London sees 500% FinTech growth since 2017

London has taken over over as the world’s leading FinTech hub, recording 500 per cent growth in the past three years, according to new data.

A report from recruitment firm Robert Walters, with market analysis from Vacancy Soft, found that the UK has seen explosive growth in the past three years, compared to 170 per cent in the US and 133 per cent for Europe.

In the first quarter of this year, London FinTechs generated almost as much investment ($114 million) as they did for the entirety of 2017 ($148 million).

However, the impact of the Coronavirus outbreak is expected to weigh heavily on venture capital funds throughout the remainder of the year, with funding falling rapidly, the report stated.

If venture capital investment in 2020 grows at the same pace as it has done in the first quarter then the sector will see a 73 per cent drop in investment in London, tempering hopes of a rapid bounce back effect once lockdown restrictions are lifted.

Nevertheless, in terms of the jobs market and recruitment levels, the report found that the UK remains an attractive hub for FinTechs.

Growth in the sector was illustrated by the ongoing increase in vacancies since 2018 - up 16 per cent in 2019, and up 53 per cent since 2017.

Tech continued to dominate the hiring agenda – accounting for 46 per cent of job vacancies within the sector. Tech roles increased by six per cent last year, and are up by 45 per cent since 2017.

However, the UK’s FinTech growth remains London-centric, with the growth in tech vacancies primarily in the capital; where vacancies have increased by 31 per cent since 2017.

The concentration of funding in London is evidenced by the downturn in regional vacancies in 2019 compared to the previous year, with investment typically going into firms based in the capital.

In 2018 there were 50 FinTech deals of $1 million or more within the UK, of which 45 were in London. In 2019, the number had nearly doubled (96), however only eight were into regional businesses.

Tom Chambers, senior manager for technology at Robert Walters, commented: “FinTechs were not initially seen as direct ‘competition’ to traditional banks – with their products and services differing vastly.

“However, over the past 12 to 18 months we’ve seen FinTechs apply for banking licenses which means they can now expand their offering to include overdrafts, guarantee deposits, and the ability to set-up direct debits."

He explained that the Coronavirus response had shone a light on the role of FinTechs for consumer and businesses finances.

“Perhaps the most drastic change was governments swift action to ‘shake-up’ traditional lending and allow FinTech companies to be an official loan provider for the government COVID-19 bailout scheme - introducing FinTech to the masses."

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