also an increasing amount of
activity in other locations. The FinTech community in
the north is mainly made up of established businesses
seeking to embrace FinTech, rather than startups looking
to drive disruptive change. The evolving FinTech sector is
receiving an increasing amount of support from the major
universities across the north, including the launch of
FinTech courses, the creation of physical innovation hubs,
and a number of initiatives to encourage academics and
businesses to work together on innovation and FinTech
related challenges.
Manchester has strengths in banking, insurance,
payments, platforms and data analytics, with major
brands having a presence in the region including Coop
Bank, Barclays, BNY Mellon, HSBC, and RBS. Leeds has
a large diverse base of financial services and technology
organisations and is host to 30 national and international
banks, including the likes of First Direct, CYBG, and HSBC,
home to 3 of the top 5 building societies and is the only UK
city outside of London to be home to offices of the three
main credit referencing agencies Experian, Equifax and
TransUnion. Liverpool is the largest wealth management
centre outside London, and home to major international
financial brands, including Santander, Barclays, Investec
and Pershing BNY Mellon. Newcastle is home to a number
of major brands including Sage, Virgin Money (now CYBG),
and Tesco Bank, and has a thriving digital scene.
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UK FinTech State of the Nation
The FinTech landscape in the north is forming not just in
individual cities, but across the region, with events-based
community FinTech North playing a central role. Founded
in Leeds in 2016, it has now expanded into a series of
conferences and events across locations including
Leeds, Manchester, Liverpool, Newcastle, Harrogate,
and Sheffield. FinTech North has hosted over 35 events
attracting over 4000 delegate registrations from over
600 different companies, with speakers drawn from
21 countries.
From an inward investment point of view the regions
benefit from a coherent message, mapping their
specialisms with international FinTechs to help create
a compelling message. When multiple cities combine
their strengths, as we are starting to see in the North of
England, this can be extremely powerful.
Chris Sier FinTech Envoy for Northern Powerhouse &
Chairman FinTech North
Julian Wells Director at Whitecap Consulting &
FinTech North
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UK FinTech State of the Nation
Wales:
" The decision to establish our HQ in
Wales was based on a variety of factors:
strong pipeline of talent from local
universities, emerging innovation
clusters, generous Welsh government
incentives and new SME accelerators."
Chris Ganje - CEO at Amplyfi
There is a nascent FinTech ecosystem in Wales, primarily
centred around the South Wales corridor of Cardiff,
Swansea & Newport. There are a multitude of tech hubs,
around 40 FinTech firms, a dozen corporate financial
services firms headquartered in Wales and perhaps 20
other significant financial services and FinTech firms who
have opened a key function in Wales.
Wales already has a plurality of successful financial
services and FinTech companies particularly in the areas
of insurance, price comparison, payments and lending
with some successes in the areas of banking, investment
management and RegTech.
Wales has good culture, talent and skills, low operating
costs, great work life balance, low property and operating
costs, a burgeoning academic sector and easy access to
London. Wales is a proud nation and has a strong sense of
community where even the corporate financial services
firms are keen to participate to help the FinTech startups.
There is good networking and a programme of associated
networking events and groups. Funding is readily available
although firms tend to have to travel to find it rather
than having investors knocking on their door, as happens
in London.
In order to further enhance the ecosystem, the HM
Treasury appointed FinTech Envoy for Wales is working
closely with Welsh government to establish a new not-for-
profit organisation called FinTech Wales. FinTech Wales
will be run by a broad board of experienced FinTech and
financial services leaders together with public sectors
stakeholders and leaders from other firms that serve the
needs of the industry. The board aims to establish a clear
vision for FinTech Wales during the first half of 2019 and
establish a programme of activities to enhance the Welsh
FinTech Ecosystem which enables Wales to be identified as
a go-to location for FinTech and enable anyone wanting to
start a FinTech company to have the best possible chance
of success.
Richard Theo FinTech Envoy for Wales & Co-Founder &
CEO of Wealthify
Northern Ireland:
" We looked at many potential locations
and Belfast was the outstanding
choice. The combination of a highly
educated workforce, attractive business
environment and great infrastructure,
underpinned by the support of local
government and Invest Northern
Ireland, offers a compelling proposition
for a global financial services group
such as ours."
Luke Barnett - Group CIO at Tullett Prebon
Northern Ireland is a leading international centre for
financial technology and Belfast is the world's number
one destination for FinTech development projects. Major
international banks, insurers and FinTech companies in
the region include Citi, Lloyds, Allstate, Liberty Mutual,
Visa, Cayan and Chicago Mercantile Exchange.
International companies benefit from the strength of
technology and innovation talent in the region, but they
have similarly tapped into the wealth of other skills to
deliver a broad range of services to clients including
fund administration, operations, fraud prevention, risk
management, compliance and legal services.
Northern Ireland has a thriving start up and SME FinTech
community thanks to a highly developed entrepreneurial
ecosystem, vibrant networking scene and the active
promotion of sector collaboration. FinTech incubators
established in the region by Danske and Barclays
are nurturing entrepreneurs in payments, InsurTech
and RegTech.
Northern Ireland has a high concentration of product
development activity in which NI tech companies and
teams 'own' product management, design, development,
QA and DevOps from end to end. Consequently it has
become a major international hub for trading technology,
data analytics, cyber security, and regulatory solutions.
Alastair Hamilton - CEO at Invest Northern Ireland
Kerry Quinn Client Executive for Financial
Professional Services at Invest Northern Ireland
20
UK FinTech State of the Nation
Scotland:
" When you cluster together people
working at the cutting edge
of data science with leaders in
financial services, it creates a
unique environment of innovation,
collaboration and ideas sharing. That's
one of the big draws for us in Scotland,
where you have some of the world's best
academic institutions and innovation
hubs for globally leading financial
institutions sharing space together."
Paul Christensen CEO & Co-Founder at Previse
Scotland is a global FinTech centre building on its
reputation as an international financial location with
Edinburgh being the second financial centre in the
UK after London. Today, talented people, innovative
entrepreneurs, an established financial services sector,
a supportive business environment, world leading
universities and a vibrant tech scene are rapidly growing
Scotland as one of the top FinTech destinations in the
world as well as being voted one of the top places to live in.
Scotland is now home to over 100 FinTech companies and
the country has been voted the best European place to
start a tech business. Scottish FinTech firms are tackling
societal and economical challenges with innovative
solutions and technologies. Growth in the Scottish FinTech
sector is very strong and the number of innovative
FinTech SMEs based in Scotland has grown by three times
in twelve months from 2018.
This growth has been driven by new startups, existing
international FinTech firms setting up in Scotland to
expand and early stage technology firms expanding their
proposition into financial services. This is supported by
many of the world's most respected financial institutions
having functions in Scotland, and the growth in Scottish
financial services having recently outstripped London.
There are significant opportunities for FinTech firms to
grow through collaboration in Scotland with the financial
sector as demonstrated by FNZ with Standard Aberdeen
Life and FreeAgent with RBS.
In addition, entrepreneurs and companies relocating to
Scotland can benefit from an unparalleled level of support
from dedicated public sector agencies such as Scottish
Development International (SDI). Scotland's universities
were the first to offer specific degree courses in FinTech.
To help Scotland further build on its FinTech credentials,
FinTech Scotland was established in 2018 by members
of Scottish Financial Enterprise (SFE), University of
Edinburgh and Scottish government. FinTech Scotland
acts as a strategic enabler ensuring the sector achieves
critical mass through innovation, collaboration and
inclusion as part of the country's broader digital and data
economy objectives.
FinTech Scotland works closely with SFE, the respected
body representing all financial institutions in Scotland
as well as the international FinTech body FDATA in
establishing a global open finance centre of excellence.
David Ferguson FinTech Envoy for Scotland & CEO
at Nucleus
Louise Smith FinTech Envoy for Scotland & Head of
Intelligent Automation at RBS
Stephen Ingledew CEO at FinTech Scotland
21
UK FinTech State of the Nation
Capital & Investment
" The UK has always been a nation
of inventors, of imagineers and of
entrepreneurs. The UK's exceptional
R&D incentive schemes ensure that
firms that invest in change are rewarded
to continue investing in their future.
Encouraging further investment into
financial services innovation by the UK's
89,000 finance and insurance firms
will be instrumental in helping the UK
remain one of the world's most innovative
economies. Today we are the world's
FinTech capital, and continuing to utilise
these initiatives and working with our
government will be a critical component
to ensuring we maintain this position."
Adam Kene - Founder & CEO at Kene Partners
UK FinTech State of the Nation
22
The UK's Investment
Environment
" At Oval Money we believe in creating
a product that is European at heart
and thus even though we are Italian
founders, we chose the UK to be the
headquarters. The UK and especially
London is still the largest hub for
startups with real incentives to be here
like tax benefits for startups, equity
investors through crowdfunding, R&D
tax reliefs and a great ecosystem of very
diverse talent from all over the World"
Benedetta Arese Lucini Co-Founder & CEO
at Oval Money
The UK is the home of European enterprise and
investment. We have the most mature and highly-
developed funding eco-system in Europe, connecting
entrepreneurs and investors along an innovation chain
which is supported by strong government backing, world
renowned scientific and academic institutions, and a
rich support infrastructure. From business angels and
crowdfunding, to venture capital and the public markets,
the UK is the best and most logical place in Europe to
start, run and grow a business.
Similarly, if you are an investor, there is no better place
in Europe to find exciting, cutting-edge companies that
are not only creating great things, but which have a
commercial potential as well.
Consider the facts: we have a highly-educated workforce
with 4 out of the top 10 universities in the world. In 2018,
more than 660,000 new business were created . Foreign
Direct Investment reached 1,336.5 billion in 2017 in
the UK according to the Office for National Statistics ,
making us the destination of choice for European inward
investment projects, which reached 1,205 projects that
same year. Of the 33 billion raised by UK private equity
and venture capital funds in 2017, over 80% of that came
from outside the country (in fact, the UK is the second
biggest global hub for private equity and venture capital
after the US).
Key to all of this is our long and proud track record of
enterprise, entrepreneurialism and innovation. And
nowhere is this more obvious than in the tech sector.
Much of this success is facilitated by a raft of government
initiatives and funding initiatives. Tax-advantaged venture
capital schemes such as the Seed Enterprise Investment
Schemes (SEIS), Enterprise Investment Schemes (EIS) and
Venture Capital Trusts (VCTs) have all raised significant
sums from retail investors and have played an important
role in providing a continuum of early stage funding
for companies.
They provide important development funding to build the
generation of growth companies that are moving into the
next phase of larger scale up capital.
The government has also announced measures to unlock
over 20 billion of investment of 10 years through the
British Business Bank (BBB); a government-owned business
development bank supporting economic growth by making
finance markets work better for smaller businesses.
In June 2018 the BBB announced the launch of British
Patient Capital (BPC), a 2.5 billion investment vehicle to
help innovative UK startups become world-class leaders
through long-term investment by investing in venture
and growth capital funds. By investing alongside with the
private sector, British Patient Capital will support 7.5bn of
investment for British businesses.
Alongside this, the BBB started a 500 million 'Managed
Funds Programme' designed to increase access to
longer-term venture and growth capital for ambitious and
innovative, high potential companies in the UK. As part
of the government's response to recommendations set
out in the Patient Capital Review, the new programme will
invest commercially in large-scale fund-of-funds, run by
experienced managers, to boost the amount of patient
capital available to the UK's high-growth businesses.
Startups need more than capital to support their growth,
of course, and one of the most effective ways of providing
this is through accelerators and incubators, programmes
designed for young businesses and offering them a range
of services such as legal advice, finance investments
access to professional networks, mentoring and sometimes
even office space or funding. The latest estimates put the
number of accelerators operating in the UK at 186 and
the number of incubators at 205 . These programmes are
hugely beneficial. According to new research, the average
accelerated company raises 44% more funding and
achieves a 75% higher valuation than those that do not .
Their success and popularity are a clear indicator of this
country's entrepreneurial appetite. We are producing
outstanding companies across a wide range of sectors,
some of which, like FinTech, barely existed a decade
ago. We have a proud history of innovation, and the
infrastructure and expertise to flourish in the years to
come. No matter where you go, you will find people and
companies doing extraordinary things, pushing the
boundaries of what is possible. It is these companies
which illustrate just how important a combination of
ideas, business expertise and investment is to fostering
enterprise. Whether it is our world-leading academic
institutions, our ability to create and attract talent from
across the globe, our huge funding eco-system or, perhaps
more fundamentally, our entrepreneurial culture, the UK
truly is the innovation nation.
Tim Hames Director General at British Private Equity
& Venture Capital Association (BVCA)
Tom Allchorne Director at British Private Equity &
Venture Capital Association (BVCA)
23
UK FinTech State of the Nation
Key Government Funding Initiatives
Seed Enterprise
Investment Scheme
(SEIS)
Your company (or group of companies if you're a parent company) may
qualify if it is less than 2 years old, and at the time of investment has:
no more than 200,000 in gross assets
fewer than 25 employees
not previously carried out a different trade
You will not qualify if you've already had investment through EIS or a VCT.
Enterprise Investment
Scheme (EIS)
Your company (or group of companies if you're a parent company) may
qualify if at the time of investment it has:
no more than 15 million in gross assets
fewer than 250 employees
been more than 7 years since it's first commercial sale
There may be higher limits if your company carries out research,
development or innovation and meets certain conditions.
Social Investment Tax
Relief (SITR)
Your social enterprise must be either a:
registered charity
community interest company
community benefit society
Your social enterprise may qualify if you have:
no more than 15 million in gross assets
fewer than 250 employees
Venture Capital Trust
(VCT)
A VCT is a company that has been approved by HMRC and invests in, or
lends money to, unlisted companies.
A VCT may invest in your company if it has:
no more than 15 million in gross assets
fewer than 250 employees
not been more than 7 years since its first commercial sale
There may be higher limits if your company carries out research,
development or innovation and meets certain conditions.

Source: Gov.uk - Guidance: use a venture capital to raise money for your company 2016 - updated on 5th September 2018 & Gov.uk Guidance:
use SITR to raise money for your social enterprise updated on 25 January 2019
24
UK FinTech State of the Nation
FinTech Investment
in the UK
The UK has established itself as a leading global FinTech
hub following a banner year for investment activity
across the entire FinTech lifecycle from seed capital
through to billion dollar mergers and acquisitions
("M&A"). Investment activity, including Venture Capital
("VC"), Private Equity ("PE") and Corporate VC ("CVC")
investment as well as M&A soared to US$ 20.7bn (2017
US$5.6bn): more than half of the US$37.5bn recorded
across Europe and representing over 20% of the global
activity of $111bn.
UK FinTech Investment Activity
Sources: Innovate Finance UK FinTech VC Investment Sector Analysis
12 February 2019 & KPMG Pulse of FinTech 2018 H2, 13 February 2019,
Data provided by Pitchbook
FinTech funding remained strong with US$3.3bn of VC, PE
and CVC investments in 2018, over 68% of the US$4.8bn
recorded across Europe. Growth of these investor classes
has increased on average of 55% per annum since 2014,
but 2018 saw the UK's share of VC, CVC and PE funding
drop from 14% of global investment to 8.3%, mostly due
to Ant Financial's US$14bn funding round in Q2 of 2018
vastly increasing the overall global investment. M&A
activity has grown since 2014, showing the increasing
maturity in the sector as the sector's pioneers begin to
exit or consolidate, but it is still driven by relatively few
significant transactions.
There have been a number of headline investments
and deals during 2018 across the full spread of VC, PE,
CVC and M&A transactions. Revolut's US$250m Series
C funding was in the global top 10 largest VC funding
rounds in 2018; and of the ten largest European FinTech
M&A deals in 2018, six of them were in the UK. 2018 also
saw the first IPO for a UK FinTech: with Funding Circle
obtaining a 1.5bn valuation and raising 300m at their
IPO in September 2018, showing the maturing of this
sector in the UK.
VC and CVC UK FinTech Investment
Source: Pitchbook Data 4 January 2019, KPMG LLP Analysis

Specifically, CVC investors are accelerating their
investment in this space, typified by the US$20m
investment in Bud from HSBC, Goldman Sachs and
ANZ Bank, among others. This investor class is now the
second most active group investing into UK FinTech
providing around 40%of total VC investment, which is
a fourfold increase compared to 2015. This is supported
by a healthy 70% increase in the average deal size in
2017 and 2018 compared to the earlier part of decade,
demonstrating a focus on more mature investments by
this increasingly important class of investor. CVC investors
also tend to be international: with over 65% of these being
from overseas, predominately from the United States
of America.
VC and CVC Average Value per Deal
Sector coverage
A defining feature of the UK FinTech market is the
depth and breadth of sectors that it covers. Investment
into challenger banks led the way with US$461m of VC
investment in 2018: mostly Revolut's Series C funding
and Monzo's US$110m Series E; but there were also
high levels of VC investment into several FinTech sub-
sectors, which showed a sharp increase in activity
from 2017. These included personal finance and wealth
management (US$333.6m), alternative lending and
finance (US$306.6m), blockchain and digital currencies
(US$174.7m), Insurtech (US$103.1m), and payments
(US$102.5m).
Source: Pitchbook Data at 4 January 2019, Analysis by KPMG LLP
in the UK
25
UK FinTech State of the Nation
Building regional hubs
While London is frequently associated with FinTech
startups and represents 84% of VC, CVC and PE
investment volume, there is also considerable activity
outside the Capital. This has received a further boost from
the government's 21m Tech Nation programme, which
aims to create a national network of regional tech hubs in
areas such as Belfast, Birmingham, Cardiff and Edinburgh.
Many of the UK's recent FinTech success stories are
based in the regions, where some mature FinTechs are
now also the subject of M&A transactions. In 2018, three
of Europe's largest deals involved firms based outside of
London, including the buyouts of Woking-based Fidessa
Group for US$2.1bn and Datchet-based IRIS Software
group for US$1.8bn, as well as the US$910m private equity
investment in Peterborough-based BGL Group.
International expansion
Maintaining the UK's status as a global FinTech hub as well
as promoting expansion around the world is also an area
of focus that has led to successful outcomes. To that end,
in 2018 the UK released its first FinTech Sector Strategy
with the aim of helping the UK retain its leadership in the
FinTech space in Europe. Part of this strategy includes
appointing six FinTech regional envoys to ensure the
benefits of FinTech are felt across the UK.
Alongside this, a major aspect of the government's
support for the FinTech sector in recent years has been
the establishment of 'FinTech bridges' with jurisdictions
around the world to help reduce regulatory barriers and
support international expansion in a post-Brexit world.
So far, these bridges have been established in Australia,
China, Hong Kong, Singapore and South Korea.
Anton Ruddenklau - Global Co-Leader of FinTech
at KPMG
Joe Cassidy - Head of Market Infrastructure at KPMG
in the UK
Motive Partners' focus on technology-enabled
companies that power financial services meant
the UK was an obvious destination for us to set up
our European Headquarters, building our 15,000
square foot Innovation & Investment Centre in
Canary Wharf. From Thomas Savery's steam
engine in 1698 to Sir Tim Berners-Lee's World
Wide Web in 1989, for centuries the UK has been
a place of imagination and creativity, producing
some of the most life-changing, pioneering
solutions in history. The UK is continuing to
affirm its place as an innovation capital through
the climactic evolution of financial services as it
intersects with technology there has never been
a more exciting time to be investing into the UK's
FinTech ecosystem.
Increasing levels of investment into the UK's
FinTech industry show that the industry is going
from strength to strength. The UK remains
Europe's best destination for FinTech investment
and the increasing levels of later stage growth
capital being deployed suggest the industry is
maturing at an unprecedented rate globally. The
success of the UK's FinTech sector proves that
there is no better place to innovate and invest in
the future of financial services. The UK's diverse
FinTech talent, connectivity and capability
combined with the government's commitment to
ensuring the continued growth of the industry sets
it apart from other financial services hubs across
the globe.
Furthermore, we are now seeing increasing levels
of collaboration between incumbents and new
entrants within the financial technology space.
Firms that provide the right combination of capital
and value-creation capabilities to enhance this
relationship stand to gain, and will ultimately
support the next generation of technology-enabled
financial services in the UK.
Alastair Lukies CBE Prime Minister's Business
Council & Founding Partner at Motive Partners
26
UK FinTech State of the Nation
Regulation
27
UK FinTech State of the Nation
" We looked at a number of jurisdictions when we decided to
expand in Europe. Ultimately, we selected the UK to be our
European regional headquarters. A clear, structured and
applicant-friendly UK regulatory environment was one of
the positive factors."
Ricardo Capelveere - Founder & CEO at Currenxie
A view from the
Regulator
"We are humbled to say that without the
FCA regulatory sandbox we wouldn't
have been successful. We wouldn't have
had an opportunity to prove our business
model in a way that balanced support
for new innovation and consumer
protection."
Edward Maslaveckas - Co-Founder & CEO at Bud
Why we care about Innovation
Innovation is more than just a buzz word at the FCA, it's
something that actively helps us achieve our objectives,
particularly in promoting effective competition in the
interest of consumers. It's why we have a dedicated
Innovation Division at the FCA.

Innovate was launched by the FCA in October 2014,
shortly after receiving our competition mandate. We
launched our RegTech programme in 2015, after issuing
a Call For Input to find out more about how we could
support the adoption and development of RegTech.
At the heart of Innovate is the understanding that
regulation designed to fit different products at a different
point in time can hinder the progress of new technologies
created for the here and now. In short, a legacy approach
can produce legacy outcomes.
Therefore, we decided that we had to create the
conditions that would allow competition to work as well as
it could through innovation.
Our aim through RegTech was to support the development
of innovative strategies and data-led approaches to
provide opportunities for us to regulate and supervise
more efficiently and effectively and overcome regulatory
challenges in financial services

The first steps
When we first launched, we had one service offering -
Direct Support a dedicated contact point at the FCA to
help firms navigate the tricky landscape of regulation.

In 2016, we focused on the UK financial advice market
and co-wrote a paper with the UK's HM Treasury on the
provision of financial advice in the UK (the Financial Advice
Market Review). We found that steps needed to be taken
to make the provision of advice and guidance to the mass
market more cost-effective, such as through 'robo' advice.
To help address the findings we created the Advice Unit
where we provide tailored feedback for firms involved in
advice and guidance services.
Evolving our approach
The Sandbox supports firms that want to test new or
innovative ideas with real customers in a controlled
environment. Balancing all our statutory objectives
(consumer protection, protecting and enhancing market
integrity, and promoting effective competition in the
interest of consumers) is very important for us, and this
'controlled environment' means that firms still need to
follow the rules before they can test on consumers. It is
open to authorised firms, firms that need authorised, and
firms that provide technology services to regulated firms.
We are looking for products that serve a genuine
consumer need, that offer a solution to an underserved
corner of the market or a new approach to a thorny issue.
It is not a badge of honour, there are no favourites, and
there are no free passes. We do not favour a particular
technology, or company, but will support all those that are
truly innovative and provide a genuine consumer benefit.
Demand for the sandbox continues to be high, and our
fourth cohort was our largest to date with 69 applications,
of which 29 went forward to testing.
We've also focused on specific areas that could benefit
from innovation and we launched our first sector specific
support function, the Green FinTech Challenge.
Through our RegTech programme we have targeted
specific areas where we have seen opportunity for
innovation and technology to deliver better outcomes for
firms, markets, consumers and regulators. Since 2015,
we have delivered TechSprints focussing on regulatory
reporting, access and mental health (vulnerable
consumers programme) and AML/financial crime.
We have also moved our approach from purely TechSprint-
led to working alongside the BoE and regulated firms
to develop a shared vision to make the current system
of regulatory reporting more accurate, efficient and
consistent. The pilot explores how to make reporting rules
less reliant on human interpretation and implementation
and improve the quality of regulatory data.
Feeding back into the organisation
The RegTech team have developed a series of
engagement tools to bring external views into the
organisation and developing industry-wide know-how
around specific innovations and developments. This
includes demo days, where we invite anyone with a
RegTech solution to demo their product to a panel of
interested parties from across the FCA. We also host
TechKnows, bringing experts in to bring to life the
technology that exists and how it could change the
regulatory landscape in the future.
The sandbox has also proven to be a very useful tool for
identifying gaps in policy, or highlighting unnecessary
barriers to entry and innovation. This includes areas
of financial services where there is a lack of regulatory
clarity which may hinder the adoption and implementation
of innovative technologies.
28
UK FinTech State of the Nation
One such example is Distributed Ledger Technology
(DLT) and cryptoassets. This fed into FCA policymaking
through which we published our position on DLT, in this
case supporting its use in financial services. We took a
similar approach to the cloud in 2016, when we became
the first G7 nation to produce guidance on outsourcing to
the cloud.
Our DLT work also helped with our approach to
cryptoassets which included participating in the
Cryptoassets Taskforce in 2018. This was part of the wider
UK government's FinTech Sector Strategy and brought
together HM Treasury, the FCA and the Bank of England.
In early 2019 we published 'Guidance on Cryptoassets',
a consultation document that laid out the regulatory
treatment of different types of cryptoassets, as well
as conducting research into consumer behaviour
around cryptoassets.
However, it's just a step in our wider cryptoasset work
as the taskforce has also identified 3 major harms: to
consumers, to market integrity and the risk of financial
crime. During 2019 the Taskforce members will each take
steps to address these harms and to encourage future
beneficial innovation.
Expanding our horizons
Very early on, we realised the importance of cross border
collaboration to innovation one of the reasons why the
FCA's Innovate initially proposed the Global Financial
Innovation Network (GFIN).
The GFIN seeks to provide a more efficient way for
innovative firms to interact with regulators, helping them
navigate between countries as they look to scale. The
GFIN currently has 29 members, and this list continues
to grow. It will also create a new global framework for
co-operation between financial services regulators on
innovation related topics, sharing different experiences
and approaches, including the potential for firms to test in
multiple jurisdictions concurrently.
Our international collaboration doesn't just occur
within the GFIN. To deal with new developments that
are usually cross-border in nature, the Innovate team
works closely with other regulators and standard setting
bodies. This includes the FCA chairing the International
Organisation of Securities Commissions FinTech Network
steering committee and contributing to a range of
workstreams, including on big data analytics and artificial
intelligence. This reflects the importance we attach to this
work globally.
Our AML TechSprint in May 2018 was the first Global
TechSprint and convened firms and regulators from
across the globe. Our follow-up TechSprint in July 2019,
will focus specifically on Privacy Technology and again will
bring a global network of regulators and firms together to
work on a solution to an issue that affects every human on
the planet.
Innovation begins at home
A large part of our focus is on supporting the UK FinTech
ecosystem. Our own Innovate events in London and
Edinburgh in January this year attracted over 350
attendees from approximately 20 countries.
We also work closely with other government departments
such as the Information Commissioners Office, the Centre
for Data Ethics and Innovation, and the Competition and
Markets Authority to discuss areas of common interest
such as the General Data Protection Regulation (GDPR), or
to discuss the challenges and opportunities that data rich
business platforms within the financial services industry
can bring.
The academic sector is also significant in the UK and we
engage and support in many ways relating to education
and knowledge, including supporting world class research
projects with the Alan Turing Institute.
We also proposed the idea of a UK cross-sector regulator's
sandbox in October 2018. We conducted a 6-month
feasibility study into how a new cross-sector sandbox,
involving multiple UK regulators, could be established.
This is truly pioneering and illustrates how committed
we are to breaking down regulatory barriers to financial
innovation in the UK.
RegTech
Our RegTech work initially focussed on our role as catalyst
for development and adoption on new technologies to
support compliance. We use our convening authority
in the form of TechSprints to bring collaborative
groups together.
Supported by our engagement with the FinTech and
RegTech market we've identified opportunities to utilise
such technologies ourselves to improve the efficiency
and effectiveness with which we perform our regulatory
functions (RegTech for Regulators). In 2018, the FCA
hosted our largest TechSprint to date to investigate how
new technologies and greater international collaboration
could help to improve the prevention and detection
of financial crime. Over three days we facilitated 260
participants from 105 firms spanning 16 countries
together with regulators and law enforcement agencies
from the United States, Europe, Middle East and Asia
Pacific who worked in teams to help develop solutions
to prevent and detect financial crime. An innovative
approach to a global problem of epic proportions. In July
2019, we will be holding a follow-up TechSprint in London
to explore the potential for new technologies to enhance
information sharing across jurisdictions. The week-
long TechSprint will investigate how Privacy Enhancing
Technologies (PETs) could significantly alter the detection
and prevention rates.
29
UK FinTech State of the Nation
Earlier this year we started important work with the
Money and Mental Health Policy Institute to identify how
we can leverage developments in Artificial Intelligence
and Data Analytics to support the most vulnerable
consumers in society. We see well managed technology
as a force for good and hope that we can act as a catalyst
to encourage firms to adopt new technologies to support
vulnerable consumers.
The future
With the launch of Innovate in 2014 we set out to
encourage innovation and healthy competition in the
interests of consumers and we are delighted to have
helped shape the debate and influence the outcomes we
are seeing, both domestically and globally.
But we do not rest on our laurels. We will continue to
improve our work and collaborate domestically, through
initiatives such as the cross-sector sandbox, as well
as internationally through initiatives such as the GFIN
and our RegTech programmes. It is only through such
collaboration and self-improvement that we can continue
to support the benefits of innovation for the FCA, both
now, and into the future.
By the Financial Conduct Authority
Regulation: The
Business Perspective
"The UK's Open Banking regime is
the envy of the European FinTech
community, with modern technical
standards under the guidance of
an ambitious and independent
implementation body. It's no coincidence
that many world-leading FinTechs have
chosen to take their first Open Banking
steps here."
Conrad Ford Founder & CEO at Funding Options
The regulatory response in the UK to FinTech in
some ways has mirrored the journey of startups and
incumbents it has been one of experimentation,
adaptation and an attempt to align the new world to the
old. However, the overarching regulatory commitment to
foster market competition has delivered an environment
that has supported the UK FinTech success story.
While UK regulators remain alert to the existing and
emerging risks associated with technological innovation,
they recognised early on that failing to get close to
innovation which benefits consumers and competition in
financial markets presents even greater risks. The FCA's
regulatory sandbox was itself a radical innovation,
designed to get under the skin of industry innovation and
understand the inherent risks and opportunities.
So how have firms benefited? Deloitte and Innovate
Finance's recent research shows that the FCA's sandbox
has provided tangible benefits to firms - some firms could
"prove" the performance of the innovative technology
in a regulated environment; others trialled an entirely
new business model to provide a regulated activity and
demonstrated that it could be done with the necessary
safeguards; incumbents trialled FinTech partnerships to
assess feasibility and viability; and some others decided
to fine tune their business models after exit, choosing
to give up the "regulated activity" element of their
business model to becoming a pure innovative technology
infrastructure player. What all of them got in common
was the rigour and challenge from the regulator around
risks and controls and the ability to demonstrate that
technological innovation can deliver consumer and/
or market benefit in an innovative and safe way. The
regulatory scrutiny of business models in the sandbox and
results of sandbox testing, helped a number of FinTechs to
have productive conversations with investors and future
partners, including incumbents.
And the FCA has benefitted too. It is instructive to see
how the FCA's experience gained from the sandbox is
feeding through to policy. The FCA's recent perimeter
guidance consultation on cryptoassets draws on a
30
UK FinTech State of the Nation
number of regulatory sandbox case studies to explain
how existing regulation would be applied to cryptoassets.
The sandbox experience has also led the FCA to reflect
on the fact that technology-based models are global
rather than national in their reach and ambitions. This
led the FCA to explore a global initiative the Global
Financial Innovation Network. It is an experiment still
in the making but it has the potential to remove some
of the cross-border regulatory barriers that firms face.
As with all complex experiments, the constraining factors
are many regulatory cooperation, lack of international
regulatory harmonisation and creating a seamless testing
experience. But again, the FCA has demonstrated that
it is willing to experiment and has tried to facilitate the
international dialogue to support innovation.
Being close to innovation has also encouraged the FCA
to try new technologies in its own supervisory activities.
This again is invaluable experience which will reveal the
softer challenges such as culture and scalability that
innovating firms will face. This rounded knowledge will
help focus attention on some of the wider risks associated
with driving and implementing technological innovation,
at scale, in regulated firms.
In the UK, regulators have shown that regulation can
be a tool for opening up competition and has acted as
a leader in a number of FinTech policy areas, with Open
Banking (OB) being a key example. Introduced in 2016, the
Competition and Markets Authority (CMA) OB Standard
required UK banks to design and implement industry-wide
Application Programme Interfaces (API) communications
standards. This enabled greater interoperability between
OB solutions and consumer adoption compared to other
EU Member States. Third party access to previously closed
consumer banking data has forced incumbent banks to
be more competitive and consumer focused. New FinTech
aggregator apps have flourished focussing on providing
tailored financial guidance to consumers and forcing
incumbents to up their game or indeed collaborate with
these new entrants. However improvements in both the
design and implementation of OB APIs are still needed to
ensure consistent high performance and user experience.
The thorny question of liability for data breaches also
remains a sticking point for many incumbent banks.
These all demonstrate that embracing innovation and
opening up markets will not be without challenges, and
will inherently raise the profile of some existing risks and
introduce new ones in the FS sector.
In their quest to support innovation the objectives of
the regulators have not fundamentally changed - UK
regulators remain clear that innovation and competition
do not take precedence over financial stability, market
integrity, and consumer and data protection. As FinTech
services and products continue to grow, increasingly
regulators are considering the challenges these
developments present to their broader mandates.
One such challenge is mapping the old world to the new
- assessing the adequacy of the regulatory perimeter
and/or refitting current regulatory frameworks to take
account of developments such as crypto-assets, Artificial
Intelligence (AI), or the steep increase in the use of
technology third party providers. Both FS and cross-
sector authorities have started taking steps to address
some of these issues.
On cryptoassets for example, the FCA's regulatory
perimeter guidance consultation maps cryptoassets
to the existing regulatory framework and identifies
challenges. The FCA have confirmed that security tokens
are financial instruments and the relevant existing rules
will apply. This has provided much needed clarity to
both incumbents and startups. Applying these rules to
cryptoassets in a technology neutral way is a journey that
firms will now need to explore and refine and there will be
winners, as well as those who choose to step away from
the regulated space.
Technological innovation is also breaking down the
traditional "industry" view of regulation. It is encouraging
to see UK regulators taking steps to address the cross-
sectoral reach of FinTech solutions. For example,
monitoring the increasing use of customer data within the
context of technologies such as AI is a priority for both
FS and data protection authorities. In response the FCA
and the Information Commissioner's Office (ICO) have
been strengthening their efforts to cooperate effectively,
make best use of their combined resources, and ensure
a coherent supervisory and enforcement approach. It
will be important to see the practical benefits of this
stronger relationship as the ICO establishes its own
regulatory sandbox and develops additional guidance on
data protection risks arising from Big Data technologies.
The FCA is also exploring the development of a cross-
sector sandbox. Regulation may also need to engage with
potential utility solutions such as KYC platforms which
new technologies can enable.
The UK remains a recognised leader for its supportive
regulatory approach to innovation and we expect that to
continue. UK regulators can build on their early success
to meet the growing challenges that will inevitably arise
as the FinTech market continues to develop. However, in
many respects the industry as a whole is in unchartered
territory. UK regulators, similar to incumbents, cannot
abandon overnight the core foundations on which
business has been operating and the overarching
responsibility to the market and consumers. Equally, like
startups, they cannot forego the spirit of experimentation
and adaptability that helps them to harness and support
innovation. The continued success of UK regulators will
be determined by how well they can balance the best of
both worlds.
Louise Brett - Head of FinTech UK and North West
Europe at Deloitte
Suchitra Nair - FinTech Lead, EMEA Centre for
Regulatory Strategy at Deloitte
31
UK FinTech State of the Nation
Talent
UK FinTech State of the Nation
32
" We have a thriving business in Asia Pacific and we needed a base
in Europe which would match our global ambitions. We chose the
UK for its blend of world class talent, a friendly and progressive
regulator and strong client base. The talent pool in particular is
exceptional, and has meant we have been able to hire the very
best individuals to help our business continue to grow."
Jack Zang Co-Founder & CEO at Airwallex
FinTech Talent & Skills
The FinTech Ecosystem
Source: EY Financial Services. Ernst & Young LLP. (2016)
The UK is one of the world's leading FinTech hubs and access
to talent has played a critical role in the success of the UK's
FinTech sector to date. The UK's traditional strength in both
financial services and technology has created a compelling
commercial environment for FinTechs, and has ensured
access to a large pool of skilled people.
In the past five years we have seen a host of new FinTech
firms, business models and consumer propositions enter
the market, including entrepreneurial start-ups, major
technology firms, and branchless mobile banking services.
We have also seen the seeds of the next evolution of financial
services taking root, including the move towards data
sharing, open Application Programming Interfaces (APIs),
biometrics, and the application of artificial intelligence and
robotics. In delivering this progress, a world-class FinTech
skills base has been developed in the UK.
The question now, is how can the UK keep up with the
demand for the skills that will support the future success
of FinTechs?
As FinTech adoption increases across the world, we will
see greater international competition for the best talent.
Research from the World Economic Forum shows that
emerging roles such as, data analysts, AI and machine
learning specialists, designers, and people who work in
innovation roles which currently account for 15% of the
financial services workforce globally, are expected to
account for 29% of the workforce by 2022. We are already
feeling the pressure in the UK market. The UK FinTech
Census 2017, surveyed approximately 250 companies to
understand the opportunities and challenges faced by the
sector. Almost 60% of respondents stated that attracting
suitable talent was their biggest challenge - a bigger
challenge than raising equity capital (34%) or driving
consumer adoption (49%).
We know from our conversations with clients that
the most important skills for FinTechs are also the
most difficult to hire - software engineering, systems
architecture and development, and data analytics.
The good news is that we have already seen the
government and industry come together to lay some
important foundations. The Chancellor asked TheCityUK
to convene a financial services Skills Taskforce, to focus
on four core areas: digital skills, skills shortages, creating
greater social, ethnic and gender diversity, and skills
renewal and retention across the UK. The taskforce will be
reporting its recommendations at the end of 2019.
33
UK FinTech State of the Nation
In the meantime, we have seen a number of key strategic
and tactical actions being taken to ensure that FinTechs
who choose to set up their businesses here are able
to attract the best candidates from within the UK
and internationally.
Educational interventions
The UK has a high density of top ranked postsecondary
education institutions, with London alone home to four of
the top 30 ranked universities in the world
The UK is introducing specific FinTech courses,
apprenticeships, and sponsored work placements to
strengthen the FinTech talent pipeline.
To address the talent shortage in the technology
sector, the UK government has undertaken specific
steps towards improving education curricula to align
more closely with the needs of industry employers,
promoting STEM (Science, Technology, Engineering, and
Mathematics) programmes throughout the education
system.
We know from our current work with FinTechs that their
business models do not allow for extensive investment
in retraining and upskilling people; instead, they rely
on hiring skilled talent directly into their businesses.
However, many larger employers in the UK, including
EY, are offering technical training to upskill their current
employees as they future-proof their business in the face
of digital and technological change. FinTechs will benefit
from the pool of skilled talent this creates.
We know from our discussions with FinTechs that it is
hard to access school leavers and graduate hires they do
not have the resources to effectively cover the number of
institutions needed to compete for the best talent. They
also said it was hard for experienced hires to know where
to look for FinTech roles. In response, Innovate Finance
has worked with its members to launch the UK FinTech
Jobs Board. Launched in April 2019, this will create one
central platform for the industry to post roles and connect
with potential candidates.
Incubators and extra-curricular
activities
The prominence of FinTech accelerators across major
UK cities, has played a significant role in attracting and
retaining progressive start-up talent.
In addition, a number of organisations have developed
FinTech related programs and events in order to attract
and grow the skills of available talent within the UK
FinTech ecosystem.
Government and policy interventions
The UK's success as a global FinTech hub is reflective of
an encouraging policy environment. Government policy
makers and regulatory bodies in the UK are working hard
to create a progressive, open-minded and internationally
focused regulatory scheme.
Visas: Schemes that focus on visas for tech talent, such
as the Tier 1 Exceptional Talent Visa in digital technology.
These initiatives are welcomed by the industry as they
provide direct opportunities for foreign technical talent to
work in the UK.
Ecosystem Attributes and Benchmark Factors
EY Financial Services. Ernst & Young LLP. (2016)
34
UK FinTech State of the Nation
Taxation: The tax system that encourages investment in
early stage companies, through incentives such as the
Enterprise Investment Scheme and Entrepreneur's relief.
Diversity: The gender balance in FinTech in the UK is
particularly low, with women making up just 29% of the
employee base of the FinTechs who responded to the
Census. In the UK, the Women in Finance Charter (WIFC)
was launched in 2016 to accelerate the path to gender
equality in financial services and the WIFC is running an
active campaign to include the FinTech sector.
It's clear from the actions taken to date that, just as the
UK took the lead on creating a world-class policy and
regulatory ecosystem in which FinTechs would thrive, the
UK intends to take the lead in making sure FinTechs can
continue to attract and retain highly-skilled talent and
reduce time-to-hire.
Overall, the UK continues to demonstrate great
competitive strength when attracting talent. The UK
market remains one of the most attractive in Europe for
FinTechs, based on EY's analysis of market opportunity.
This is in no small part due to the ready access to high
quality financial services talent that FinTechs in the UK
enjoy. Providing the UK can keep up the momentum, it
is well placed to remain a globally competitive hub for
financial services and technology.
Omar Ali Managing Partner, UK financial services at EY
35
UK FinTech State of the Nation
The Power of Diversity
in FinTech
" We moved to London in March 2016,
and definitely one of the main relevant
aspects of being here for us is the
incredible pool of diverse talent that is
part of the ecosystem here. Particularly
in the FinTech landscape it is quite
impressive to see how relevant the
diversity and the level of expertise are to
the ecosystem, and how much it creates
a positive circle in which more and more
talent is attracted to the UK"
Dlber Lage CEO at SalaryFits
The world of financial services is changing dramatically
and it is clear that a combined technology and finance
industry now drives investment and innovation across
finance in the UK, providing new platforms for products
and bringing services closer to the end consumer.
As FinTech evolves into something more akin to
mainstream financial services, it is not only driving
competition, it is also stimulating greater diversity of
products, and increased financial inclusion. However, as
with most of our industries, FinTech's success depends as
much on the people working within it, as it does on those
external factors - such as regulators or policy makers -
that have encouraged this growth.
However, the importance of diversity in both FinTech and
financial services is no longer an act of simple awareness
building or garnering high-level buy-in from boards.
Of course, building awareness remains an essential
ingredient to change, especially in the corporate world,
where improvement and advancement seem to move
at a glacial pace. But the dialogue has shifted and is now
geared more towards action and ensuring the change
actually happens.
An Innovate Finance/WPI Economics joint report in 2018
highlighted the growing importance of FinTech in the UK,
with the sector set to top 100,000 employees by the year
2030, with 30,000 new jobs created and an estimated
3,300 UK FinTech firms.
Gender diversity statistics in FinTech are not as progressive
as we would necessarily expect or want them to be. The
wave of founders that has come out of banking has been
predominantly male, so unsurprisingly, 83% of all FinTech
executives are male. Women represent just under a third
of total staff in the FinTech sector and female founders
are still struggling to raise capital with unconscious (or
conscious!) bias against women-led organisations.
In the UK, only 13% of senior decision makers at venture
capital firms are women and 48% of firms have no women
in their investment team. Innovate Finance's 2018 report
on VC investment showed that of the $1.7 billion that
flowed into UK FinTech firms, only 3% went to firms with a
female founder.
Yet there's a great deal of evidence that a diverse
workforce makes commercial sense. Diversity has a
proven impact on the bottom line and a direct return on
investment. McKinsey's latest report on the topic showed
that in 2017, companies in the top quartile for gender
diversity on their executive teams were 21% more likely to
experience above-average profitability than those in the
bottom quartile. If you throw ethnic & cultural diversity
into the mix, that number rises to a 35% outperformance.
In FinTech, there is a will for innovation and change that
is being both demanded and driven by female and male
entrepreneurs and industry leaders across the sector.
Innovate Finance wants to play a role in helping to accelerate
that pace of change, especially in startup FinTechs, who can
potentially make a real difference right from the very outset.
There is a real need to create better ways of working and
better systems to deliver a more inclusive sector. There
is a need for new models to recruit and retain diverse
talent, new systems to teach and inspire at a young age
(especially young girls) and more collaboration to develop
better programmes that deliver real change.
Much better signposting is needed in order to attract more
people from more diverse backgrounds into FinTech and
it needs to start at a much earlier age. It has been shown
that by the age of 10, children already have a strong sense
of identity of what they can and can't do. So, inspiring
children from an early age, by providing them with a wide
variety of role models from diverse backgrounds and skill
sets, is a vital first step in creating a new model to deliver
real change in terms of diversity.
Change will only happen through a concerted effort from
different angles: a top-down approach through inclusive
and collected leadership; developing and inspiring a pool of
diverse talent via a bottom-up approach; understanding the
important role data can play in driving through the change
by planning, tracking and measuring diversity programmes.
There is a great opportunity, though FinTech, to drive
through real change. FinTech offers remote working,
flexibility and the chance to move seamlessly within
companies to different roles. The culture and social
purpose of FinTech is naturally attracting a more diverse
workforce. Could FinTech become the poster child to
create the next generation of financial services? Can
financial services learn from the new world?
Clare Black - Head of Diversity at Innovate Finance
36
UK FinTech State of the Nation
Innovation is driven by the intersection of a myriad
of voices. The global diversity of voices and
experiences that meet in the UK provide the perfect
turf for innovation and material disruption. In fact,
Neyber's innovative solution to a UK market need
is a result of a cultural savings experience from our
founder and CEO.
When we analyse innovation through a data lens,
the opportunity is also rich. The UK is 4th on the
Global Innovation Index behind only Switzerland,
Netherlands and Sweden.
The UK has one of the most diverse and inclusive
societies on the planet. We have the ability to attract
people from all over the world. Global visibility linked
with our local advantages gives the UK an almost
unmatched ability to innovate that simply can't be
replicated anywhere else.
There are several complementary factors that
make the UK market hot for innovation. The UK has
some of the best and well regarded universities in
the world and centres of research excellence, with a
world class science and research base.
Additionally, home to leading edge industrial
sectors, a skilled and productive workforce, smart
and sustainable infrastructure, high environmental
standards, world-respected corporate governance,
and a power house in London and our other
major cities.
Monica Kalia Co-Founder & Chief Strategy
Officer at Neyber
Future Technology
Trends, Innovation
and Collaboration
"Being a heavily regulated
industry, conservatism and
fear of change can often stifle
innovation, however UK
financial services firms have
embraced new technology much
faster than other centers. In
the UK, there has also been a
clear trend that in-house IT
expertise may not achieve the
innovative goals a firm may
have and adoption of vendors
who create value-add solutions
to help manage regulatory
or work-flow efficiencies has
been growing vs. other parts of
the world."
Stephen Carney Co-Founder & CEO of Quintain
Analytics
37
UK FinTech State of the Nation
Future Technology Trends
Air - or water-based devices and vehicles, for example, Unmanned Aerial
Vehicles (UAV) that fly or move without onboard human pilot. Drones can
operate autonomously (via on-board computers) on a predefined flight
plan or be controlled remotely.
Source: PwC - The Essential Eight Technologies, PwC.
38
UK FinTech State of the Nation
Healthcare and smart medical devices
Tool and end use parts
Prototyping
Bridge manufacturing
Supply chain optimization
Customized products
Remote location production
39
UK FinTech State of the Nation
" We are at an inflection point in FinTech.
The confluence of the growing tech
sector in the UK along with banks and
financial institutions moving towards
cloud micro-service architectures gives
us a once in a generation opportunity
to build a genuinely world class new
industry. The UK is perfectly placed
for this, having its roots in the financial
sector, AI, cloud computing and in
London, Europe's largest tech hub."
Paul Taylor Founder & CEO at Thought Machine
Technology is evolving at an unprecedented pace and in an
age of digital disruption, innovation can change an industry
overnight. As a result, the majority of financial services
CEOs in the UK (62%) believe that a focus on emerging
technologies is the number one driver that will separate
high-performing firms from the rest. It is therefore no
surprise that UK financial services CEOs are keen to remain
at the forefront of the technology adoption curve, more
so than their global peers. Yet, many business leaders are
unsure how to respond to emerging technology trends
and consequently often adopt a 'fast follower' rather than
an 'early adopter' approach. However, in order to remain
competitive, organisations will have to make a concerted
effort to explore and invest into emerging technologies.
PwC analysed the business impact and commercial
viability of more than 250 of the most innovative
emerging technologies, identifying the "Essential Eight"
technologies that will have the biggest impact, across
industries, over the next three to five years. They are a
reflection of a business environment that is rapidly moving
towards a smarter, more autonomous technological
ecosystem that provides both the digital experience that
customers expect and the operational efficiency that
business leaders demand.
As the 'Essential Eight' technologies continue to mature
over the coming years, they will increasingly be viewed
as the foundational building blocks that organisations
ought to explore to remain competitive. However, these
technologies should not be explored in isolation, as what is
shaping to be the most disruptive emerging trend, within
the innovation ecosystem, is the convergence of individual
technologies that will result in more powerful applications
and greater overall results.
Across the financial services industry, three main
themes are emerging that demonstrate how individual
technologies are coming together to create the next wave
of innovation:

Intelligent Automation, combining
Artificial Intelligence (AI), Robotic
Process Automation (RPA) and the
Internet of Things (IoT)
Intelligent Automation enables human-like interactions
to create a 'virtual workforce' of automated bots that are
capable of handling tasks typically performed by humans.
It can include machine based decision making without
explicit programming, gathering data from unstructured
sources like handwritten text or voice, or using natural
language to respond to requests in a human-like way.
By combining AI and the IoT with RPA, vast amounts of
data from a range of sources (embedded sensors, smart
devices, wearable technology etc.) can be collected to
feed intelligent algorithms and automate processes.
Within financial services, Intelligent Automation has the
potential to yield returns beyond cost savings, including
better customer and employee experience or quality
improvements attributable to a reduction of errors.
For example, Intelligent Automation could enable the
automation of 'Know Your Customer' (KYC) requirements
by implementing RPA for customer data capture
and Machine Learning algorithms for the approval of
associated workflows.
Automated Trust, combining Artificial
Intelligence (AI), Blockchain and the
Internet of Things (IoT)
The primary application of Automated Trust is often
framed within the manufacturing industry. However,
the convergence of AI, Blockchain and the IoT to
'automate trust' should not be underestimated within
financial services. Automated Trust can, for example,
bring trustworthiness to AI by providing clear audit
trails. It can also help improve the trustworthiness of
machine-to-machine interaction by providing a secure
way to share data and coordinate decisions. With the
increased adoption of Automated Intelligence within
financial services, such as virtual assistants, technology
to secure the trustworthiness of technology will become
increasingly important. Auto insurance is a good example,
where insurance payments are automatically credited to
a claimant's account through a blockchain implemented
authentication process as soon as an IoT connected
sensor detects a defect.
40
UK FinTech State of the Nation
Extended Reality (XR), combining
Virtual Reality (VR), Augmented
Reality (AR), the Internet of Things
(IoT) and Artificial Intelligence (AI)
Extended Reality is the combination of technologies to
provide fully immersive, digital experiences to achieve
life-like simulations. The widespread availability of
smart devices, breakthroughs in wearable technology
and enhanced data analytics capabilities, enable the
development of a seamless hardware and software
ecosystem, the precondition for Extended Reality. It is
redefining how humans interact with the virtual and
physical world.
The use of emerging technologies, and the benefits
organisations can yield from them, strongly depends
on the availability of good quality data. The cloud will,
likewise, play a key role as enabler for innovation,
evolving from a tool to cut costs towards a fundamental
requirement for the agile implementation of emerging
technologies.
As organisations move forward and break through new
innovation frontiers, the need to balance the benefits of
innovation with associated risks will increasingly become
important. A global study of the State of Information
Security conducted by PwC, for example, shows that
44% of organisations surveyed don't have an overall
information security strategy. And less than a third have
implemented controls for emerging technologies. In
order to build trust in their customers of the future,
organisations will need to be transparent on how
customer data is used, managed and protected. At the
same time, they will need to embrace technological
innovation in a more responsible way by proactively
implementing robust security frameworks throughout
their digital transformation journey.
Keeping up with the pace of innovation and ever
increasing customer expectations, while meeting complex
regulatory requirements, will require financial services
organisations as well as upcoming FinTechs to remain
agile. Organisations will have to rely on relationship
based business models. They will need to bridge the
gap between technology and service providers while
working with regulators to test and validate technologies
in a highly regulated market. An 'outside in lense' will be
necessary to balance the need between technological
developments and the human-to-human interactions that
customers still demand.
The combination of the "Essential Eight" technologies is,
undoubtedly, shaping to become the most disruptive trend
within the technology innovation ecosystem. However,
ultimately it is a combination of internal and external
factors that will dictate how powerful the conversion
of emerging technologies will become. Clearly, the
availability of good quality data, information security
standards, agility of business models and cooperation
between business and government will play a key role
going forward.
Rav Hayer Financial services Tech Partner and UK
FinTech Lead at PwC
The rapid growth of FinTech in recent years
has sparked change across the financial sector.
The challenge from new FinTech brands, and
opportunities presented by technology-led business
models, are fuelling the creation of new value
propositions for a broad spectrum of customers.
Santander has a significant presence across the UK
and in 10 global markets; supporting business, retail
and investment customers. Our challenger mindset
and agile ways of working encourage discovery
and rapid experimentation. We can leverage our
relationships to deliver faster, safer and more
seamless products and services.
It is in the interests of our customers and the
sector as a whole, for banks and FinTech startups
to collaborate more closely. We are working with
partner FinTechs; smoothing their entry to market
and providing access to a large data pool for testing
and product refinement, whilst improving our own
core capability and customer-centric solutions.
For example, last year's launch of OnePayFX by
Santander and Ripple Labs transformed ease of
international payments for our customers, through
low-cost, same-day, cross-border transfers, and
peer-to-peer payments.
A solutions-driven partnership between banks and
FinTechs will help unlock the immense technological
potential in the UK in order to better anticipate and
meet customer need.
Stephen Dury Head of Innovation at
Santander UK
41
UK FinTech State of the Nation
Partnerships, Culture & Innovation:
The key to future success
Banking Battlefield
Source: 11FS Banking Battlefield: Winning the War For Customers
The UK has been at the centre of financial services for
centuries. More recently, London has emerged as a
global hub for FinTech and innovation due to a melting
pot of creative, technological, regulatory and purely
opportunistic reasons. But we have to guard against
complacency because everything that has been built
and worked so hard to achieve can disappear without us
releasing it already has.
This is especially true for the banks
While just a few years ago it was easier to dismiss new
market entrants, firms including Exo, GoCardless, Monzo,
Nutmeg, Revolut and TransferWise are now competing
with traditional banks' business lines - from international
payments, transfers and FX, through to savings,
investments and retail accounts.
Meanwhile incumbents have to deal with ever increasing
operating costs through legacy technology, resources
and real estate. Their innovation spend is just layering
more and more cost into their operational spend without
decommissioning the spaghetti that keeps the show on
the road. Billions spent just to keep the lights on.
This was an acceptable outcome when the game was
purely about size of customer base and everyone in
financial services was treading water at the same pace.
But the world has changed and banks are now busy trying
to readjust to the new realities of a new axis based around
the level of intelligent digital services.
For that to happen, we have to move away from the talk of
digital transformation or innovation, and get down to the
job of actually delivering meaningful change.
Banks should be wary of the FinTechs, challenger banks
and the tech titans who won't just copy the traditional
banking model, they'll be doing something brand new
that they would not expect which will cause tension in
the market.
But real fear should be saved for the real business-killers;
apathy and a lack of respect for the challenge ahead.
That's the real opponent. That's where the danger lies and
that's what banks have been getting wrong for too long
and what let Goliath lose to David.
The important questions are not which technology wave
to catch, startup to partner with, or emergent technology
to back. They are, with new possibilities being opened
up, what is the purpose of banking? What can the bank
meaningfully do? What can you achieve with credibility,
reliability and capability that customers would want?
42
UK FinTech State of the Nation
A cultural shift
Multiple new entrants have shown the big banks that if you
come to market with expertise and the right culture with
a real desire and hunger to deliver what customers need,
then you can achieve amazing things.
Startups don't need to write a five year business case,
they have no "digital" strategy and don't need to get 14
committees to approve. They need to build something
that customers want, so they can secure more investment
and fast.
We're already seeing some promising signs from the
incumbents. Goldman Sachs released Marcus to huge
success and RBS launched Mettle, to service small
businesses through a truly digital experience. These are
the organisations that are trying to rekindle the desire to
deliver better customer experiences and what that means
for both their customers and themselves.
To achieve this they needed to be agile. Not postit notes
and sheep dipping employees into Kanban training. True
agility is not a methodology, it is in product development
and engineering, where firms can move from an idea to it
being safely and securely executed to their customers in a
fraction of the time it currently takes.
New challengers can move at pace because they have
a tech stack and a mentality that allows them to. Data
is accessible, clean, and available in real-time. Their
core banking engines are designed around integrated
customer identity systems, not ones that are siloed
around product lines. They're easily configurable, allowing
the flexibility to create new financial products, and more
importantly services, quickly and easily.
Time for action
We are in a fascinating time with a continually shifting
banking battlefield. The UK, and London in particular, has
built an incredible financial services community that I am
proud to be part of and work within.
However, we cannot be complacent. We need to ensure
the services created here and those already becoming
household names, continue to be founded, funded and
supported as they have to make us the undoubted leader
in the world.
The incumbent banks also need to change before
everything they have built to create their legacy, and I
mean in the good way, is eroded through inertia and a
culture that is no longer fit for the truly digital age.
It's daunting. But it is also in our collective hands
and I believe the UK has the talent, imagination and
determination to do it and remain at the forefront of
financial services.
Let's get back to work.
David M. Brear - Group CEO at 11:FS
The UK has a long tradition of entrepreneurial
enterprise, and its global leadership in FinTech offers
an opportunity to reshape financial services in the
years to come. To realise this vision, innovative
thinking and experimentation must continue to be
fostered by government and private sector alike.
A culture of growth begins in translational university
research, bringing cutting edge ideas from lab
to launch. In the commercial marketplace, the
UK's array of preeminent financial institutions
must promulgate a growth mindset and increase
failure tolerance, to encourage experimentation.
UK regulators must provide a receptive climate
in which financial innovations can drive inclusion,
promote equity, accelerate liquidity improvements,
and demonstrate creativity on the world stage.
By harnessing the vibrancy of the UK financial
ecosystem and all of its participants, the UK can
expand and internationalise its culture of innovation
both to create economic value and improve society.
David Shrier - Associate Fellow, Said Business
School at University of Oxford and Lecturer at MIT
Media Lab
43
UK FinTech State of the Nation
Domestic FinTech
policy and initiatives
" Millions of consumers and small
businesses have already chosen FinTechs
over banks, and this trend is only
going to continue. In our case we have
transformed the customer experience
for small business owners. Initiatives
like Open Banking enable us to set new
standards in the industry and help unlock
the true potential of small businesses."
Christoph Rieche Co-Founder & CEO at Iwoca
UK FinTech State of the Nation
44
Making the UK the
best place in the world
to start and grow a
FinTech business
" UK customers are digitally savvy and
expect top quality financial service
products. We're proud to be able
to do that in 2019. We're able to do
this by getting support from the UK
government and our UK based business
partners. Without them, we would not
have a sling to shoot from."
Matt Leibowitz Founder & CEO at Stake
The world is being transformed by a technological
revolution, with established incumbent firms being
challenged by digital innovators. This is particularly true
in financial services, where FinTech is changing the way
customers bank, invest, insure and pay for things.
Financial services is a key sector of the UK economy
and so the government has invested heavily in ensuring
that we are also at the forefront of this revolution. This
investment has paid off, the UK has been independently
assessed as the best place in the world for FinTech,
and the government is committed to ensuring that this
remains the case.
World leading financial services and
thriving tech scene
The UK's comparative advantage in FinTech is rooted
in our world-leading financial and professional services
sectors we have the markets, domestic skills, talent and
expertise, and demand for products and services from
corporate clients to provide a solid foundation for the
growth of our FinTech sector.
Combining this historic strength in financial services with
a thriving tech scene, it's no wonder that the UK is the
best place to start and grow a FinTech business. The UK is
home to more billion-dollar startups than anywhere else
in Europe and has strong domestic demand for FinTech
products from consumers, with 42% of digitally active
adults using the services of at least one FinTech firm and
more than 20 million people using banking apps.
Positive regulatory environment
supporting innovation
The focus of UK government support for FinTech has been
creating a positive regulatory environment for FinTech.
The UK's main financial services regulator, the FCA has
been given a strong competition objective, which led to
them establishing an Innovation hub and Regulatory
Sandbox.
The Innovation hub helps FinTech firms understand the
regulatory framework and provides them with assistance
when they make an application for authorisation. Since
2013 the Innovation hub has provided support to over 500
businesses. The Regulatory Sandbox creates a safe space
for firms to test revolutionary new products, allowing
them to serve real customers, while ensuring that risks to
both customers and firms are well managed. Since 2016
almost 100 firms have tested products in the sandbox.
The government has also supported innovation in
payment systems, creating a new Payments Systems
Regulator (PSR) in 2015, the first of its kind in the world.
Like the FCA, the PSR has been given a clear remit to
promote and support innovation. The government also
legislated to allow non-bank payment service providers
direct access to payment systems, creating a level playing
field with banks.
Promoting competition in retail banking
markets
The UK is at the forefront of efforts to develop and
implement Open Banking. In 2017, the Competition and
Market Authority, published its ground-breaking Retail
Banking Market Investigation Order, which required the
nine largest banks in the UK to build standardised systems
that allow consumers to safely and securely share their
financial information with FinTech firms.
Open Banking allows firms to offer innovative solutions to
consumers, from better financial advice, to cheaper loans.
The standardisation that sits at the heart of the UK's Open
Banking project, and differentiates it from similar activity
in other jurisdictions, also makes it easier and cheaper
for FinTech firms to build these services and improves the
quality of the products they can offer consumers. Open
Banking also allows consumers to make payments without
needing to use a credit or debit card.
45
UK FinTech State of the Nation
The FinTech Sector Strategy
The government has made great strides in supporting
FinTech, but it also recognises that there are always
opportunities to do more. The government's first FinTech
Sector Strategy, launched in March 2018, sets out its plans
to maintain and extend the UK's comparative advantage
in FinTech, and included details of a number of innovative
new projects:
Building RegTech solutions the UK's financial
regulators, the FCA and the Bank of England have
developed a digital regulatory reporting project. This
work, delivered in partnership with industry, is focused
on making the process of achieving and maintaining
compliance with regulations as efficient and effective
as possible.
Helping FinTech firms access talent ensuring the right
mix of skills is critical to the success and growth of the UK's
FinTech sector. In order to build a domestic talent pipeline,
the government has partnered with Barclays to deliver a
Connect with Work project, which aims to introduce young
people from diverse backgrounds to careers in FinTech.
Exploring new forms of financial services
infrastructure the government's financial services
Trade and Investment Board has sponsored work to
investigate the potential benefits associated with shared
utilities that promote economies of scale in complex
financial services markets.
Facilitating partnerships with incumbents the
government-funded FinTech Delivery Panel published a
set of 'Onboarding Guidelines' in November 2018, which
help FinTech firms partner with incumbents. Barclays,
Lloyds Banking Group, HSBC, RBS and Santander have
committed to fully implementing these guidelines.
Delivering the benefits of FinTech across the UK
at present the UK's FinTech sector is concentrated in
London, with 80% of FinTech firms based in the capital.
To ensure that the whole of the UK benefits from FinTech,
the government has announced six Regional FinTech
Envoys charged with fuelling the growth of firms across
the country.
Harnessing the potential of emerging technologies
the government's FinTech Sector strategy announced
the creation of a Cryptoassets Taskforce, comprised
of HM Treasury, the FCA and the Bank of England, to
explore further the risks of cryptoassets and the potential
benefits of the underlying distributed ledger technology
(DLT). The Task Force published its final report in October
2018, which set out actions the government and financial
regulators will take to mitigate the risks that cryptoassets
pose to consumers and market integrity; to prevent the
use of cryptoassets for illicit activity; to guard against
threats to financial stability that could emerge in the
future; and to encourage responsible development of
legitimate DLT and crypto-asset related activity in the UK
.
UK FinTech Week
In 2017 and 2018, HM Treasury hosted an International
FinTech Conference, bringing together investors, UK
FinTech firms, and key industry figures to celebrate the
UK's position as a global leader in FinTech and interact
with policy-makers on the evolving landscape for these
businesses. Keynote speeches, panel discussions, and
workshops highlighted the UK's innovative approach
to regulation and policy that makes our sector both a
global leading FinTech hub and a valuable destination for
investment. Speakers included Mark Carney, Governor
of the Bank of England, Adrienne Harris, former adviser
to the Obama administration, and Andrew Bailey, Head
of the FCA. The best of the UK's FinTech talent also had
the opportunity to pitch directly to global investors. Each
conference brought together over 100 FinTech firms
and over 400 domestic and international investors,
leading to an increase in capital investment in the UK
sector. HM Treasury look forward to supporting Innovate
Finance's Global Summit and a range of events taking
place during UK Fintech Week 2019.
By HM Treasury

46
UK FinTech State of the Nation
International
initiatives for UK
FinTech
" WorldRemit sends money from 50 to
150 countries, operating in over 6,500
remittance corridors and serving 4
million customers worldwide. Access
to capital, diverse talent and a growing
migrant population with a strong
appetite for low-cost digital alternatives
to send their money back home, have
been crucial to our fast growth. The
UK's progressive approach to FinTech
regulation enables early stage companies
to innovate, scale at pace and compete on
the global stage."
Ismail Ahmed - Founder & Executive Chairman at WorldRemit
47
UK FinTech State of the Nation
Making UK FinTech
more competitive
globally
As the UK continues to focus on its international trade
policy, this presents an important opportunity for the
financial services sector and UK FinTech exports. The UK
is taking a creative and ambitious approach to financial
services trade policy to facilitate detailed discussions on
cross-border market access, ensure advanced, fair and
transparent operating environments, and support the
growth and competitiveness of the UK FinTech sector with
new financial services, payments and data at the forefront
of policy development.
As the UK's financial services industry expands it will
ensure the continued competitiveness of the City of
London as a major global financial centre. This will support
growth and jobs in the UK and our partners' economies, as
new policy provisions are implemented and trade friction
is reduced to develop more effective shared markets.
The UK remains a world-leading destination for the best
global talent and our migration system helps to ensure
we are at the forefront of digital and scientific advances.
The Exceptional Talent Visa is available to leaders in the
digital technology, science, arts and creative sectors,
ensuring UK businesses in these fields have access to the
best talent from across the world; while our new Startup
and Innovator Visas make it faster and easier for talented
entrepreneurs to come to the UK and start a business.
FinTech is clearly a growing sector of importance for the
UK internationally. The sector's growth is unprecedented
and there are several ongoing international initiatives that
the UK government is leading on for the benefit of the UK
FinTech ecosystem, both domestically and abroad.
These include:
FinTech Steering Board

DIT's FinTech steering board brings together academics,
industry experts, government and regulators to drive
investment into the sector, which is at the forefront of the
UK's global technology and innovation proposition.
The Board is chaired by the City of London's Lord Mayor.


FinTech Bridges

The UK has entered 5 FinTech Bridge agreements
with other FinTech hubs including Singapore, South
Korea, China, Hong Kong, and Australia. These bespoke
agreements create valuable opportunities for the UK
by overcoming barriers to international market entry
and linking UK-based FinTechs with opportunities for
international investment through:
Collaboration between key players in the UK FinTech
sector and in Bridge markets on emerging market trends
Regulatory agreements that support firms to overcome
market access barriers in each jurisdiction
By sharing knowledge and best-practice with Bridge
jurisdictions, and aligning international FinTech policy
development, we are increasing opportunities for FinTech
firms to export solutions to key markets at pace. Each
Bridge enables firms licensed by the FCA to be referred
directly to regulators in Bridge markets, easing the
process of obtaining a license and smoothing access to
priority international markets.
FinTech Bridges Pilot Program
DIT's primary goal for the Bridge Pilot Program in the
coming months is to demonstrate the sucess of the UK's
world-leading FinTechs and to support their business
growth. The Pilot Program has been devised to be run
across the Australia and Hong Kong Bridges to establish
the success in helping companies to scale from the UK
into a Bridge market. 10 UK FinTech companies will be
selected to participate in each of the two programmes
(Australia and Hong Kong). A tailored support programme
will be developed for each of the FinTech companies to
run throughout 2019, culminating with a trade mission
to a flagship conference in market. The ultimate goal
of the programme is to provide essential, connections
and assistance, thereby accelerating their ability to
set-up business in the bridge market during the year.
Once the pilot is complete, the aim is to put forward
recommendations to create a scalable programme across
other Bridge markets supporting and accelerating the
growth of bilateral trade related to FinTech.
Emerging markets

The UK is a globally recognised hub of FinTech excellence,
with a wealth of unique expertise to offer developing
countries. Leveraging the City of London to empower and
enable FinTech in emerging markets to grow successful
business has the potential to stimulate growth, create
jobs, drive financial inclusion and make it easier for UK
companies to enter and invest in markets of the future.
48
UK FinTech State of the Nation
This is where departments across UK government, such
as the Department for International Development (DFID)
have long championed the significant role that financial
technology can play in increasing access to, and reducing
the cost of, financial services in developing countries.
Learning from the UK's success at pioneering regulatory
tools and approaches to enable FinTech growth, DFID is
working with regulators and policymakers across a range
of developing countries to help put the building blocks
in place for well-functioning digital finance ecosystems,
including modernising payment infrastructure and
supporting conducive regulatory environments. In
partnership with Vodafone, DFID support provided seed
funding to M-PESA in 2007, one of the most successful
mobile money services globally, radically expanding
financial inclusion in East Africa and providing a platform
on which emerging FinTech continues to flourish.
As part of this vision, and to showcase how support may
be provided for the development of FinTech more widely,
DIT is currently piloting ways of working together with
DFID. FinTech can be an enabler for broader financial
reform and stability, as well as in introducing innovation
which may directly benefit those who are the most
financially excluded. It is for this reason that partnering
with DFID will not only help in better sharing regulatory
best practice abroad, but in also better matching where
UK (and international) FinTech expertise might be best
deployed to help drive efforts around financial inclusion,
and the digitisation of financial services.
By creating sound, stable and supportive financial
ecosystems abroad, coupled with facilitating useful
collaborations between the UK FinTech sector and those
in emerging markets, our ambition is to promote greater
financial inclusion and and drive greater cross-border
flows of activity.
UK-Africa FinTech Partnership
In August 2018 the Prime Minister announced the first
UK-Africa FinTech partnership, which aims to deepen
collaboration and build relationships between African and
UK FinTech industries. The partnership is coordinated by
DFID and has three features:
1. Identifying business opportunities the Africa FinTech
Investment Group is a sub-group of DIT's FinTech
Steering Board and brings together the collective
expertise of the UK and African FinTech communities
to identify investment opportunities to support the
development of the thriving African FinTech industry.
2. Building capacity within the regulators a DFID
partnership with the FCA will support regulation of
FinTech in Africa, to be piloted in Kenya and Nigeria.
3. Taking African FinTech innovations to scale a 2m
FinTech fund is helping Nigerian FinTechs with a focus
on financial inclusion to take their innovations to scale.
DFID may expand this offer to other African markets.
Women in FinTech
The Women in FinTech Global Initiative is aimed at bringing
more female entrepreneurs to the UK and to help make the
UK's FinTech ecosystem more diverse.
The initiative has three pillars. First is creating an
opportunity for likeminded women to meet, inspire, advise
and mentor each other. Second is the chance to connect
female entrepreneurs with a supportive investment
community that understands the challenges that women
face. Third is to provide valuable scaling guidance by
working with accelerators and incubators to offer women
support through their programmes. NatWest is the first
company to support DIT's accelerator programme by
offering places to women FinTech entrepreneurs to take
part in the 18-month fully-funded programme. The cohort
will be offered bespoke coaching, learning, workshops and
free office space.
The VCs and investors supporting the initiative include
Motive Partners, Anthemis Group and Octopus Ventures.
David Bartlett Head of Financial & Professional
Services at Department for International Trade
49
UK FinTech State of the Nation
The UK has built a reputation as the home of
innovative trailblazers in the payments sector. Bacs
launched in 1968, and we were a first with Faster
Payments in 2008. Over the last decade Faster
Payments transitioned from a radical idea around
enabling instant payments to become a platform
for innovation and a world leader. It now has nearly
30 participants in the UK, and in the last year alone,
transaction volumes increased by 23%. As the global
appetite for state-of-the-art payments solutions
grows, the UK continues to set the pace. We now
take for granted transferring money in real-time,
paying by contactless or smartphone however
innovation is not just about technological advances,
it's about adding real value to users. At Vocalink,
we believe 'thoughtful innovation' is central to the
payments sector by making the system safer and
more resilient, and tackling both current and future
consumer needs.
Vocalink's strong heritage in the UK includes the
designing, building and operating of the nation's
payments infrastructure. Today, Vocalink is active
all around the world, driving financial inclusivity
and powering economies through technology-led
solutions.
It is our belief that innovation is thriving in the UK,
particularly in the payments sector, and thoughtful
innovation will continue to be at the heart of what
we do.
Paul Stoddart CEO at Vocalink & President of
New Payments Platforms at Mastercard
Key milestones
2008
2009
2010
2011
2012
2013
2014
2015
Financial Crisis
Global Financial Crisis created
an impetus for numerous
regulatory reforms and a shifting
public perception towards
financial services, creating an
opportunity for new, competitive
players to join the market with a
technology-first approach.
FCA's Project
Innovate Launch
The purpose was to help
firms tackle regulatory
barriers to innovation, be it
through clarifying regulatory
expectations, examining the FCA's
own rules or enacting policy
changes. This in turn, provided
firms the space to innovate in the
interests of consumers.
Innovate Finance
Launched
Founded in August 2014, Innovate
Finance, an independent
membership organisation,
formed out of a government
consultation to represent the
FinTech sector and promote
FinTech member companies.
The Innovate Finance Global
Summit was also launched as
a flagship event to convene the
global FinTech community to
the FinTech capital of the World,
London.
UK FinTech State of the Nation
50
Launch of
FCA Sandbox
Launch of
FinTech North
Launch of
FinTech Scotland
2016
2017
2018
First FinTech
Bridge
Singapore was the first FinTech
bridge. There are now 5 bridges
with Singapore, China, Hong
Kong, South Korea and Australia.
Retail
Banking Market
Investigation Order
The Competition and Market
Authority published the Retail
Banking Market Investigation
Order requiring the nine
largest banks in the UK to build
standardised systems that allow
consumers to safely and securely
share their financial information
with FinTech firms.
Launch of
UK Open Banking
and PSD2
British Patient
Capital (BPC)
The British Business Bank
announced the launch of British
Patient Capital (BPC), a 2.5
billion investment vehicle to help
innovative UK startups become
world-class leaders through long-
term investment by investing
in venture and growth capital
funds. By investing alongside
the private sector, British Patient
Capital will support 7.5bn of
investment for British businesses.
Launch of HMT
FinTech Sector
Strategy
The government's first FinTech
Sector Strategy, launched in March
2018, set out its plans to maintain
and extend the UK's comparative
advantage in FinTech.
51
UK FinTech State of the Nation
Closing remarks
As we reflect on the last ten years, the face of financial and
professional services in the UK has transformed. Innovation is
now firmly at the heart of the sector and the UK has emerged to
become the global hub for FinTech.
The UK FinTech sector employs over 76,500 people and
generates a revenue of 6.6 billion pounds. Whether it be
investment in FinTech, the role of the regulator, government
policy or the abundance of skills, talent and diversity; the UK has
laid solid foundations for its future in the FinTech industry.
The strength of the UK's growing FinTech sector is fast receiving
global interest. During my visits overseas, FinTech has become
a major topic of conversation; international companies are keen
to hear about the strength of the UK's FinTech ecosystem and
explore opportunities for collaboration with British FinTech firms.
When promoting the UK's FinTech sector abroad, it is essential
that we have a cohesive voice, both at government and industry
level. The State of the Nation is a perfect example of this; revealing
the scale and depth of FinTech across the UK and acknowledging
the fundamental work of government and industry in creating a
welcoming and healthy environment for FinTech firms to thrive.
As Chair of the Department for International Trade's FinTech
Steering Board, this document will act as a benchmark for future
discussions around FinTech, offering a strong understanding of
the UK FinTech industry today, so we can build on our success
for tomorrow.
The Rt. Hon the Lord Mayor of City of London Peter Estlin
52
UK FinTech State of the Nation
Sources
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Beauhurst - Why you should keep an eye on accelerators and their cohort (18th January 2019)
BVCA - Letter to HM Treasury: Financing Growth in Innovative Companies (22nd September 2017)
Centre for Entrepreneurs (CFE) - Business formations recover to reach new high in 2018 (14th January 2019)
City of London Corporation - Global investment: driving UK jobs and growth in financial services (2018)
Competition and Markets Authority's (CMA) - Retail banking market investigation - Final Report (2016)
Crunchbase Data - Funding Circle (IPO stock price) assessed: 26 March 2019 - also available at: https://www.crunchbase.com/organization/funding-
circle#section-ipo-stock-price
Crunchbase Data - Monzo (funding section) assessed: 26 March Series E Funding (GBP 85m - FX rate at 31 Oct 2018) - also available at: https://www.
crunchbase.com/organization/monzo#section-funding-
Deloitte & Innovate Finance - A journey through the FCA regulatory sandbox (2018)
Deloitte, The City UK, Santander - Splitting the bill: the role of platforms in financial services Regulation (2018)
Department for Business, Energy & Industry Strategy - Business Incubators and Accelerators: The National Picture (2017)
EY - FinTech Adoption Index (2017)
EY - UK Attractiveness Survey: in transition (2018)
EY, HM Treasury and Innovate Finance - UK FinTech Census (2017)
FCA - Regulation innovation: a global enterprise, by Christopher Woolard - Executive Director of Strategy and Competition at the FCA (20th March
2018), available at: https://www.fca.org.uk/news/speeches/regulating-innovation-global-enterprise
FCA - Regulatory sandbox lessons learned report (2017)
FinTech Futures - Convergence of RPA and AI: the changing landscape in banking compliance (14th May 2018)
HM Revenue & Customs - Research and Development Tax Credit Statistics (2018)
Innovate Finance - Supporting UK FinTech: Accessing a Global Talent Pool (2018)
Innovate Finance - UK FinTech VC Investment Sector Analysis 12 February 2019, Data provided by Pitchbook
Intellipaat - The Convergence of Blockchain, IoT and AI (3rd September 2018) - also available at: https://intellipaat.com/blog/convergence-blockchain-
iot-ai/
Tech Dragons - Interview of Chris Ganje, CEO of Amplyfi by Nicholas Fearn (Tech Dragons) (5th January 2019) - also available at: http://techdragons.
wales/interview-chris-ganje-ceo-of-amplyfi/
Investni - 300 New Tullett Prebon Jobs Will Contribute Over 9.9m in Salaries to Economy Each Year (2nd August 2016) - also available at: https://
www.investni.com/news/300-new-tullett-prebon-jobs.html
KPMG International - The Pulse of FinTech 2018 H2, released 13 February 2019 (Data provided by Pitchbook at 4 January 2019)
Medium - The convergence of AI and Blockchain: what's the deal? (1st December 2017) - also available at: https://medium.com/@Francesco_AI/the-
convergence-of-ai-and-blockchain-whats-the-deal-60c618e3accc
Office for National Statistics - Foreign direct investment involving UK companies: 2017 (4 December 2019)
Pitchbook Data: VC and CVC average value per deal (UK FinTech investment) assessed 18 October 2018, Analysis by KPMG LLP in the UK
Pitchbook Data: VC and CVC deal volume (UK FinTech investment) assessed 4 January 2019, Analysis by KPMG LLP in the UK
PwC - 22nd Global CEO Survey (2019)
PwC - Automation Now: Your business - automated and empowered - also available at: https://www.pwc.com/us/en/services/consulting/library/
unlocking-automation-value.html
PwC - Global Blockchain Survey (2018)
PwC - Global FinTech Survey (2016)
PwC - Redrawing the lines (2017)
PwC - The Essential Eight technologies: how to prepare for their impact (2016)
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Tech Nation - Connection and collaboration: powering UK tech and driving the economy (2018) - also available at: https://technation.io/insights/
report-2018
53
UK FinTech State of the Nation
Contributors
11:FS is the challenger firm defining and building digitally native financial services. They've
assembled the world's top banking, FinTech and insurance leaders to transform traditional
banks from within, and build new banking services from scratch. They field interdisciplinary
teams bringing the best designers, product experts, consultants, researchers, technologists
and domain specialists together to deliver tangible outcomes in the shortest possible time
frames. By combining corporate expertise with startup agility in the way they work, the way
they think and the way they build propositions, they are uniquely placed to help overcome
legacy systems, create new business models, and develop the best next-generation, customer-
centric services.
The British Private Equity & Venture Capital Association (BVCA) is the industry body and
public policy advocate for the private equity and venture capital industry in the UK. For more
than three decades they have represented the industry and delivered authoritative research
and analysis, proprietary publications, specialist training, topical conferences and best practice
standards. Their membership comprises more than 750 influential firms, including over 300
private equity and venture capital houses, as well as institutional investors, professional
advisers, service providers and international associations. They work together to provide
capital and expertise to growing businesses, to unlock potential and to deliver enhanced
returns to the millions who directly and indirectly invest in their industry.
The financial and professional services industry is key to the ongoing prosperity of the UK. It
provides exports more than double those of any other sector, and significant contributions to
employment, tax and productivity across the country. The City of London Corporation works
with partners in industry and local and national governments across the UK, to keep the UK
competitive into the future: nurturing innovative sectors, securing the best environment for
firms to thrive, supporting inclusive and sustainable growth, and showcasing the sector's UK-
wide offer. They work to promote the industry to overseas markets: attracting and retaining
investment, building partnerships and sharing expertise to secure long-term, worldwide
trading relationships.
Deloitte LLP is a leading professional services firm committed to making an impact that
matters for our clients, our people and society. They bring a breadth of skills and industry
knowledge in providing high-quality audit, advisory, tax, legal and consulting services to clients
across the financial services industry and FinTech ecosystem. As part of a globally connected
network of member firms in more than 150 countries, Deloitte's industry specialists provide
comprehensive, integrated solutions to the FinTech sector to help their clients meet their
goals, plan new strategies, and keep up-to-date on changes in technology, regulation and
customer expectations.
At EY financial services, they share a single focus to build a better financial services
industry, not just for now, but for the future. They train and nurture their inclusive teams to
develop minds that can transform, shape and innovate financial services. It's because they
have minds made for financial services that they ask better questions. Better questions lead to
better answers that benefit their people, their clients and their communities. It's how they play
their part in building a better working world.
The Financial Conduct Authority is the conduct regulator for 58,000 financial services firms
and financial markets in the UK and the prudential regulator for over 18,000 of those firms.
FinTech North is the focal point for the FinTech community in the Northern Powerhouse.
It is an open and collaborative platform for sharing ideas, challenges and best practice,
for showcasing innovative startups and scale-ups and for facilitating the connections and
collaborations which create real value for businesses and consumers.
54
UK FinTech State of the Nation
FinTech Scotland has been established to secure Scotland's place as a top five global FinTech
centre. To succeed they bring together entrepreneurs, the established financial sector,
the public sector, accelerators, investors, consumer groups, technology and service firms,
universities and skills agencies.
Northern Ireland attracts global companies because of its blend of an exceptionally skilled
workforce with a strong work ethic and highly competitive operating costs. The region has
accumulated a number of industry accolades with Belfast ranked as the top destination for
financial technology investment projects, the top city in Europe for new software development
projects and the top international location for US cyber security development projects. Invest
Northern Ireland, the region's economic development agency, works in an ongoing partnership
with investors offering business advice and financial assistance in order to develop and expand
the business and to improve capability and international competitiveness.
KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with
approximately 16,300 partners and staff. KPMG is a global network of professional services
firms providing Audit, Tax and Advisory services. They operate in 153 countries and territories
and have 207,000 people working in member firms around the world. The independent
member firms of the KPMG network are affiliated with KPMG International Cooperative
("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity
and describes itself as such. KPMG FinTech professionals include partners and staff in over
50 FinTech hubs around the world, working closely with financial institutions and FinTech
companies to help them understand the signals of change; identify the growth opportunities;
and to develop and execute on their strategic plans.
At PwC, their purpose is to build trust in society and solve important problems. They are
a network of firms in 158 countries with over 250,000 people who are committed to
delivering quality in assurance, advisory and tax services. They have an end-to-end FinTech
team engaged at all points of the innovation ecosystem. Working across both start-ups and
established financial services firms, their team advise on strategy, integration of FinTech into
business processes, facilitate partnerships and offer support as firms scale and mature.
Tech Nation is a government-backed organisation helping to accelerate the growth of the
digital tech sector across the UK, and make the UK the best place in the world to imagine, start
and grow a digital tech business. Its mission is to empower tech entrepreneurs to grow faster
through knowledge and connections, to build a UK economy that is fit for the next generation.
It does this by running growth programmes, developing digital entrepreneurship skills through
its online Digital Business Academy, through its visa scheme for exceptional talent and by
championing the UK's digital sector through data, stories and media campaigns.
Established in 2012, Whitecap Consulting is a regional strategy consultancy headquartered in
Leeds, with offices in Manchester, Milton Keynes, Bristol and Newcastle. Whitecap works with
executives, boards and investors of predominantly mid-sized organisations, typically with a
turnover of c10m-300m, helping them analyse, develop and implement growth strategies.
Whitecap works with clients across multiple sectors, with financial services and FinTech being
key areas of focus.
55
UK FinTech State of the Nation
invest.great.gov.uk
Department for International Trade
The Department for International Trade (DIT) helps businesses export, drives
inward and outward investment, negotiates market access and trade deals,
and champions free trade.
We are an international economic department, responsible for:
supporting and encouraging UK businesses to drive sustainable
international growth
ensuring the UK remains a leading destination for international investment and
maintains its number one position for international investment stock in Europe
opening markets, building a trade framework with new and existing partners
which is free and fair
using trade and investment to underpin the government's agenda for a Global
Britain and its ambitions for prosperity, stability and security worldwide.
Disclaimer
Whereas every effort has been made to ensure that the information in
this document is accurate, the Department for International Trade and the
Contributors accept liability for any errors, omissions or misleading statements,
and no warranty is given or responsibility accepted as to the standing of any
individual, firm, company or other organisation mentioned.
Crown Copyright 2019
You may re-use this information free of charge in any format or medium, strictly
in accordance with the terms of the Open Government Licence.
To view this licence, visit:
www.nationalarchives.gov.uk/doc/open-government-licence
or email: psi@nationalarchives.gsi.gov.uk.
Where we have identified any third party copyright information in the material
that you wish to use, you will need to obtain permission from
the copyright holder(s) concerned.
Any enquiries regarding this material should be sent to us at
enquiries@trade.gov.uk
Published April 2019
by Department for International Trade