A note from Marty Reid: Why the region is a melting pot for fintech innovation

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Last week I spoke at the UK FinTech Week: Bristol & Bath Fintech Cluster Showcase on why the region is a melting pot of innovation.  Here is an extract of my talk:

Fintech is a truly innovative sector in the West of England, not because of its potential to generate revenue for the financial services sector, but because it is characterised by genuine multidisciplinary and multisector engagement. These are the perfect conditions for the bringing together of different ideas, skills and experience that are the sources of innovation within a sector that can make a real positive impact on people’s lives.

Greater equity in the financial systems we rely on

I’m sure some people will still get excited about a new tech which creates marginal gains in the processing times of FX trading, and that’s fine too, but I’m inspired by the potential for providing people and businesses from all walks of life a greater degree of equity in the financial systems that they rely on. Not equity in a shareholding sense, but the true meaning of fair access and influence, with the enormous potential that brings for wide reaching growth.

The fintech sector also has job creation potential for new generations of investors, accountants, advisors, behavioural scientists, user/customer experience specialists and a plethora of roles within cyber security. And that “new generation” is not limited to bright young graduates. There is enormous potential for retraining or changing of role; as a reference point, the average age of a tech founder in the UK is over 40.

For a more personal example, consider your local restaurant that you enjoy. Applications of fintech could enable it to become financially more productive or have access to better sources of flexible credit, freeing up cash to hire another employee to look after you in the sunny days ahead.

When we talk about the strength of a tech or innovation cluster, there are a few go to characteristics, and the West of England certainly stands up to these.

What are our region’s fintech cluster characteristics?

Any fintech cluster should have anchor institutions, bringing together financial services and technology domain expertise, the potential for market access for new products or service, and an existing depth of talent. Here, we have Hargreaves Lansdown, an extensive presence of the major banks including NatWest, Lloyds and Barclays, and a significant number of insurance sector giants.

The West of England has the second highest density of financial services employment in England, supported by thriving consultancy and professional services. On the tech side, 68,000 people work in the tech sector in the South West according to Tech Nation’s 2021 report.

Looking at the future talent pipeline, not only are the Universities of Bristol, Bath and the West of England churning out data scientists, finance and cyber security graduates and postgraduates, but there are two fintech masters’ programmes in Bristol alone and we are seeing a huge growth in vocational programmes for digital skills, particularly supporting new developers.

The Kalifa report, published February this year, focused on the region’s “quality STEM talent”, but we should also celebrate our strong creative sector which is so valuable for new types of user experience that new fintech relies on.

A successful cluster has evidence of a thriving startup scene. Tech Nation ranks Bristol and Bath as the 3rd largest UK hub for tech investment, with businesses raising an impressive $414m in 2020, which put us 12th in all of Europe for investment in tech. More specifically, Bristol & Bath has the largest number of fintech startups per head outside London according to Whitecap’s 2019-2020 Ecosystem Report.

Finally, you would look for networks and support programmes. Pre-pandemic, Bristol and Bath had one of the highest meetups and networking events for startups, tech companies and SMEs per head in Europe, and there are a plethora of mature incubators and innovation centres, from Future Space and the Bristol Robotics Lab up at UWE, to Science Creates and our own tech incubator SETsquared Bristol which won Hottest Accelerator in Europe last year and is shortlisted again for the award this year.

All of these factors combine for a critical mass of activity that enables an innovation cluster to enjoy sustainable growth through connectivity, new opportunities, attracting investors, and freeing the institutions to focus on specific interventions to empower participants rather than underwriting the whole thing.

I found it really interesting that in the Kalifa report, Bristol & Bath’s fintech cluster was not characterised strongly by one sector. As a reference point, half of Cambridge’s fintechs are in wealthtech, while Manchester has five times as many lending focused fintechs per head than London. In Bristol and Bath, our capabilities are “spread evenly across subsectors”.

This breadth is characteristic of the wider tech cluster in our region – our team, and organisations like Invest Bristol & Bath, are often trying to identify the key sector strengths, yet we find ourselves trying to cover biotech, the creative sector, microelectronics, AI, cyber, and obviously fintech, amongst others. Some commentary portrays this as a disadvantage, and the Kalifa report even went so far as to say a priority was to “accelerate cluster specialisms”, so where does that leave us?

Given the evidence of strong growth, I think it suggests our specialism is actually collaborative, multisector engagement that drives more fundamental innovation and impact at a larger scale. If you are looking for a flavour of this, you should look at the rising stars of our region:

  • Moneyhub are one of the true pioneers of open banking, enabling individuals, businesses and other financial service providers equitable access to financial data.
  • LOQBOX are helping individuals build credit scores, thereby enabling those who need it most to access financial services in a far more affordable way.
  • Tumelo are enabling people to understand where their pension funds are really invested and thereby empowering them to influence the application of those funds in line with their values.

All of these are great novel applications of technology that are certainly of interest to institutional investors and venture capital because of the value they could generate, but more importantly they are impact led, with potential for genuinely disruptive but positive change.

It is this potential for wide reaching impact that makes the fintech sector in the West of England so innovative; the potential to provide people and businesses with greater equity in the financial systems that they rely on, and its exactly that fundamental innovation that the Bristol & Bath cluster is particularly good at empowering.


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