The UK is known to be an environment where tech startups can thrive. Fintech, in particular, is a sector in which the Midlands is absolutely booming.
This merit does not come without cause, the UK is a hotspot for most of the world’s biggest fintech companies, housing over 3,000 fintech firms and fintech ecosystems with a net worth of over $1.1 trillion. But why is fintech so successful in the Midlands? Find out below.
History of Fintech in the UK
The UK has some of the oldest financial institutions on earth, making it a cornerstone of world finance. Financial technology in the country started with Barcalys’s introduction of ATMs in 1967 and the establishment of the Interbank Computer Bureau.
Later, in the 90s, online banking became very popular. This caused a shift among users as more physical customers began using digital financial services. Paypal, despite being an application made in the United States, gained traction in the UK and fully ushered in the era of digital finance. It also paved the way for numerous subsequent fintech startups.
Fintech Statistics in the UK
Research data shows that the fintech sector contributed over $13 billion to the UK economy and created over 76,000 jobs last year. There was also a significant number of fintech users in the Midlands in 2023 with over 53.87 million users using digital payment methods to carry out their transactions.
Despite a major drop in the investment value (around 30%) in 2023, the UK still received more funding than fintech in countries like Germany, China, and India, recording a respectable $5.12 billion dollars in fintech investments for the year.
Factors That Make the Midlands a Fintech Hotspot
A Solid Background in Financial Services
A big reason fintech thrives so much in the Midlands lies in the strong financial and banking services the country already offers. The UK is the biggest exporter of financial services globally. London, for example, is a world-leading financial hub that has powerful banking services like Barclays, HSBC, and Lloyd.
The UK’s presence as a financial powerhouse inadvertently translates to fintech dominance. The sheer size of finance companies has presented widespread opportunities to create financial applications that can streamline payment processes and manage and lend assets. One good example is with casinos, where fintech solutions enable you to play online poker and deposit funds to your account easily.
Access to Investment and Capital
Fintech, on average, accounts for nearly 50% of venture capital in the UK because many large companies and private equity investors in the region see fintech as a lucrative business venture to invest in.
London alone has abundant private wealth, with over 200,000 millionaires in the city. The amount of wealth in countries in the UK has also increased the possibility of fintech startups gaining investment funds to drive their project.
Talent and Community
The United Kingdom has made itself an attractive destination for working in the fintech space. It offers global talent visas to encourage talent from various countries to contribute to its ecosystem.
Beyond international talent, the Midlands reinforces its own talent by offering tech courses with well-planned curriculums in tertiary institutions and free online courses to foster skilled local talent.
A tight-knit community bolsters the fintech companies in the Midlands. Here, veterans in the space are willing to share vital knowledge with aspiring fintech founders and share insightful tips to guide them through the challenges of starting a business.
The fintech community regularly hosts events, conferences, and meetups where entrepreneurs and investors can meet, connect, discuss potential partnerships, and showcase their innovative technologies.
The Future of Fintech in the Midlands
Fintech has become an important sector in the UK economy. The Midlands region is well positioned as a fertile ground for fintech innovation that will contribute to the country’s economy. With such a great talent pool, supportive infrastructure, and continuously developing entrepreneurial spirit, the region is all set for bright prospects over the coming years.
