The second annual Fintech Week is coming to London next week, celebrating the exciting world of innovation in financial services. And there’s certainly lots to celebrate. The UK’s financial technology scene is now estimated to be worth approximately £20bn in annual revenues, according to Ernst & Young.
What’s more, despite continuing to lag behind California when it comes to attracting investment, British start-ups are successfully raising capital with growing numbers of VCs and angel investors willing to back innovation with cash. In fact, annual investment into fintech companies is increasing year-on-year with figures for 2014 showing that there was £342m of investment made into UK businesses alone.
It’s therefore no surprise to see the UK’s Prime Minister, David Cameron, in Spain this week launching a plan for greater EU competitiveness – alongside his Spanish counterpart – with one of the main areas of focus being on ‘enterprise and start-ups’. Businesses under five years old generate almost 50% of new jobs in Europe and so the two leaders want to make the EU work better for this important community. One of their suggestions is to set up an EU Capital Markets Union which would offer new sources of financing for European SMEs worth millions of Euros.
While the capital markets are the backbone of any thriving entrepreneurial-led culture, it’s refreshing to see the importance of the markets brought to European attention in this way. It’s also an area which is increasingly being disrupted by fintech-led innovation. And, quite frankly, it’s about time.
After previous UK success stories like Monitise and TransferWise leading the way, the time is ripe for a capital markets UK fintech unicorn. Banks are rethinking their business models due to regulatory pressures which are also affecting their technology infrastructures. Tighter budgets mean that banks are beginning to see the merits of partnering with a start-up to help them become more efficient, rather than building all their technology in-house. These are just a couple of the factors driving a wave of innovation and change in the capital markets.
It’s therefore exciting to see the entire second day of Fintech Week dedicated to ‘Markets, Trading and Investment’. We’re looking forward to attending and hearing about the innovations and new business models that are about to rock the capital markets – in a good way!