British FinTech companies have had record-breaking investment in 2017 and far outstrip their European competitors, data shows, adding to signs that Brexit is so far having no big impact on the fast-growing sector.
FinTech firms have been chipping away at traditional banking by offering services ranging from mobile payment apps to digital currencies like bitcoin, and the government regards the sector as a key source of growth.
Investors have pumped more than £1.46 billion ($1.8 billion billion) into British FinTech start-ups since the start of 2017, double the amount seen in the same period last year.
The UK attracted 224 deals in 2017, raising investment levels by 153% over the previous year when $704 million was bet on the sector. The top two UK deals, TransferWise and OakNorth, both raised rounds of over $200 million and were ranked among the top 20 global deals.
London attracted 90% of that investment, and over the past five years has pulled in more than five times the amount of any other European city, research has found.
Some had worried that Britain’s vote last June to leave the European Union would see a drop-off in international investment into UK fintech.
But Kevin Chong, co-head of emerging companies at Investec, which invests in a number of FinTech start-ups across the world, said that he had seen an increase in international investors, and in the number of those who had never previously invested in the sector.
“A lot of it is to do with the fact that we have such a high concentration of financial service players in London in such a tight geography,” he said.
“And FinTech, unlike some of the other technology sectors, is one of those areas where you can’t avoid having to partner with or have some sort of relationship with the established players.”
Despite London’s dominance in Europe, it still lags investment in Silicon Valley, whose FinTech sector pulled in almost $6.5 billion in the past five years, as well as Beijing and New York.
Chong said that although budgets were bigger in Silicon Valley, start-ups had less access to major banks and other financial services firms there, and this was a reason that New York and London were growing quickly.
“Clearly Brexit poses major challenges, but London’s position as a global financial center and world-class technology hub…cannot be replicated anywhere else,” said London’s Deputy Mayor for Business, Rajesh Agrawal, in a statement.
“This highlights the need for a Brexit which enables London to maintain its place at the heart of the single market, as the continent’s financial capital.”