FinTech50
WHY LONDON IS A CENTRE FOR FINTECH
INNOVATION
Alex McCrakcen, Silicon Valley Bank, Director, Venture Services and Origination
F
inancial technologies are big news in London. Of
the $11bn invested in FinTech worldwide in 2012,
around $3bn was invested in the UK. Two thirds of
this ($1.8bn) was earmarked for London-based FinTech
businesses. Despite having a population that is one fifth the
size of the US, investment in UK FinTech is half that of the
US, which means that the UK, and London in particular,
is really punching above its weight in the global FinTech
innovation arena.
In the global FinTech market, electronic and mobile
cash sees most of the investment activity, driven by the
rapid growth in smartphones, tablets and mobile commerce
transactions. According to reports by Forrester Research
Ltd, global purchases over mobile will reach $1tn by 2017,
leading to the rise of hundreds of mobile money payments
and transfer solutions and technologies. Over 30m people
in Europe are expected to move to mobile banking over the
next few years, leading to the rise of new authentication and
security solutions, and the gradual disappearance of banks’
high street branches.
FinTech is of course a broad eco-system, and other
subsectors benefiting from increased funding activity
include E-Money, Peer-to-Peer lending (P2P), FX, Payments,
and Challenger Banks (of which Silicon Valley Bank is one)
which are being set up as an alternative to the traditional
high street incumbents. We only have to look at the range
of sectors represented by the 50 hot FinTech businesses
featured in this booklet to see that the UK and Europe are
producing FinTech businesses of global significance across
the board.
With payments and FX transactions worth billions of
THIRTY-SIX
dollars flowing through banks and Financial Services
businesses worldwide on a daily basis, we expect the majority
of disruption and innovation to come within the payments
sector. Finech businesses should be mindful of the challenges
of globalization - especially security, with the rise of global
cyber-hacking, and the demands of stringent rregulatory
requirements. Keeping pace with regulatory changes across
global markets is essential for any FinTech business wishing
to grow while remaining compliant.
The transition towards ever faster, cross-border micropayments driven by m-commerce will push financial services
businesses to adapt and transform their technology systems.
It is pleasing to see FinTech businesses developing solutions to help existing banks adapt to meet modern demand.
Financial Services businesses must remain agile in adopting
new technologies if they wish to survive. The days of large
financial services businesses having a “one size fits all”
policy and developing in-house systems are over. Instead,
to avoid going out of business, banks must be able to make
changes rapidly by partnering with or acquiring new FinTech
businesses. At Silicon Valley Bank, we fully recognise the
importance of this and are proud to work with a wide range
of innovative businesses within the FinTech space, by providing funding and banking