UK FinTechs seek government support after SVB

British FinTech startups are concerned that their country has lost its status in the financial world.

According to a report on Saturday (April 15) by the Financial Times, FinTech founders say the UK government needs to do more to ensure the nation remains a financial centre, whether that means using new funding or reforming listings.

“I think everyone is a bit tired,” said Christian Faes, chairman of mortgage lender LendInvest, which is set to go public in 2021. “There was no doubt that London was the center of FinTech[ . . .]It has been declining for several years.”

The UK government has long called for the country to become a center for FinTechs. When current Prime Minister Rishi Sunak took office last October, his ascension was met with enthusiasm among crypto enthusiasts due to his support for the “hub” plan during his time as chancellor.

“However, a lot has happened in the digital asset sector since then,” PYMNTS wrote recently, including the collapse of Silicon Valley Bank (SVB), which catered to many FinTech startups.

In March, British banking giant HSBC announced plans to buy – and invest $2.1 billion in – the UK operations of failed lender Silicon Valley Bank.

As the FT report notes, FinTech bosses say the deal was a better option than SVB UK going out of business, although many of them worry about a culture clash between the two banks.

And Philip Hammond, a former British chancellor and chairman of crypto company Copper, wondered whether HSBC could provide the support riskier early-stage businesses need.

“Companies are asking themselves whether, despite all the rhetoric, it will be possible for the rather peculiar culture [of SVB UK] to flourish in a behemoth like HSBC, he said.

James Hickson, founder and CEO of European income-based lender Bloom, praised the purchase in an interview with PYMNTS last month.

“HSBC is a good safe haven for depositors,” Hickson said. “It was the right decision.”

However, he asked the same question as Hammond: How does a legacy bank that wasn’t necessarily designed with entrepreneurs in mind retain the “energy” of a technology-focused challenger bank like SVB brought to the ecosystem?

“One challenge they have is to ensure that the culture is not destroyed in the process and that all the factors that made SVB successful, including the ties to the VC [venture capital] community, is not lost,” Hickson said.