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What now for Manchester's FinTech sector? Whitecap Consulting

What’s next for Manchester’s FinTech sector? The first Robert Walters Tech Forum hosted on Friday 31st January sought to understand the current state of play of one of the UK’s most fastest growing industries.

Organised by Robert Walters and hosted by Chris Macguire, Founder at iMeg Partnership and Executive Editor at BusinessCloud, the series of breakfast panel events run throughout the year, inciting debate on key topics in the Manchester technology sphere, while bringing together experts, advisors, investors and businesses looking to grow, hire and retain talent

Manchester is regarded as the breeding ground for budding fintechs, but is the outlook for growth positive when compared against the global stage? Is the current support system enabling the sector to achieve its growth potential? Eleanor Simmons from Whitecap Consulting shared insights to help us understand the foundations of Manchester’s fintech ecosystem.

Whitecap Consulting is a strategy consultancy with a regional focus, with six offices across the UK (including Manchester) but none in London. The firm help clients analyse, develop and implement growth strategies, working mainly with established SMEs and mid-sized businesses across multiple sectors, including financial services and FinTech. It is also the co-founder of FinTech North – an open and collaborate platform bringing the FinTech ecosystem together with regular events across the Northern Powerhouse. Whitecap is about to publish its inaugural report into the Greater Manchester FinTech Ecosystem, a project which Eleanor has been at the heart of, having interviewed over 40 key stakeholders from around the region over recent months.

The million-dollar question…

Defining a fintech.

“In truth, it’s a broad church – but for the sake of our latest report, we split this into: FinTech start-ups and scaleups - pure FinTech business models, often with a focus on disrupting the sectors they work in, Established Financial/FinTech - established entities, offering financial products or services, and Techfirms- businesses operating in multiple markets (must include serving financial services or FinTech).”

Manchester relative to the global stage

There are estimated to be 1,600 FinTech firms in the UK, which is expected to double by 2030. As things stand today, the vast majority of these firms are based in London. The report by Whitecap breaks down the FinTech sector into three distinct categories: FinTech start-ups and scaleups, established Financial Services/FinTech firms, and Tech firms who serve the financial sector. In Greater Manchester, 35 FinTech start-ups and scaleups have been identified, which is more than any other region Whitecap has researched to date.

“In Manchester, there’s a thriving, amazing financial presence, a huge tech sector and extensive support networks to cultivate FinTechs. It’s true, UK’s presence on the global scene is driven by London – a gulf exists between the scale of fintech in the capital and the UK regions. But Manchester sits on London’s doorstep, which is a huge asset and part of Manchester’s sell. It’s not just how many firms there are, but all about having the professional advisors and access to talent that these businesses need during early and growth stages. Manchester’s ecosystem as a whole is generating people that can push the sector forwards.”

“It’s also about looking beyond those statistics in isolation. According to the most recent Tech Nation report, if the North of England was classed as a country, it would boast the 9th biggest fintech sector in Europe. In fact, currently the region employs 11 times more people in the FinTech sector than Frankfurt and two times more than Paris. This indicates the potential for growth is substantial.”

The funding debate

New figures released by Innovate Finance show that over the last year, the proportion of UK FinTech investment being made via London has decreased from 94% to 88%. Whilst this is still a dominant share, it represents a marked improvement and if this rate of changes were to continue, then in 3 years’ time around a quarter of FinTech investment would be outside London.

As things stand, do you have to be based in the Capital if you want funding?                                   

“In short, no. But there’s two interesting camps of debate. On one hand, thinking globally and getting your product to a stage where you can access online networks suggests you don’t necessarily need to be in London to access investors. On the other hand, not being in London has a few different knock-on effects. It’s argued that there’s an investor knowledge gap, creating difficulty for early-stage businesses to receive funding when investors can’t necessarily get their head around intricate, technical concepts and would rather invest in something tangible with a sure-fire revenue stream. Growing your network can also be an issue, factoring in train travel and opportunity cost to get face-to-face interaction on a regular basis.”

“But the attitude here certainly isn’t defeatist, and if you cost your time tactically as an early-stage start-up, you can prioritise the meetings and events that will get you the valuable face-time you need.”

Aligning the FinTech ecosystem

Is Manchester optimising its growth potential?

“What’s clear from the FinTech Ecosystem report, is that the key players are not integrated as well as they could be. Manchester has all the components it could possibly need for a thriving FinTech sector, but key pillars in the system are ingrained in their own commercial goals. Start-ups need more networking opportunities to meet the right potential customers and investors, while scale-ups are looking to acquire talent, juggling between hiring expensive talent that can do the job quickly and investing their resources in up-and-coming talent. While there is a huge presence of the financial sector, it’s about finding those thought-leaders among a sea of operations and back-office functions that can support that.”

“We need to think about supporting our existing fintechs and how we can attract more to the region. With this challenge, there’s real potential to create spaces where these stakeholders can interact and create connections that are mutually serving, while creating outcome-focused events that give fintechs access to customers, regulators and investors when they need to grow and/or receive investment.”

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