FinTech Generates Massive Interest in the United Kingdom
Defying the Odds: Britain Is a Hot FinTech Destination
Britain’s FinTech companies received an estimated $564 million (£429.94 million) in Q1 and Q2 2017. This figure is 37% higher than the same period, year on year. According to Innovate Finance, financial technology companies in the United Kingdom are ahead of the curve, despite wide-ranging Brexit concerns.
Worldwide FinTech investment in Q1 and Q2 2017 topped $6.5 billion. Of that figure, approximately 50% went into US-based FinTech startups and an additional $1 billion was invested in Chinese FinTech startups. It is notable that the capital invested in FinTech in 2017 is substantially less than what was invested in the first half of 2016. Experts believe the reason for the 45% decline is a series of huge deals valued at more than $1 billion apiece that were processed in China in the early part of 2016.
Major Capital Inflows Continue into UK FinTech Industry
What is particularly notable about the capital inflows is that the United Kingdom now sits behind the US and China as the most heavily invested FinTech country. British financial technology is enjoying an imperious run of form with foreign investors, notably in the form of venture capital. There were growing concerns that the UK’s departure from the EU would end the money flow.
Pre-Brexit in 2015, the UK FinTech sector managed to pull in an incredible $676 million worth of investment during Q1 and Q2. For the full year, the overall level of FinTech investment topped $1.3 billion. For the first three weeks of July in 2017, UK FinTech has reeled in an additional $155 million. Since the June 23, 2016 referendum, the UK economy has adjusted well, and GDP growth came in on target at 0.3%.
The UK government has prioritized financial technology, and states that it contributes tremendously to the economy with $9 billion in revenues and some 60,000 employment opportunities. There were concerns that the Prime Minister’s poor showing in the June 8 general election, and difficult Brexit negotiations would hamper investment in the UK. On the contrary. International investors believe in UK ingenuity, and they are investing heavily in the United Kingdom’s tech sector.
Limited Risk Seen in UK FinTech
Innovate Finance features approximately 300 tech startups, and only 60 of them would likely be affected if the UK loses its European passporting rights after a Brexit. That explains why financing continues to flow into this sector at a healthy pace. The more pressing concern for the United Kingdom is the loss of human capital.
If innovators, entrepreneurs and tech experts decide that their talents are better employed outside of the United Kingdom post-Brexit, the sector could face tremendous difficulties. Presently, 30% of FinTech workers in the UK are from the EU. FinTech is a brains-based industry, and if the UK can continue to attract talent it will remain at the top of its game. Approximately 33% of all investments in UK FinTech came from the US.
Cleo Gets £2 Million from Heavy Hitters
FinTech is one of the most competitive arenas for venture capitalists. Companies are eager to invest their funds in lucrative startups and the UK is still a hot destination. UK FinTech got a huge vote of confidence on July 26, when the cofounder of Skype and a leading venture capital startup in the country signed off with a UK FinTech chatbot named Cleo. Billionaire cofounder of Skype, Niklas Zennstrom and the owners of LocalGlobe pumped £2 million into the funding of this new messenger bot which connects users with their credit cards and bank accounts in an interactive format. Clearly, the UK remains a hot favourite!
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About Brett Chatz
Brett Chatz is a graduate of the University of South Africa, and holds a Bachelor of Commerce degree, with Economics and Strategic management as his major subjects. Nowadays Brett contributes from his vast expertise in online trading for spreadbettingreview.co.uk.