UK fintech investment set for record-breaking year in 2017

British fintech companies are expected to see record-breaking investment this year and to far outstrip their European competitors, data showed on Thursday, adding to signs that Brexit is so far having no big impact on the fastgrowing sector.

Financial technology firms have been chipping away at traditional banking by offering services ranging from mobile payment apps to digital currencies like bitcoin, and the government regards the sector as a key source of growth.

Investors have pumped more than 825 million pounds (US$1.1 billion) into British fintech start-ups since the start of 2017, double the amount seen in the same period last year, research commissioned by the London Mayor’s office found.

London attracted 90 percent of that investment, and over the past five years has pulled in more than five times the amount of any other European city, the research found.

Some had worried that Britain’s vote last June to leave the European Union would see a drop-off in international investment into UK fintech.

But Investec (which invests in a number of fintech start-ups across the world) Emerging Companies Co-head Kevin Chong said that over the past 12 months he had seen an increase in international investors, and in the number of those who had never previously invested in the sector.

“A lot of it is to do with the fact that we have such a high concentration of financial service players in London in such a tight geography,” he said.

“And fintech, unlike some of the other technology sectors, is one of those areas where you can’t avoid having to partner with or have some sort of relationship with the established players.”

Despite London’s dominance in Europe, it still lags investment in Silicon Valley, whose fintech sector pulled in almost US$6.5 billion in the past five years, as well as Beijing and New York.

Chong said that although budgets were bigger in Silicon Valley, start-ups had less access to major banks and other financial services firms there, and this was a reason that New York and London were growing quickly.

“Clearly Brexit poses major challenges, but London’s position as a global financial centre and world-class technology hub cannot be replicated anywhere else,” said London’s Business Deputy Mayor Rajesh Agrawal in a statement.

“This highlights the need for a Brexit which enables London to maintain its place at the heart of the single market, as the continent’s financial capital.”