Can fintech thrive outside London? Charlotte Crosswell talks about growing the sector around the country

Even when Charlotte Crosswell launched the Center for Finance, Innovation and Technology in Leeds this week with a mandate to boost fintech across the UK, those in attendance asked why it couldn’t have been in London.

The Leeds event had major supporters in City Minister Andrew Griffith and has the full support of the whole of government and industry. But however heavy on the mouth these questions may have been, they now point to the challenge ahead of CFIT and its chairman, the former head of open banking and Innovate Finance Crosswell.

Outlined as the key delivery measure in the landmark Kalifa review of fintech in 2021, CFIT was described by Ron Kalifa as “the outstanding piece of the puzzle” to deliver a coherent national strategy for the sector when it was given £5.5m . funding from the Treasury in 2021.

But fintech’s success has become synonymous with the capital. And naturally, the talent and money that keeps the sector moving has followed suit. The role of Crosswell and CFIT’s new boss Ezechi Britton is now to ensure that the spread of the sector becomes “more balanced”.

“If we do our role well, by having the spotlight and the input and output coming in from these regions, [talent and investment] will be a natural development, she says By AM. in an interview. “We are not there to promote [areas outside of London], that is not our role. We are there to solve the difficult challenges.”

She says the aim of the new body will not be to pull the existing sector away from the capital, but to establish cities such as Manchester, Belfast and Bristol as thriving fintech ecosystems in their own right. As you’d expect with a challenge of that size, that’s probably easier said than done.

London is calling

Fintech has undoubtedly been a UK success story over the past ten years. Regulators and policymakers moved quickly in the wake of the financial crisis and rolled out smart reforms that have created an ecosystem and been adopted worldwide.

But it is an industry that has clustered closely around London. If London were a country, it would be surpassed only by the US last year in terms of capital invested in fintech, while employers had 350,000 software developers to choose from in the capital in 2019, more than any other European city.

And while Crosswell says the use of telecommuting should in theory have helped ease the tight crowd, London’s dominance remains.

“During COVID, everyone made it [invest] virtually, and I think everyone thought we had finally broken the back of that – you don’t need to be headquartered in London to get capital,” she says.

“Someone once called it ‘the £200 cup of coffee’ – you come down from Manchester to London to be told ‘no’. But we seem to have gone back to that again.”

The numbers confirm it. London accounted for two-thirds of all venture capital investment in the UK with over £16.4bn raised across sectors last year, while deal value in the UK regions fell by £3bn to £6.2bn, according to KPMG.

Crosswell says there is a word-rather-than-deed problem among investors who say they are keen to expand the geography of their portfolio but rarely deliver.

“[Investors say] I really want to have a regional portfolio, but maybe they don’t go out to proactively find it that much, she says. “When I saw the investment figures for last year, they are still very skewed towards capital. And I think if we look at the profile of all the fintechs across the UK, it doesn’t quite map out where the potential fintechs are.”

Regulators want to lead by example and are spreading their footprints across the city. FCA opened a Leeds office in September with 100 new staff, and the Bank of England has previously seen a migration of staff to the city.

CFIT has also rolled out a number of new partnerships with universities around the country to try to increase the flow of talent to fintechs outside of London, which she says could start to bear fruit within the next year.

But Crosswell says there is still a huge amount of work to be done and London’s drag is – for the moment – ​​inevitable.

“Every fintech I talk to, regardless of size, is probably in the capital at least once a week. And that’s even with the arrival of homework. It used to be two or three days, so I think we’re progressing slowly, she says.

Falling behind?

More existential than the interregional problems, however, is that Britain’s crown could slip. France is ramping up its bid to win Paris the title of European fintech hub, and progress in areas where the UK moved fast as open banking is being bypassed.

While the UK shaped the framework for fintech regulation and innovation, other markets are now picking only the best bits, she says.

“We’ve put together the whole fintech playbook for international hubs, and then they come in and say, ‘Great, someone’s done all the hard work. [The UK] have learned from the mistakes. What works? We’ll take it.'”

And that is why the issue is less a division between the UK and the regions, and more about national growth and ensuring that the UK remains competitive internationally, she argues.

“We need to make sure we don’t rest on our laurels and we take it forward and solve these problems and accelerate the adoption of fintech,” she says. “That is what is needed to further strengthen the sector.”

Instead of a battle between the capital and the rest, she argues that the growth of the sector will lift everything. Now it’s at CFIT and Crosswell to help run it.