The fintech sector in the North is a different shape to its London counterpart with a real shortage of startup businesses. But that doesn’t mean it does not have potential to grow.
While there are many companies in the broader Northern England fintech sector, doing IT for financial services, there is a shortage of the kind of startups that most people associate with the fintech sector. This is according to one of the founders of Fintech North, an organisation that creates events to bring together fintechs in the North of England.
Julian Wells at management consultancy Whitecap Consulting Group, who is also a founder of Fintech North, said the idea was born three years ago when he and some colleagues were asked to set up a fintech event focused on Northern England.
It currently has conferences in Leeds, Liverpool and Manchester and is planning events in Newcastle and possibly Sheffield.
When asked how many fintechs there are in the North of England he said: “I don’t think there is as many as people think.”
“A lot of people when they think of fintech they think of startups but actually fintech is a pretty broad sector, including a lot of established businesses,” he told me.
“The fintech sector outside London is not very startup centric. In the North it is big, with so many financial services organisations, but it is a different shape as there aren’t many startups.”
“What you have in London is a great environment for startups to grow in. There is lots of funding, lots of entrepreneurial events which create a really good environment for an idea to become a business.
“You don’t really get that much outside London. You get little pockets of incubators and accelerators but it is not really the right environment to fire up startups,” he added.
But he said it would not make sense just to replicate London in other cities. “London is the epicentre and all the other centres are looking at where they fit in. There are pockets in different places that offer different benefits.”
“The whole of the UK economy is forming and not everywhere is going to be a centre for startups.”
Wells said in the North particularly in the university cities there is a good base of students graduating with other advantages including lower staff costs and rents.
“It is also less crowded than London so it is easier for fintechs to get conversations going with existing financial institutions,” he added.
He said fintechs such as Leeds based White label Crowdfunding which build peer to peer lending software, business lender Rebuildingsociety.com also in Leeds, and Accespay in Manchester have been involved with the Fintech North events.
But he stressed that London has some big advantages. “There is good access to funding and it has a thriving ecosystem
And he said one particular challenge for fintech startups is the fact they have to meet strict regulations from the FCA. “You can’t just have a great idea and turn it into a business. You need people that understand regulations and you get that in London.”