Rahul Sharma, 25 October 2017

London as a FinTech hubWhat does the future hold?

Our work with the World Economic Forum demonstrates how FinTechs are active across FS and across the value chain

The 11 clusters of innovation in financial services

2Source: The Future of Financial Services – How disruptive innovations are reshaping the way financial services are structured, provisioned and consumed, World Economic Forum and Deloitte, June 2015, p.12

London currently has the joint-most conducive environment for FinTech growth among 44 hubs we researched

1= London

1= Singapore

3 New York

4 Silicon Valley

Top ten hubs most conducive to FinTech growth

3Source: A tale of 44 cities – Connecting Global FinTech: Interim Hub Review 2017, Deloitte and the Global FinTech Hubs Federation, April 2017, p.17

5 Chicago

6 Hong Kong

7 Zurich

8 Sydney

9 Frankfurt

10 Toronto

UK FinTechs have been riding the crest of a wave of VC investment in recent years…

UK FinTech VC Investment, deal value ($m), 2012-2015

4Source: The 2016 VC FinTech Investment Landscape, Innovate Finance, February 2017

2012 2013 2014 2015

…but VC investment declined in 2016, suggesting uncertainty around Brexit could be impacting the UK FinTech market

UK FinTech VC Investment, deal value ($m), 2012-2016

5Source: The 2016 VC FinTech Investment Landscape, Innovate Finance, February 2017

2012 2013 2014 2015 2016

However, London remains an attractive FinTech hub; pro-innovation regulation, such as “Open Banking”, will enable FinTechs to thrive

The 'opening up' of customer transaction data

6Source: Deloitte analysis

Our view of the future, ‘marketplace banking’, could allow FinTechs to own the customer relationship or provide a wide distribution network

Marketplace banking

7

• Several FS providers continually compete to offer customers tailored, good-value products

• Financial optimisation e.g. moving funds to accounts paying the highest rates (with customer consent)

• Give customers insight into how best to optimise their finances

• Aggregation (all financial products at different providers available via one interface)

• Price comparison via the app

• Budgeting and money management tools

Source: Deloitte analysis

FinTechs have many of the capabilities required to succeed in an “Open Banking” world, but incumbent banks also have strengths to leverage

UX design

Acquiring and harnessing data

FinTech advantages

Incumbency advantage

Strong, trusted brands

Incumbent bank advantages

8

Acquiring and harnessing data

‘Agile’ and ‘open’ culture

‘Bleeding-edge’ technology

Strong, trusted brands

$$$

Financial history and expertise

vs

Source: Deloitte analysis

Along with a supportive regulator, there are four other key trends which will help London maintain its position as a leading FinTech hub

9Source: Deloitte analysis

At Deloitte, we are working with FinTechs to ensure the ecosystem continues to thrive

10Source: Deloitte

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