As I sat down to write this blog, I asked myself, ‘when was the last time I went into a bank?’ The answer? Well it’s been a long time.
The reason is I do nearly all of my banking online, like many of us. From paying bills, managing my accounts, even applying for a mortgage, it’s all done with the help of technology.
The financial services sector is an area of industry that has been transformed through new technology. So much so, it even has its own name – fintech.
Referring to a business that provides financial services by making use of software and modern technology, fintech is big business in the UK. EY and Deloitte have both independently ranked London as the leading global hub for fintech and despite uncertainties around Brexit, venture capital and private equity investment in the UK fintech sector rose to a record $3.3 billion in 2018. London is home to some of fintech’s leading unicorn companies, including checkout.com, Greensill and Monzo.
The good news is it’s not just the capital that is reaping the rewards of this thriving sector. There are many cities in the Northern Powerhouse that have developed strong clusters around fintech and are encouraging investors to look outside of London.
Manchester, for example, is home to fast growing fintech startups, Mojo Mortgages and AccessPay. Its two largest industries, financial services and digital technology, have successfully worked together to position Manchester as a major fintech hub.
Leeds is the second-largest financial centre in the UK meaning it’s well placed to capitalise on the fintech revolution. More than 37,000 people work across Leeds’ financial sector and leading firms Direct Line, First Direct, Leeds Building Society, Lloyds, RBS and Yorkshire Bank are all major employers in the city.
Hot on the heels of Manchester and Leeds is North East England. With Sage, Virgin Money, Newcastle Building Society and one of fintech’s big success stories, Atom Bank, all headquartered here, it’s no wonder we’ve caught the attention of investors who see the potential market opportunities. We have all the ingredients for a thriving fintech sector.
Our existing digital cluster is one of our major strengths. Earlier this year, the leading organisations that represent and support the creative, digital and tech sector launched One Region, One Sector, One Statement. It outlines our region’s capabilities in the sector and the resources available to help businesses in the North East. I think it demonstrates how we work collaboratively to support the sector as whole.
Recent infrastructure developments, like the North Atlantic Loop, which connects the North East to Dublin and the United States to the west, and Europe via Esbjerg, Denmark, has added to the region’s ability to be a significant hub for fintech businesses requiring almost limitless amounts of extremely fast digital connectivity – with better speeds and capacity than London.
Recently I’ve been meeting lots of London-based fintech and digital technology companies who have all told me that staff retention in the capital and surrounding area is a huge issue for them. Being at the heart of a booming sector can be good thing, but it can also mean competition for the best staff. There are currently 51,000 graduates studying STEM subjects in our region’s universities creating a potential workforce of talented, entrepreneurial and ambitious people. The workforce in the North East has always been adaptable, flexible and loyal, with low staff turnover.
High costs can be an issue too, it’s expensive to build and grow a business in London. North East England is home to quality, grade A office accommodation and costs can be a fifth of those in London.
Invest North East England is in conversation with a number of London-based fintech companies about either relocating to North East England or opening a second office or developement centre in the area. It’s great to see the shared enthusiasm people have for our region and what it can offer businesses in the sector.
When I explain about our National Innovation Centres located on the landmark Newcastle Helix development, business networks like Dynamo North East, Sunderland Software City and Digital Union, as well as the leading fintech companies already operating in the region, including Worldpay, True Potential, Wirecard and Newcastle Strategic Solutions, I can see people’s eyes widen at the opportunities available here.
Henri Murison, director of the Northern Powerhouse Partnership, said of the fintech sector in the North, “I believe we are on the cusp of something that could be very big and have significant potential for growth.” I couldn’t agree more.
Blog by Guy Currey, Director, Invest North East England