2017 saw an increasing amount of investment going into financial technology (Fintech).
The sector is expanding across the world and 2018 could be the year for Fintech.
2017 began with uncertainty on both sides of the Atlantic, Brexit was going ahead and Trump was inaugurated in the US. In this atmosphere, some decided Canada was the next best option and it was announced that the UK’s Financial Conduct Authority (FCA) and the Ontario Securities Commission (OSC) agreed to help fintech startups navigate regulations. For Fintech companies, regulation has always played a big part and now for many companies and startups there were new regulations to prepare for such as the European GDPR and the PSD2. Regulatory bodies were now wanting to support fintech, a shift for many in the industry.
In the US, 2017 also saw Trump announce his controversial travel ban. In its wake, 127 tech companies, including Apple, Facebook and Google, filed orders against the ban on grounds that it was against the US Constitution.
Many see the fluid movement of people as a necessity. It pursues the fluid movement of ideas and in turn, the fluid movement of money in the form of jobs, education and the digitalization of life. With people from Iran, Libya, Somalia, Yemen, Sudan and Syria being banned from entry into the US, it is thought other countries such as Canada may poach this intelligence and talent and in turn, start to become a larger fintech powerhouse.
With the Brexit bill being passed in March of 2017 many questions were being asked about the impact this would have on the Fintech capital of the world, London. Would London lose this status? Would financial institutions relocate to Europe? were the two main ones. It is thought the uncertainties surrounding Brexit could have had an effect in leading to the significant fall in funding to venture capital backed fintech companies worldwide.
A report issued in 2017 found that Germany outpaced the UK last quarter and saw 80% more funding than the UK did and notable funding rounds went to fintech startups Finanzcheck that raised $46 million, N26, $40 million and AEVI, $34 million. The UK’s top deals were from challengers Tandem Bank which raised $31.7 million and Azimo, $15 million, as well as Transferwise that raised $26 million. In total, Germany brought in $64.9 million from five deals and came in second for payments technology investment activity, under the U.S. that brought in $251 million from 26 deals.
In France, the new Macron government have been attempting to recruit and encourage British fintech firms to move to Paris. The French government have made no secret of the fact that they would like Paris to be the fintech capital of the world. Earlier in the year, at a London rally, Emmanuel Macron, the then French presidential candidate, now president, voiced his concerns about post-Brexit Britain, Macron urged “banks, talents, researchers, academics” to return to France and “come back as entrepreneurs, to do business, innovate, create, research, teach.” Will the French follow this advice? If yes, what will happen to the UK and London fintech?
The French digital minister Axelle Lemaire in a recent interview highlighted how although British startup investment fell, investment in French technology has soared by 71% from January to September in 2016. “In the third quarter of 2016 alone, funding obtained by French startups reached €857 million ($921 million), double the amount invested in Germany and almost equalling the €919 million ($988 million) invested in the UK,” Lemaire said. . She went on to say, that the “goal should be to create real European champions and not to focus on a narrow competition between European states.” Alongside this, Paris is not the only city or town with potential to become financial centres, as Lemaire states and has shown with her launch of 13 French tech metropoles in cities like Montpellier, Bordeaux, Grenoble, and Lille.
Investment figures from last year seem to indicate that Paris has a better chance of becoming a fintech centre than say Berlin, Frankfurt or Hamburg.