Taste all the many flavours of the vast technology revolution
There are many flavours - Cleantech, Biotech, Cybertech, Agritech and Fintech are just a few. However this broad menu only serves to highlight the phenomenal array of ways in which the powerful combination of ubiquitous computing and connectivity has the potential to make a mark on the way we live our lives.
One area that will likely directly impact our lives the most is Fintech – the application of new technologies to the world of banking and finance. This technological change is democratising finance and fundamentally changing the way financial services firms operate. It is using tech to put choice in the hands of individuals and businesses and changing their relationship with lenders. As the financial crisis demonstrated, when bank lending dries up, an economy based on a single form of finance is fragile, which is why the growth of alternative sources of business funding should be cheered.
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Hide AdThe UK is leading the Fintech revolution - long a finance powerhouse, in recent years it has developed itself into a Fintech capital. Ernst and Young recently highlighted that with 61,000 employed in the sector, more people work in UK Fintech than in the industry in New York or in the combined tech workforce of Singapore, Hong Kong and Australia.
The UK Fintech sector represented approximately £6.6bn in revenues in 2015 and attracted around £524m in investment.
And, the UK and Ireland account for more than 50 per cent of European technology venture capital measured by number of deals and 69 per cent measured by funds invested.
Fintech companies include crowdfunding platforms, which allow a business or project to raise financing by asking a large number of individuals for a small amount of money; peer-to-peer lenders, which provide online services that match lenders directly with borrowers and mobile, mobile-first banks, and real time payment firms which dramatically speed up the time taken for online transactions.
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Hide AdThe UK leads the world in eCommerce adoption, and with the innovative regulatory support of the UK Government, we are becoming increasingly interested in crowdfunding – indeed on March 3 this year, London-based mobile banking company Mondo raised £1m on Crowdcube, an equity crowdfunding platform, in a little over 90 seconds.
At first sight, these alternative sources of funding might appear to be direct competitors to London Stock Exchange but we are supportive of this innovation taking place.
London Stock Exchange is passionate about the power of equity over debt to support companies’ long term growth. To realign this funding imbalance, we believe that a comprehensive equity financing ladder must be established, with crowdfunding and Venture Capital working alongside the public markets. The Fintech sector is playing a critical role in this readjustment by making these alternative forms of investment (on both sides of a deal) available to individuals and business.
But equity funding from private platforms is not the only form of financing backing Fintech or any other kind of tech. The UK public markets are also providing robust support. Last year, Worldpay, the payments processing company used everyday by millions of people across the country, listed on London Stock Exchange in a £2.48bn deal. It was the world’s largest technology IPO by deal size, and the second largest by valuation.
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Hide AdThe UK is emerging as a Fintech powerhouse – we posses a rare and powerful combination of a strong financial sector, supportive Government, vast network of advisory institutions, excellent and motivated talent with a deep knowledge of the industry.
Vitally, this is not a London story but a national one, as Tech City UK showed us last month in their Tech Nation report. This in-depth study highlighted there are Fintech companies flourishing across the country, including in Leeds, Sheffield and Rottherham - areas identified as Yorkshire’s largest tech clusters.
These companies and their contemporaries across the UK are generating global interest, so now is the time for us all to develop a taste for the many flavours of tech. This technology is changing the world and will allow finance to become increasingly open and accessible to everyone.