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Why Brexit hasn’t deterred fintech investors in the UK

The UK fintech sector is a leading source of innovative fintech solutions but this is under threat. While the U.K.’s government was trying to deal with Brexit, with numerous negotiations on the horizon, the European Union has decided to nurture its own blockchain industry via several initiatives. Can the UK fintech sector weather the Brexit storm?

Michael Jermaine Cards

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2019 was a record year for the UK fintech sector in terms of investment value. Fintechs collectively raised $4.9 billion in investment, which is $1.3 billion more than the previous year. The number of deals fell slightly, from 393 to 359. However the average deal value also rose sharply. The British results fit into a broader pattern of increased investment. The results are reflected in a study by Innovate Finance.

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Few people could have predicted that 2019 would be a record year for the British fintech sector, by far the largest in Europe. Despite the predictions of Brexit’s critics the London fintech world flourished like never before. During the year, there were already indications that things were not going badly at all. In April, for example, there was news of major job creation, and in the autumn it turned out that the demand for office space was also doing well.

A 38% increase in fintech sector investments

Companies and funds invested $4.9 billion, 38% more than in 2018. Remarkably, the number of deals decreased slightly. So somewhere very large deals must have been closed, and that’s right. Of the ten largest investments in Europe, seven were in British fintech. Corporate lenders top the tables with a capital injection of no less than $800 million. There is an honorable mention for OakNorth, which raked in $440 million. OakNorth is also active in corporate lending.

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Such reports are undoubtedly grist to Prime Minister Boris Johnson’s mill and the Brexit camp. They can pull a long nose towards anyone who feared the lights would go out. However, several experts previously believed that London would remain the financial capital of Europe even after Brexit, depending to some extent on how hard or soft the divorce would be.

The exceptionally high concentration of talent and capital in a city with a very strong foundation ensured that self-confidence, as well as the use of English as a lingua franca. Regardless of the good results, in 2019 the UK was still in the European Union. The question is what the overview will look like in a few years time because since last Friday the Brexit is a cautious fact. Cautious, because there are still tough negotiations about the conditions.

The fintech sector in Europe generally continues to grow

Growth in the UK did not stand alone. As a region, Europe grew strongly. Germany, France, and Sweden, in particular, showed impressive growth rates. The German-based neo-bank N26 raised the second-largest amount of money with $470 million, closely followed by the Swedish Klarna with $460 million.

They are two of only three non-British companies in the top ten. Investments in the Dutch fintech sector also increased, which is an almost logical side-effect when the whole of Europe is growing strongly. The investment value rose from $66 million to $82 million. Like almost all other countries, the number of deals fell, from 24 to 22.

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(Featured image by Lukas via Pexels)

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First published in banken.nl, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.

Michael Jermaine Cards is a business executive and a financial journalist, with a focus on IT, innovation and transportation, as well as crypto and AI. He writes about robotics, automation, deep learning, multimodal transit, among others. He updates his readers on the latest market developments, tech and CBD stocks, and even the commodities industry. He does management consulting parallel to his writing, and has been based in Singapore for the past 15 years.