Europe Fintech Ecosystems Thought Leadership

Nexus: Northshoring – Riding the Wave of North England’s Fintech Revolution

The use of AI in finance can bring big changes to how customers experience financial services, manage risks, detect fraud, and more. While London has long established itself as a well-known hub for fintech, the extreme growth of the number of fintech start-ups and scaleups in Northern England (an increase of 263 per cent since 2020) cannot be ignored.

Chelsea Boothroyd, an expert in emerging technologies, based at the University of Leeds’ innovation hub, Nexus, discusses the reasons why the North is a great place for financial and fintech innovation. However, it cannot be ignored that the region is still confronted with the ongoing scarcity of fintech-specific funding.

Chelsea Boothroyd, an expert in emerging technologies, based at the University of Leeds’ innovation hub, Nexus, North Fintech
Chelsea Boothroyd, an expert in emerging technologies, based at the University of Leeds’ innovation hub, Nexus

Over the past decade, fintech has revolutionised the finance landscape, improving efficiency, accuracy and accessibility across the board. With a whole host of new applications becoming essential tools in the financial sector, the advance and spread of technology has been transformative.

Take, as a few examples, the way AI is now used for risk-assessment purposes, analysing large amounts of data, and assessing creditworthiness quickly and effectively. Or in fraud detection, where it can recognise patterns, anomalies, and suspicious activities in real-time. This goes hand-in-hand with regulatory compliance, with agencies better able to interpret and enforce complex financial regulations with the use of tech tools.

Then there are the broader applications that have transcended to us as individuals, personalised financial-advice services, which work based on spending patterns, investment goals and risk appetites, and the democratisation of access to the financial markets.

The UK has been one of the key drivers of this innovation, globally. But while London has commanded most of the headlines – and much of the funding – the North has been quietly innovating, scaling its businesses, and building up its fintech ecosystems.

Here’s why northern England, and Leeds in particular, is doing so much to move the needle forward regarding fintech.

The rise of startups and scaleups in northern England

There’s one particularly telling statistic when it comes to highlighting the innovation that’s taking place in the North currently: a study by Leeds Digital Festival and The Data City reveals that digital industries in Leeds have experienced an impressive 9.9 per cent growth rate this year – despite a 0.6 per cent decline nationally.

2023 has undoubtedly been a tough year for fintech funding globally, with KPMG reporting a drop from $63.2billion to $52.4billion. But while funding remains a large barrier to growth, Leeds has seen an 88 per cent increase in venture capital flowing into its startups.

We have also seen the ecosystem being strengthened with the presence of the FCA, Bank of England and the UK Infrastructure Bank. According to Whitecap Consulting, Leeds is now home to more than 100 fintech firms and is contributing more than £700million per year to the regional economy.

Leeds has a progressive approach to its regional strategy, being the first city outside London to join the Open Finance Coalition ran by the Centre for Finance, Innovation and Technology (CFIT), which held its launch event at Nexus, the University of Leeds’ innovation hub earlier this year. Nexus is also the home to the Leeds Innovation hub for the centre for All of which makes it unsurprising that Leeds is predicted to be the fastest-growing city in the North for job creation, according to the Digital Economy Council.

This stellar performance can be attributed to several factors, not least for the fact that the city’s five universities rank exceptionally high for graduate retention. Additionally, innovation hubs, have emerged as significant contributors in the area, acting as incubators for innovative ideas and cultivating valuable collaborations. One example is Nexus, which sits at the University of Leeds, fostering business synergies in the fintech landscape.

Notable rise of startups and scaleups in recent years

The rise of digital industries continues to be a boost for the UK economy – and nowhere is that more evident than in the North. Even amid challenging financial conditions across the country, the number of UK startups still managed to increase by 4.5 per cent in 2022. Within the technology sector, the ‘Northern Triangle’, comprising Manchester, Leeds, and Sheffield, has secured £1.3billion in funding over the last five years.

Leeds has shown particular strengths in fintech, health tech, and data, reinforcing its reputation as the UK’s second centre for banking after London. Historic banking specialisation in Yorkshire, and a sturdy fintech bridge to London, are helping to fuel this. And as a result, the number of fintech start-ups within the Leeds City Region has skyrocketed by 263 per cent since 2020.

Leeds is a hub for credit reference agencies and building societies in the UK, leading to its strong presence in banking and lending. The collaboration between 4-Xtra, a University of Leeds spin-out company, and Leeds Building Society exemplifies how these industries can leverage each other’s expertise to create emerging fintech solutions.

In this case, 4-Xtra’s technology is assisting the society in evaluating mortgage portfolio emissions and integrating climate-risk considerations into its operations. This partnership showcases the translation of university research into commercial success.

Spaces like Nexus have played a vital role as an ecosystem for these rising stars, and as a hub for an energetic and growing sector. Indeed, a Digital Economy Council and Tech Nation assessment in 2021 predicted that Yorkshire’s digital industry will spawn 42,000 tech jobs by 2025.

The challenges facing northern England’s fintech industry

While the northern fintech system pulses with potential, there’s no doubt that certain challenges persist. For one, the disparity in fintech-specific funding between the North and South has stifled growth. London’s dominance, housing 37 per cent of all high-growth companies, has only experienced a mere two per cent drop since 2019. Furthermore, the North-South funding gap remains at two per cent, with London securing 50 per cent of equity deals since 2011.

That has clear knock-on effects. While the Leeds fintech ecosystem has been fuelled by access to strong talent, the local industry now needs to focus on its supply of seasoned professionals to drive its next phase of growth. And while universities could serve as a conduit of talent, we need to ensure that they are responsive to the needs of the fintech industry and teach skills that can be easily applied.

The ongoing impact of fintech innovation hubs

In short, then, innovation hubs such as Nexus are playing an important role in nurturing entrepreneurial talent and growing businesses. As a link between academia and industry, they are turning innovative ideas into commercial successes while nurturing the next generation of talent. And for an area of the UK like Leeds, that’s proving an essential ingredient in helping to boost the local economy and expand the digital sector.

The result is a thriving fintech ecosystem that not only holds its own against international peers but is primed to lead the next wave of financial innovation.


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