London's secret sauce for success in FinTech
London Technology In all the world only London has all the ingredients in place for a strong, vibrant and innovative financial technology sector, says venture capitalist Eileen Burbidge.
The pioneers of the rapidly-growing FinTech sector need access to the financial sector and the politicians that regulate it, and the support of a strong digital economy, says venture capitalist, government advisor and London Tech Week ambassador Eileen Burbidge. And only London has it all.
"London is the undisputed capital of the FinTech world for several reasons including the heritage of the City as a financial centre - about £4 trillion passes through London every day just on foreign exchange," she points out. “300 of the world's banks have their headquarters in London which means more American banks have their headquarters in London than in New York, and you have more than 150,000 knowledge workers in the industry."
The sector’s regulators and politicians are also located in the capital, Burbidge notes. "We have a very progressive and supportive regulatory environment and policymakers here in the UK."
And London is emerging as a tech powerhouse, almost unnoticed despite the hype around the 'Digital Roundabout' in trendy Shoreditch.
"We have the digital sector that contributes more than 11 per cent to UK GDP. We have more software developers than any other hub in the world including San Francisco or New York. The overlap between the digital and financial sectors is driving FinTech," she says.
It is this easy communication between finance, politics and tech that is driving the growth of FinTech.
"London is uniquely positioned in having all three aspects in one city," she explains. "The US has regulators and policy makers who sit in Washington DC, they have Wall Street in New York and the technology cluster in Silicon Valley and those are flights of five to seven hours apart. All these are a cab ride away in London."
Burbidge has seen the growth of the sector at first hand since she arrived in the capital from Silicon Valley in 2004 to become employee number 3 at the UK headquarters of an ambitious new start-up called Skype.
"The development team was in Estonia but the business headquarters was in London because it really is one of the tech hubs of the world. The founders, Nik Zennstrom and Janus Friis, are Swedish and Danish respectively and they just realised they wanted to be in a global city with access to a big market and London was an obvious choice for them."
Nowadays Burbidge is a partner at Passion Capital, and invests not just in FinTech but other areas where London harbours a growing digital sector. "I am genuinely excited about the opportunities in London which I believe are greater than I personally would have in Silicon Valley. We may be starting from a lower base but the potential is greater than anywhere else in the world."
"I am genuinely excited about the opportunities in London which I believe are greater than I personally would have in Silicon Valley. We may be starting from a lower base but the potential is greater than anywhere else in the world."
Burbidge was demonstrating exactly why London is so strong in FinTech as we spoke. She was on the move from a meeting with a government department in Whitehall to a meeting with a financial institution in the City, a journey of just a few minutes by taxi. Because she was on the phone to me, she hailed one of London's iconic black cabs in the traditional way rather than use Hailo, the app developed in London to call and pay for taxis, or one of the many other taxi and minicab apps now available in the capital. She then paid using Apple Pay, the wireless payment system supported by most of the largest UK retail banks.
London possesses the ideal combination of financial strength and probity, democratic government and strong but fair regulation, digital expertise and other professional services of world standard, and, most of all, an innovative, entrepreneurial and highly educated workforce. Plus, it is a great place to live. It is an environment that seems set to extend London's lead as the FinTech centre of the world.