Posts

UK Holds the Crown for Worldwide Fintech Investment

The UK has received more investment in its fintech sector than any other country in the world, according to KPMG’s latest Venture Pulse Report.

With over US$16.1bn of inbound investment during the first half of the year, the UK is firmly ahead of China (US$15.1bn) and the United States (US$14.2bn).

Europe currently stands as the leading continent for fintech investment ($26bn), with the UK accounting for over half of this. Moreover, four of the ten largest European fintech deals were conducted in the UK. This includes the US$250m raised by Revolut in April and US$100m by eToro in March of this year.

KPMG also predicts that the UK will retain its crown in the second half of 2018.

The report cites artificial intelligence (AI) as one of the main sectors responsible for attracting fintech investment in the UK. Hot startups such as Previse and Mosaic Smart Data are utilising the technology to revolutionise areas as diverse as late payments and data analytics in wholesale financial markets.

Brexit

With the shadow of Brexit looming large, it is a timely reminder of the importance of the UK to the global fintech community. In a keynote speech at London Fintech Week earlier this month, our CEO Nick Murray-Leslie noted how finance and technology are almost indivisible; nowhere comes close to London in terms of dominance as a financial centre and, by extension, a fintech hub.

The strong data also dismisses the notion that Brexit is affecting the way investors think about the City and the rest of the UK. Our view is that Brexit is not the biggest risk to London; rather, it is the risk that the UK, and London in particular, becomes a victim of its own success and unaffordable or unattractive for people.

This city has been undergoing its own version of what scholars of US cities have termed “the Great Inversion”. This is the return of people, high-end housing and highly-paid jobs to city centres. If it becomes too expensive these people will go elsewhere and there may soon be only two types of people left: the wealthy and those who are in social housing. This will be a problem.

Looking Forward

Beyond the UK, fintech as an industry has sky-rocketed this year. Worldwide global fintech investment this year has already exceeded the whole sum value of 2017, proving why it’s crucial for the UK to remain at the forefront of this vital sector.

Chatsworth has been working with a number of award-winning start-ups and established fintechs such as Previse (late payments), Mosaic Smart Data (data analytics), R3 (blockchain), and can personally avow for how London can support a fintech business of any size, better than any other city in the world.

Looking forward to the third-quarter of the year, tax reforms in the US, a significant amount of dry powder and the continued flow of funding into the VC world are expected to keep the fintech investment market strong over the next quarter.

AI and data analytics are expected to remain high on the radar of VC investors. It is also expected that companies in maturing sectors, such as e-commerce, will continue to broaden their offerings and investments in order to access new or adjacent verticals.

But as KPMG notes, an area that may be one to watch over the next quarter will be valuations – particularly for companies with no tangible assets, where investors are focused on what the company might do in the future. The level of assumption and risk involved in these types of valuations is quite high and it is still to be seen if these valuations will be substantiated.

London’s Fintech Scene Greatest Threat Is Not Brexit

Finance and technology are almost indivisible. Nowhere comes close to London in terms of dominance as a financial centre and, by extension, a fintech hub.

Activity in the sector has really exploded in the last half decade. Inward investment to London has doubled since 2014 and it was the leading sector for investment in 2017. UK fintech attracted a record £1.34 billion VC funding, double the amount of any other European country.

That is why some of the most exciting fintech companies in the world, like R3, a consortium of over 200 banks and funds building a blockchain for finance and business, are building right here, in London.

Why London?

This city has been the beating heart of international finance for centuries. The Bank of England was the second central bank in the world and provided the financial flexibility which would be the foundation of the Empire’s power and which has pertained to this day.

Towards the turn of the millennium, the “Big Bang” reforms of the 1980s complimented the infrastructure and expertise which had evolved from running the Empire and led to London becoming the model for global financial administration. Only in a city with London’s concentration of intellectual capital would this have been possible.

So while our cousins across the pond had to deal with the bureaucracy and the restrictive regulation of the Sarbanes-Oxley Act, we didn’t. Companies simply decided to avoid the hassle by conducting their business in the US and listed their stocks in London where the people and skills were ready for them.

London also holds a unique position in terms of our legal environment, M&A expertise and even our timezone which, even today, remain important factors.

Financial professionals are redefining fintech

Fast forward and these advantage carry over into the fintech sector. There are now legions of financial market professionals and traders moving into fintechs, working with the designers and coders.

Many of my clients are former desk heads or former heads of market data – they have had successful careers but had spotted opportunities to apply technology to improve what they do. These people are bringing their knowledge of the markets, instruments and the complexities of international regulation to the table.

Brexit

Just because London is the undisputed home of fintech today, doesn’t mean that is always going to be the case. I see a couple of threats on the near horizon that need dealing with to stay on top.

Brexit is an obvious concern. We simply must make sure that we remain open for business and be seen to be open for business. I do not agree with the former Foreign Secretary’s reported view that business should go “reproduce” with itself.

If the final deal jeopardises the status of London in the global markets there’s more at risk than just transactions going elsewhere. This is about a concentration of talent and access to capital. The way the UK makes relationships with other countries and structures its own agenda in the run up to Brexit will be key to its success.

London’s talent pool

So Brexit is clearly a risk, but I don’t actually think it’s the biggest risk to London. I think the biggest risk is that it becomes a victim of its own success and unaffordable or unattractive for people.

This city has been undergoing its own version of what scholars of US cities have termed “the Great Inversion”. This is the return of people, high-end housing and highly-paid jobs to city centres.

Inner London’s growth was in part fostered by the ability of creative people from various fields to cluster together and share ideas.

If inner London becomes too expensive these people will go elsewhere. In inner London there may soon be only two types of people left: the wealthy and those who are in social housing. This will be a problem.

London needs to be good for both business and for people and their families. That means ensuring individual and corporation tax is sensible and that families can afford to live in a capital with effective services.

Word to the risk takers

Some final words of tribute to the fintech risk takers who have put their time, their own and their investor’s money, plus a whole lot of coffee and sleepless nights into their concept, design and build.

If you’re doing it in the wholesale markets space, you’re competing for attention in the face of an established tech infrastructure, highly resistant to change. It’s tough, but ultimately the USP of your platform or offering will do the talking. Never give up. Get it right and you will change a – part of this business world for the better.

SWIFT and Chatsworth leading the debate at SIBOS, 2017

The Chatsworth team is proud to be supporting SWIFT at SIBOS, the world’s premier financial services conference, exhibition and networking event. What started out as a banking operations seminar in 1978, has grown into the premier business forum for the global financial community to debate and collaborate in the areas of payments, securities, cash management and trade.

Organised by SWIFT for the financial industry, Sibos has brought financial leaders together, over four decades, to network, collaborate and make sense of changes in the industry, helping to build an understanding of the forces affecting the financial community. 

 SWIFT is all about connectivity. The organisation remains the world’s leading provider of secure financial messaging services, providing a platform for messaging, standards for communicating and products and services to facilitate access and integration; identification, analysis and regulatory compliance.

 The organisation connects more than 11,000 banking and securities organisations, market infrastructures and corporate customers in more than 200 countries and territories. Headquartered in Belgium, SWIFT’s international governance and oversight reinforces the neutral, global character of its cooperative structure.

 The Chatsworth team will be in attendance throughout the event in Toronto, where the team will be working to support SWIFT in highlighting the challenges facing the financial eco-system and how their connectivity and experience can help. Chatsworth’s CEO will also be moderating some of the panel debates.

Get in touch

Email: swift@chatsworthcommunications.com   

Twitter: @chatsworthcomms

We look forward to seeing you there. 

Burberry continues to set the standard

Chatsworth stopped by Burberry’s take over of the Old Sessions House, soon to be London’s hottest new club and restaurant venue, near our office in Clerkenwell. 

The British brand is hosting a photographic exhibition curated by president and chief creative officer Christopher Bailey, entitled ‘Here We Are’, with the accumulated work of over 30 social and documentary photographers who made their aesthetic mark on the 20th Century.

Burberry remains a real case study for smart integrated brand communications, using digital channels, event space and marketing to remarkable effect. 

Marketing by association and advocacy is a clever technique and Burberry use this to the max by curating both new and established art and music to reinforce their own creative work. 

As they say, it’s the company you keep. Great brand, great reputation.

Richard E Grant joins the cast of Downton Abbey

 

 

Richard E. Grant, Chatsworth’s cover star, is to join the cast of Downton Abbey

 

Richard lent his considerable grace and style to front Chatsworth’s rebrand and we’re delighted he’s joining one of our biggest TV exports, adding to his already impressive roll call of great movies and TV.