By Andrew Garvey, Chief Commercial Officer, Countingup
London fintech week has once again drawn attention to what is a rapidly-changing financial services landscape across the capital and beyond. And much of the disruption is being driven by the ongoing rise of fintechs as a major force in the London and UK economies.
A new report from recruitment consultancy, Robert Walters and market analysis company, Vacancy Soft, found that in 2018, job creation within the fintech space grew by 61% in London and 18% in the regions.
In recent years, we have seen London become the fintech capital of the world. In line with this, the report also found out of the 29 fintech unicorns globally – companies with a valuation of more than $1bn (£765.5m) – nine are based in the Californian hub, while seven are housed in the UK.
Building the foundations
The rationale for London’s success is clear as the city has access to capital and lots of talented people, a dynamic fast-growing financial services sector – and the government has its seat of power there too. Everything a budding fintech would need is close by in fact.
in 2018, job creation within the fintech space grew by 61% in London and 18% in the regions.
So there is a positive environment in place for fintechs to thrive, but what qualities do they need to have in place to take advantage? The starting point for success has to be having a product or a solution that is doing something different and genuinely disrupting what is happening in the marketplace. At Countingup we’ve focused on delivering on these twin goals in developing what we believe to be the first banking app in the UK to offer a fully integrated bookkeeping solution.
Having a great product will also help fintechs ensure they can recruit and retain the right people to drive success. You need to be attractive to potential hires and you need to have a good working culture. If you have a great product combined with a great team and a great culture, that strikes the right balance between the commercial and tech sides of the business, that should set you on the road to success.
That balance is important. The product and technology developers need to have empathy with the challenges and drivers that impact the commercial teams and vice versa. Ultimately it comes down to what the customer wants. There is no point in developing any technology unless you are delivering a service to the customer.
Finding a differentiator
If I was to highlight just one piece of advice I would give to anyone setting up a fintech business, though, it would be: don’t just focus on developing something that is nice to have, focus instead on developing a product that is essential and solves genuine pain points. ‘Be a pain killer, not a vitamin’, as the mantra has it.
As your business establishes itself and develops, you will want to find ways of attracting investment that drives further growth and enables them to stand out from the pack. To do this well, you need a clear value proposition and market strategy and people in place who have some experience in selling into your target market. That’s what venture capitalists will be looking for above all – so you need to get that right.
There is no point in developing any technology unless you are delivering a service to the customer.
It is also important to have a positive attitude. We hear a lot about the fintech unicorns and their successes but that should not be daunting even for the smallest start-ups. What’s great about the unicorns is that they shine a light on the sector and show how much ‘good stuff’ is happening. Every start up can aspire to become one. It’s not unrealistic. The size of the market we are trying to address is so large that once you make a breakthrough, you can scale rapidly in fintech. Every business and every individual needs financial products, after all.
That’s partly why I see a bright future for fintechs over the coming years but there are many other factors at play driving fintech growth. Most people are becoming more comfortable using fintech and using mobile apps to ‘carry’ a range of different services but they also expect a far higher level of technology and service than they used to. People and business are also becoming more receptive to, and more accepting of, new ideas.
As a result, we are not anywhere near ‘peak fintech’ yet. Dozens of new companies are likely to emerge. The size of the financial services market in the UK alone, that alone Europe in the world, means there are billions and billions of pounds worth of value tied up in traditional institutions. We are likely to see the transfer of that value to the burgeoning fintech sector, start to gather pace over the coming years.