Thought Piece

Shining a spotlight on Leeds’ thriving fintech ecosystem

Posted: 14 Feb 2023

Resource Type: Thought Piece

The Whitecap Consulting Leeds Fintech Ecosystem 2023 report reveals substantial growth in the fintech ecosystem. Leeds has cemented its position as one of the UK's leading fintech hubs – with over a 263% increase in the number of fintech startups and scale-ups and a 105% increase in the number of fintech sector firms in the past three years.

The macro-economic context

The latest of three reports examines the activity over the past three years (a particularly unique snapshot of time) and highlights the significant growth in the size and scale of Leeds City Region’s fintech industry.

Despite the uncertainties caused by the pandemic in 2020, the UK saw a surge in fintech investment in 2021. Since then, Innovate Finance have reported $12.5 billion for investment in 2022. Although this marks a slight dip compared to the previous year, the UK remains one of the leading nations in fintech investment, ranking second globally and first in Europe. With an 8% drop compared to the global average, the UK's fintech industry has proven to be the most resilient among the leading nations.

The UK's fintech industry has proven to be the most resilient among the leading nations.

Leeds' growing influence

Whitecap’s report, which offers a comprehensive look at the current state of the sector, reveals, alongside the significant increase of firms operating in the sector, that the economic output of Leeds’ fintech ecosystem has nearly doubled to over £710m in 2022 compared to 2020.

The sector now employs over 7,800 people and is expected to continue to grow. Leeds’ fintech is also contributing to the growth of the Leeds economy, with Fintech GVA increasing by 102% since 2020.

Who is creating all this noise?

Attracting Major Players

The city region’s location and booming fintech scene have made it a desirable destination for companies looking to start, scale and synergise. Cognizant has opened an office in Leeds and is seeking 200 data engineers, with the expansion of the tech consultancy seeing 1000 new jobs to be made in the city.

It is clear Leeds city region is firmly on the global radar for expansion.

Australian fintech firm PEXA purchased Leeds-based Optima Legal and are piloting an entirely digital approach to payments and settlements in re-mortgage transactions. LHV Pank, an Estonian digital bank, opened their first UK office in Leeds, all thanks to the established ecosystem and highly skilled workforce.

Home-grown success stories

Key addition Tred – the only B-Corp pending and ‘1% for the planet’ fintech in Europe – provides debit cards that track spending to offset environmental impact. They recently raised £600,000 in just 10 minutes through crowdfunding, highlighting consumer’s appetite for these products and services. Combine this with the University of Leeds’ Centre for UK Green Finance and Investment and it shows Leeds’ emerging strength in sustainable finance and Greentech.

University-Industry collaboration is also growing. Novuna, a Leeds-based leading point-of-sale finance lender of over £2.3bn annually, is exploring AI-powered credit and business decisions with the University.

A supportive ecosystem

This growth is possible due to access to top talent, ecosystem connectivity, local government support, university engagement, and a strong financial services sector, indicated by the reports key finding areas.

One of the UK's largest banking hubs, Leeds deep financial services sector also hosts over 60 established organizations Recently, institutions such as the FCA, UK Infrastructure Bank, and Bank of England have all selected Leeds as a regional base. Their council provides support through funding and resources and a strong collaborative nature with universities and businesses.

Hubs such as Bruntwood's Platform, Leeds University's Nexus, and facilitator Fintech North play a vital role in maintaining the ecosystem's cohesion.

Centre for Finance, Innovation and Technology (CFIT): a catalyst for change

The report highlights the importance of diversity and collaboration across organizations in the UK fintech sector and the Lord Mayor of the City of London emphasizes the impact that CFIT will have on the success of the cross-UK fintech sector.

With its newly appointed CEO (Ezechi Britton) and Chair (Charlotte Crosswell), CFIT is more than a research institute. The organization will convene coalitions of experts across finance, technology, academia and policy to solve the most complex industry problems.

It will be essential to the growth and development of the fintech sector by addressing barriers, supporting high-income tech employment and the adoption of new technologies. Regionally this means fostering collaboration within and between growing national and regional fintech hubs such as Leeds.

Recognising its strength and contribution to the sector, CFIT has chosen Leeds for its upcoming launch.

CFIT will be essential to the growth and development of the fintech sector by addressing barriers, supporting high-income tech employment and the adoption of new technologies.

What’s next?

Alongside the work CFIT will do to bring the sector together, Leeds City Region must also take action to secure exponential growth for the sector. The reports list of possible actions astutely highlights the integral need for further collaboration between academia, industry, and government. Just three of 16 suggestions include;

  • Greater links between employer requirements and academic syllabus
  • The development of an innovation challenge to bring established FS and Fintech closer together
  • Deeper focus on specialisms for fintech hubs.

The growth of the fintech ecosystem in Leeds is a testament to the strength of the UK’s sector as a whole. With continued investment and support proposed in the report, Leeds is poised to play a major role in shaping the future of financial services.

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