Why investors shouldn’t ignore the hype about fintech
By Eileen Burbidge, Partner at Passion Capital and a Technology Ambassador for The Mayor of London.
Many investors (business angels, venture capital and private equity funds as well as family offices) are participating in fintech, and recognise value creation truly reflective of a “fourth industrial revolution”.
However, others are somewhat sceptical and concerned about froth and hype. Either way, what’s interesting is that even the most sceptical aren’t willing to bet against innovation coming to the sector nor that London will be the centre of it all.
For those who question why there’s so much attention on fintech in Europe and specifically in the UK and London, the answer is simple: We are rightly playing to our strengths. Fintech is a natural opportunity for London – and a sector in which we have inherent advantages.
In the UK we have the most centralised timezone where one can reconcile financial transactions with Asia in the same business day as with the Americas. This happens nowhere else in the world. As a consequence, there’s no disputing the fact that London is one of the world’s leading financial capitals.
Off the back of our advantage and rich heritage in financial services, we now also have a burgeoning digital ecosystem – with more software developers than any other city in the world according to Stack Overflow. Therefore when one overlays the rich financial services institutional knowledge with innovative software development and digital agility *plus* the progressive regulatory environment which the chancellor committed to and has been demonstrated by initiatives delivered by the Treasury, the FCA and PRA, we do have “a perfect storm” in the UK for creating the greatest fintech ecosystem in the world.
Sceptics might still acknowledge all of this but then dismissively and incorrectly decide that there has yet to be “true innovation” in the sector. If one doesn’t believe there’s been innovation with respect to user experience, transparency, efficiency/cost and financial inclusion to date, one is not paying attention.
Further to this point, the maturation cycle of the fintech sector is not so different to the dot-com era of the 1990s. In the mid-90s, Amazon, Ebay and Yahoo were all founded within the same 12 months of one another – attempting to enable easier and more intuitive online service access for consumers and end-users. It took nearly a half decade later for another company called Salesforce (one of the most impactful companies for the enterprise) to be founded.
First appeared in City AM