Scaling Regional Fintech - With FinTech Wales
Understanding the world of UK fintech outside London
London is a great place to do business. It’s a global hub for start-ups and investors. On par with regional hubs such as New York and Singapore, with only Silicon Valley sitting definitively ahead of London as the best place to start a fintech. The population of the greater London area alone is 10 million people, bigger than many European countries. It’s no surprise that many international fintech companies open an office in London after achieving success in their home market.
Despite these positives, London and the surrounding area can overshadow other parts of the UK. As the seat of government, media, and business, the UK is very London-centric. I say this as someone who grew up in Wales but have now lived in London for most of my adult life. In the past years, this discrepancy has been recognised rather than shied away from. Politicians have spoken of wanting to level up parts of the country that have been left behind.
Outside of the politics of this, it has been positive to see a wider acknowledgement of the UK’s regional disparities. We need to do more to develop opportunities and growth in the regions - a term used to mean anything outside the capital. According to the Office for National Statistics, London has a GDP per capita of £57k, whereas the UK average is £34k, and the North East of England is the lowest region in the country at £24k.
Some small nations have shown the way when it comes to start ups. Places like Estonia have nurtured unicorns like Wise and Bolt despite having only half of Wales’s population. If Estonia can find success in fintech, then I’m sure Wales, Scotland, and other parts of the UK can, too. Luckily, when it comes to fintech, there’s a lot that the UK’s regions can offer. There’s an emerging ecosystem of regional organisations such as FinTech North, FinTech NI (Northern Ireland), and FinTech West. These organisations are building regional hubs and helping local start-ups succeed.
With all this in mind, I was happy to read a recent report on this topic. Earlier this year, three organisations that work to help fintech organisations grow - Innovate Finance, Streets Consulting and Whitecap Consulting - released a report titled Scaling UK Regional FinTech. You can read the full report here.
I saw Josh Dracup from Whitecap Consulting and Julia Streets from Streets Consulting present the report’s findings at a Fintech Fringe event. Even though I had read the report some weeks before, it was great to see it brought to life. The report was born from many years of analysing fintech firms (located outside London), building a data set on regional fintech firms, and interviewing entrepreneurs in the sector.
Some of the key findings of the report can be seen in the above graphic. What was particularly interesting was some of the feedback from fintech entrepreneurs within the report. They were motivated by solving a specific problem. This is key - a start-up needs to find one thing they can do really well, ideally better than anyone else. (I mentioned this concept of building a wedge in my neobanks series.) The report saw a strong correlation with the companies that joined an accelerator programme, and an ability to scale and fundraise.
Further Perspectives On Regional Fintech
I decided to get further perspectives on regional fintech from Chris Gardner. Chris is the founder of Ninety Two Ventures, a strategic advisory firm that works with early to mid-stage UK fintechs. Chris commented that the growth of the UK’s regional fintech centres is a critical enabler in making UK financial services more accessible and inclusive.
“We are at the bottom of the growth curve, and the next decade is critical. Success will be defined by how well the UK government, industry bodies such as CFIT (Centre for Finance, Innovation and Technology), regional growth organisations, and established financial services firms can work together to drive access to information, investment, talent, and policy and regulatory expertise across these regions. A critical mass culture needs to be established, that doesn’t undermine the uniqueness, independence and heritage of these regions.”
Chris went on to highlight three areas that need the most attention across the regions in the next 12-18 months:
- Large financial services brands employ tens of thousands of people outside of London. More needs to be done to encourage these firms to support the development of fintech start ups and scale ups operating in these regions
- UK fintech lacks consistent, up-to-date industry data. Without a national and regional ‘baseline’, it is difficult to assess outcomes historically and relatively. It also has other ramifications across the industry, such as measuring and improving diversity
- Regional UK fintech has historically been built on independence and a local, demand-led approach through private and public sector partnerships. This continues to work well. But a more centralised approach should be considered to explore opportunities for genuine economic cooperation between regions.
These points highlight the need for coordination to develop regional fintechs. By leveraging existing financial services infrastructure, improving industry data, and fostering collaboration between regions, the UK can develop a more robust and diverse fintech eco-system.
The UK starts from a strong position (I have attended some valuable events in Manchester with FinTech North in the past year), and addressing some of these challenges can help economic growth across the UK, helping to bridge the gap between London and other regions.
Fintech Wales Q&A
One of the key growth enablers of regional fintech is organisations such as Fintech Wales, which seek to nurture and expand the local ecosystem to support fintech growth. I spoke with Sarah Kocianski, the CEO of Fintech Wales, to understand what a regional fintech hub does and how we can get more people outside of London involved in the financial services sector.
Can you please introduce and provide some details on your background?
I’ve worked in the fintech industry for over a decade, beginning my journey at a fintech startup. I then transitioned into a role as an analyst and researcher at Business Insider Intelligence, where I led the launch and growth of the fintech vertical. Before taking the reins at FinTech Wales as CEO, I was a consultant specialising in advising clients on key industry trends, competitive positioning, and achieving product-market fit. These experiences have given me a unique perspective on the fintech ecosystem and its ever-changing landscape.
What is Fintech Wales's role?
FinTech Wales' role is to empower fintechs and financial services in Wales to achieve ever greater success across the UK and globally. We focus on 4 strategic pillars — Funding, Skills, Ecosystem and Amplification and carry out a range of activities to support our members in these areas.
What kind of organisations join Fintech Wales?
We have over 150 members and work with fintechs and financial services of all sizes. From startups, scaling fintechs and tech organisations, to the more established insurtechs, challenger banks and financial organisations, each member has unique needs and challenges depending on their stage of growth and market position and we provide support to them all.
We also work with what we call ‘Associate Members’ which are organisations across all sectors that work with and support the Welsh fintech ecosystem.
What are some of the Fintech companies that have come out of Wales?
When it comes to financial services and fintechs, Wales is known for its insurance and comparison website companies such as Admiral, Confused.com, Go.Compare and Moneysupermarket.com. The success of these organisations within the insurtech space have paved the way for new entrants and scaling businesses such as Bikmo, Acquis, ActiveQuote, Comparison Creator and Dynamo Cover, to name just a few.
Outside of the insurance and comparison space, Wales has also seen the emergence of a thriving digital banking segment that builds on the country’s reputation for community-centric financial services, established by the likes of the Principality and Monmouthshire Building Societies, and Hodge Bank.
Some other Welsh fintechs to look out for are Sonovate, a provider of flexible funding solutions within the recruitment industry and tipped to be Wales’ first fintech unicorn and Coincover, which offered one of the first cryptocurrency insurance products and raised £25 million in 2023. Another is Mazuma, a Bridgend-based online accountancy firm which secured a multi million pound investment to support growth earlier this year. Also there’s our Foundry Alumni (Fintech Wales’ accelerator programme), including FinalRentals, Zing, Wagonex, AGAM, Voltric, Credit Canary and Sero.
What's the role of higher education, e.g. Universities, or other research bodies, when it comes to fintech?
Wales is home to 10 universities and colleges that offer over 200 courses related to financial services, accommodating around 20,000 students. These programs span all levels, from apprenticeships to postgraduate degrees. Notably, there is a growing focus on dedicated fintech degrees, such as Swansea University’s Fintech Master’s Degree and Bangor University’s Fintech undergraduate degree.
Both Higher and Further Education establishments in Wales play a significant role in ensuring there is a high quality talent pool here for fintechs and financial services to hire from. Some offer fintech specific courses, while others offer practical skills, like our partner Cardiff and Vale College together with which we deliver coding and data academies. Others are doing important research, for example our partner Future Finance is working with 4 universities and is focused on boosting the UK financial services sector's impact and ability to serve a wider range of customers via numerous activities, including its accelerator.
Overall, the synergy between higher and further education institutions, research bodies, and fintech organisations in Wales is pivotal in driving innovation and preparing a skilled workforce for the evolving demands of the fintech industry.
What has been the trajectory of investment in fintech in Wales?
The trajectory of fintech investment in Wales largely mirrors broader UK trends, with a slight increase in activity over recent years. However, the investment landscape in Wales is distinct due to the presence of specific funding bodies tailored to the region. Institutions like the Development Bank of Wales, and funds including the Cardiff Capital Region's Innovation Investment Capital Fund and the British Business Bank's Innovation Fund for Wales are crucial players in supporting increased funding and investment in Wales.
Angel investors remain an active force in the Welsh fintech ecosystem, though the exact volume of their contributions is difficult to quantify due to the private nature of many deals.
How can we get more people in Wales interested in fintech as a career opportunity?
Attracting more people, and importantly increasing diversity, into the industry is a key objective for FinTech Wales to support the future growth of Welsh fintechs.
FinTech Wales promotes over 100 jobs available in Welsh fintech every month through multiple marketing channels. Regular events designed to showcase opportunities such as “Speed Interviews” and Recruitment Days are well attended by both employers and individuals. Working closely with both HE (Higher Education) & FE (Further Education) institutes, we aim to raise awareness of Wales’s unique offering. Such as career prospects, reasonable living costs, and proximity to national parks when it comes to work-life balance.
If any organisations are looking to enter the UK, what are some of the strengths or reasons why Wales could be a good base for them?
Easily accessible from European urban centres, and with a thriving fintech scene, Wales is unique in offering easy access to the natural landscape as well as region specific investors. With a thriving talent pipeline nurtured by the Higher Education sector and government-funded schemes, companies can benefit from hiring skilled tech workers at each stage of their careers.
The Welsh fintech ecosystem has a reputation for being highly collaborative between the private and public sectors. The Newport Council-backed Soft-Landing programme is an example of how FinTech Wales and Tramshed Tech come together to attract successful tech companies establishing their headquarters in Wales. The programme offers eligible companies six months of office space where they can register their new UK headquarters, membership of FinTech Wales, and a business support programme for free.
Often, the UK and London are seen as the same internationally, but there's a thriving regional eco-system outside of London, with organisations such as, Fintech Scotland, Fintech North and Fintech Wales. How can regional fintech organisations work together most effectively?
FinTech Wales is proud to be part of the FinTech National Network (FNN) which includes other fintech bodies such as FinTech Scotland, FinTech West and FinTetch North. Our aim as the FNN is to collaborate and raise awareness of the opportunities and specialisms available outside of London by working together to harness our collective impact.
It's hugely important for anyone talking about the "UK Fintech Scene" to emphasise that the UK is more than London, or even England. By not doing so, they are missing out on highlighting regions that are thriving in specific or many areas of fintech. In turn, that gives investors, fintechs, and other interested parties an inaccurate picture of what's happening here and where future opportunities lie.
What's the future for FinTech Wales?
We will continue to support financial services and fintech companies in Wales, and empower them to thrive to ensure Wales remains a globally recognised fintech hub. We will do that via our priorities which remain tied to our key pillars and are; Increasing funding to support further growth, helping to develop the skills the industry needs now and in the future, promoting Welsh companies and fostering collaboration with adjacent industries and key infrastructure providers.
Thanks to Sarah and the FinTech Wales for helping with their insights on regional fintech! I hope more fintechs will consider using Wales as a base for their UK operations, and more young people will see fintech in Wales as a career path. A decade ago, it was expected that past a certain level of seniority, staff would be based in London, but nowadays, this thinking has changed.
Many places, including Cardiff, Manchester, Liverpool, and Newcastle, can connect to London in 2-3 hours via train, and many employers are much more open to having staff be in London when needed for specific reasons rather than as a daily presence. This change means that staff can be based in regional centres and build their life and careers where they want rather than feeling like living in London is a necessity.
Note: Fintech and FinTech are both used in the UK. In this post I’ve standardised to fintech whenever possible. FinTech is used where it forms part of an organisation’s name.
If you enjoyed this post, please consider liking this post or leaving a comment. It's much appreciated. Please consider subscribing to receive new posts via email or in the Substack app. If you’re an existing subscriber, you can upgrade your subscription to support this newsletter.
Further Reading (Payments Culture)
Other Interesting Reads 👀
Some articles - not necessarily payments and fintech related - that caught my eye:
Silicon Valley, the New Lobbying Monster (The New Yorker)
Have We Reached Peak Human Life Span? (NY Times)
Europe's Local Card Schemes on a Steady Decline (Flagship Advisory Partners)