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UK: Doom and Gloom or Fintech Boom?

By Jon Dawson, Senior Manager, haysmacintyre

Many of the entrepreneurs I work with face the common problem of deciding which jurisdictions are most favourable when it comes to setting up or expanding globally. With all the uncertainty around BREXIT, some might argue that now isn’t the time to setup a business in the UK or expand from overseas into the UK market.

There were just 64 IPOs in the year to July 2019 (116 in the previous 12 months) and the largest fintech to IPO in this period (Funding Circle) has seen a 75% decrease in its share price since their IPO. Most of what we read about in the UK media is doom and gloom and economists are suggesting that we could be on the brink of another recession.

Despite this, I’m going to explore some of the reasons why many are still choosing the UK to locate their fintech business, and why I think the UK is a great place to setup shop. If we continue to see so many internationally recognised fintechs coming out of the UK, we’ll remain the global leader for this dynamic sector and continue to create the buzz that is felt within the fintech community. 


When I introduce myself as an accountant I’m often asked almost immediately a question about how to pay less tax. It’s at the forefront of people’s minds in everyday life as at work and as a fintech business, the UK can be seen as a particularly favourable place to setup with the Government’s R&D tax scheme having been established to reward and encourage innovation and advancements in technology. Under the scheme, businesses can reduce their tax bill or reclaim cash proportionate to the amount they spend on R&D. In addition, if and when the business becomes taxable, the tax rate in the UK of 19% is low compared to many other countries. 

“If we continue to see so many internationally recognised fintechs coming out of the UK, we’ll remain the global leader for this dynamic sector”

R&D tax credits are often viewed by scaling businesses as a form of finance in as much as they provide a cash injection, often annually, which can help to alleviate the need to raise the next round of investment for a short time. 


Given that the number of IPOs in the first six months of 2019 was so low, one might be fooled into thinking that finance is difficult to obtain. Within the fintech space, the opposite is the case and the first six months of 2019 saw a record $2.9bn invested into fintech businesses, up from $2.0bn in the first half of 2018. Much of this money went to mature businesses, raising later stage VC or PE rounds but there is still a large amount being invested into Seed, Angel and Series A rounds. The (S)EIS tax scheme provides a great incentive for investors to continue to put money into early stage UK businesses.

If you’re looking for finance in the UK, being (S)EIS eligible is important to some investors and if your business is qualifying, it’s worth applying for advanced assurance from HMRC to keep your investment options open. 

Non-financial support:

There seem to be more accelerators, incubators and ecosystems in the fintech space than in any other sector within the UK. In fact, on every day of the week there will be a selection of fintech focussed events which you could attend. Of course, one of the challenges is choosing the most valuable start-up hub to join but there’s certainly no shortage out there for fintechs wanting to benefit from surrounding themselves with a support network. 

“There seem to be more accelerators, incubators and ecosystems in the fintech space than in any other sector within the UK.”

As well as direct support from these networks, London, Cambridge and other cities have the infrastructure to support scaling fintechs. This includes access to professional advisors who understand the industry and flexible working environments make the UK’s top fintech cities an attractive prospect.


Regulation often has negative connotations, but within the fintech community it’s widely accepted that regulation provides a layer of support that financial institutions and the public need in order to feel comfortable operating within this space. The regulators are often praised with being a key facilitator in the UK’s position as a leading jurisdiction for fintech businesses to setup shop. The FCA’s regulatory sandbox, the largest and arguably the most successful sandbox in the UK, has provided the ability for fintech businesses to test their products in a controlled environment, with the FCA continually learning from each cohort and using this to guide advancements in regulation.  

This has led to huge growth in the regtech space, a sub-sector of fintech which is often now seen as a sector in its own right, providing more effective and efficient solutions to growing regulation. Increased regulation is a factor in driving fintechs to the UK which in turn creates more demand for efficient ways to cope with regulation and so a chicken and egg scenario ensues.

Talent and entrepreneurial drive:

Knowyourmoney, recently acquired by NerdWallet, published a survey suggesting that 47.6% of UK adults would consider starting their own business and although less than 10% do, the UK is a world leading entrepreneurial nation. Although there is a significant amount of talent in the UK to support the entrepreneurs, the fintech industry is highly dependent on overseas skills. Perhaps because of the UK’s leading status amongst the global fintech players, businesses have been able to successfully engage with the required technical skillset, often outsourcing tasks to developers in Europe or other areas of the world. 

“London has always been home to Europe’s most dominant financial institutions.”

The Government have been vocal with their support for the tech industry and know that their policies need to drive talent coming through both the education system and from overseas. 

Access to leading financial institutions:

London has always been home to Europe’s most dominant financial institutions. Access to these is integral for most fintech businesses to succeed and is often considered to be the original catalyst for London developing such a strong fintech community. As the sector matures, we’re seeing more senior employees from banks and other financial services, leaving to join fintech companies, bringing both experience and a natural cohesion between the leading financial institutions and the disruptive technology. 

You’re just as likely to see an electric scooter than a tie in the City these days – perhaps a coincidence or perhaps a suitable metaphor for the disruption and drive for more innovation we’re seeing in the world of finance.

Update: This article was amended on the 24th November 2020 to state that Knowyourmoney has recently been acquired by NerdWallet.


  • Editorial Director of the The Fintech Times

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