Fintech Lunch with the Lord Mayor of the City of LondonThursday, 25th July 2019
pro-manchester welcomed over 120 delegates to our annual fintech lunch with the Lord Mayor of the City of London. This is the flagship event in his two-day visit to the city.
Jenn Hazlehurst, chair of pro-manchester, opened the event and thanked event sponsors Clarke Wilmott, Robert Walters and Open Money. She welcomed the Lord Mayor of the City of London, Alderman Peter Estlin, to the stage.
Addressing delegates, the Lord Mayor praised Manchester’s incredible fintech sector and the part the city has played in establishing the UK as fintech’s global home. The UK currently has around 11% of the global fintech industry – and almost twice as many fintech companies as France and Germany combined. Fintech contributes around £7bn to the UK economy, employing some 80,000 people across 1,600 companies.
Capital is flowing into UK fintech at unprecedented levels. However, the Lord Mayor believes that firms at early VC level in the UK are still struggling to attract the quantities of investment they need to grow to the next level. Programmes like the Big Growth Fund are helping but more are required if the UK is going to successfully grow more unicorns. Currently only 7 of the 29 fintech unicorns are UK based.
He recognised that Manchester has incredible talent pool, thanks in part to the universities and the multicultural nature of the city. It is important to ensure that growth in the sector is inclusive. The Lord Mayor reminded delegates that 22% of UK adults do not have the five basic digital skills and more than half of UK employees lack the digital skills needed for work.
After lunch, the Lord Mayor welcomed a panel of fintech experts to the stage to discuss these issues in more detail:
- Anish Kapoor, CEO – AccessPay
- Susan Hall, Partner – Clarke Wilmott
- Amir Nooriala, COO – OakNorth
- Anthony Morrow, CEO – OpenMoney
- Lee Stretton, COO – Raisin
- Paul Vlissidis, Technical Director – NCC Group
What are the key opportunities for the sector in Manchester?
Talent was referenced by all panellists with Manchester maintaining a high graduate retention rate and attracting in professionals from other cities and countries. Paul noted that GCHQ’s increased presence in the city will draw further cyber expertise. Fintech rarely has legacy systems so it can be secure by design. Anish is confident that back office processing in banks is ripe for innovation with no end of opportunities for development.
Amir believes all we are missing is the regulator and Parliamentary presence, and we should remember that is only two hours away, unlike in the US. The tech skills and people are in Manchester, the capital will come if entrepreneurs are prepared to take risks. Susan agreed, and added how important the city’s international links and multiculturism are. Manchester was the first city to actively pursue friendship city status with Wuhan, China.
What more can we do to encourage businesses?
Anthony worries that entrepreneurs may go for funding too early and that VCs will tend to be looking for a quicker exit. The unicorns tend to have a figurehead CEO with a minority shareholding. Amir goes further, believing that culturally in the UK the ambition is to have a nicer life – bigger house, holidays etc – rather than the more typical US vision to change the world.
Susan also notes that the European patent system more restrictive for business methods than the US version. Big players like Google and Amazon will patent everything that moves! The downside is that it is more expensive for new entrants to the market, and money is spent on patents rather than investing into the business.
Questions from the floor
Alec Laurie, Laudale Associates, is noticing a trend for fintechs hiring exec and non-exec from banks, and banks hiring from fintechs. What are the positives and negatives of that trend? Lee noted that banks are being challenged by fintechs, so hiring in makes sense to help them to adapt. Equally, fintechs need the risk and regulation expertise from banks. Amir explained that to become a fully regulated bank, companies must have this expertise in place. Licence applications will ensure companies employ people who have been through and downturn and seen the full credit cycle.
David Gardner, TLT, asked the Lord Mayor how London and Manchester can best work together. Manchester can do more to sharpen its identity and package itself up for promotion. The Lord Mayor is regularly travelling and promoting the UK as a whole – Manchester is part of that story to share. He also invited Manchester companies to join international delegations, as OakNorth has done.
We can’t completely ignore the B word and Mark Robinson, Finch Insurance, is keen to understand what impact the political landscape will have on the sector. Lee noted that Raisin works with European banks and not all of these will decide to register under the UK regulatory standard. Anthony sees the impact on personal finances. Unknown changes and great uncertainty lie ahead, which makes it difficult for customers to decide what to do.
The impact on the international talent pool – students and immigrants – will be huge, according to Anish. As a city and a county, we will struggle without these. The Lord Mayor encouraged delegates to reply to the consultation on international talent which is open until end of the year. He shared the staggering fact that 42% of UK fintech professionals were not born in this country.
Finally, what needs to happen next?
Lee immediately called for a reduction in train prices to train London. This would make it much easier to access capital, the regulator and professional networks. Paul would like to see further education within the regulatory community. It can be quite old fashioned and struggles with the issues needed to support fintechs. Anthony agrees based on his experience of going through the regulatory sandbox. It was incredibly useful but moved at a glacial pace.
Anish summed up the themes of the day: we have everything we need right here. We just need to get on and do it.