The UK continues to reign as the leader of Europe’s fintech community as investment among its peers lags behind.
Investors in the UK’s fintechs remain bullish even as the country heads towards a no-deal Brexit, according to new figures from the Association for Financial Markets in Europe (AFME).
The AFME’s ranking is based on a country’s regulatory landscape, availability of finance, degree of innovation and talent pool. There has been a significant improvement on the continent but investment continues to be below that of other major regions.
Investment into EU27 fintech startups during the first half of the year – €1.5bn – is dwarfed by the UK’s €2.1bn and €7.4bn invested in the US.
The success of the UK’s fintech community is in large part driven to a supportive regulatory environment with local sandboxes and innovation hubs across a section of sectors, the AFME said.
Sandboxes are schemes that enable firms to test new business models or financial products against the regulatory environment.
Development within the regulatory world was mirrored in Europe with seven European countries setting up innovation hubs for at least one financial services activity over the last year. Additionally, the joint committee of the European Supervisory Authorities launched the European Forum for Innovation Facilitators to coordinate the regulatory efforts taken by various member states.
The AFME also noted the UK’s local funding ecosystem, which accounted for 58 per cent of the funding provided to fintechs in Europe, had contributed to the success of the UK’s fintech landscape.
There has been a flurry of investments in recent months as investors start to plough money back into fintechs after a few months of calm.
UK fintech platform Primary Bid this week announced it had closed its $50m Series B round. Investors included Draper Esprit, Fidelity International Strategic Ventures and the London Stock Exchange.
Despite the success of the UK – which is now home to 10 of Europe’s 14 European fintechs – the AFME has sounded a warning on Brexit. “
“The terms of the Brexit agreement between the EU and the UK will be crucial to determine the degree in which the UK will continue to benefit from attracting a global pool of talent for their local labour force and to continue to support the production of innovative products in leading research and education centres.”