The FinTech Revolution: Can Leeds and Manchester become the global FinTech hubs of tomorrow?
By Tom Bowie, a Financial Services Associate at Squire Patton Boggs in Leeds.
Leeds and Manchester both want to be the global FinTech hubs of tomorrow. We need to work together and, perhaps most crucially, share ideas and best practices in order to achieve our ambitions.
There is no doubt that Leeds and Manchester are exciting places to be. There is a real buzz around ‘FinTech’ and the new opportunities this presents.
The ‘faces’ of both cities are quickly changing with huge re-development projects. Leeds South Bank and Manchester Spinningfields have transformed brownfield sites into fantastic places to live and work. Both cities offer a refreshing alternative to London, with their internationally renowned universities generating a strong talent pool that values community, affordability and quality of life. Academia in the North is committed to FinTech, evidenced by the announcement of a cross-discipline FinTech Msc by the University of Leeds, the creation of FinTech Labs and Research Networks by the University of Manchester, and the imminent opening of Nexus, a research and innovation hub, by the University of Leeds, which will provide an exciting opportunity for students, entrepreneurs and local businesses to meet and collaborate.
Both cities benefit from active and supportive FinTech communities, including FinTech North, Manchester Digital and the Leeds Digital Festival, which play a huge part in fostering a sense of identity and belonging. In addition to the annual conferences held in Leeds and Manchester, FinTech North’s monthly breakfast seminars allow community members to meet up, network and share ideas on how the regions is continuing to grow.
Both Leeds and Manchester City Councils continue to be supportive of FinTech initiatives, and the Leeds City Region and Greater Manchester Enterprise Partnerships (LEPs) provide support and access to funding to help local businesses thrive. The recently formed ‘Council of the North’ will give a louder centralised voice to 11 northern LEPs. HM Treasury has also shown its commitment to FinTech in the North by appointing five regional envoys, including Chris Sier, a Professor at the University of Leeds, and David Duffy, the CEO at CYBG plc.
The Financial Conduct Authority (FCA) is recognised globally for transparent and forward-looking regulation, whilst also encouraging and facilitating innovation. In recent years, the FCA’s presence in the North has been increasingly felt with its attendance at FinTech events in both Leeds and Manchester. We hope to see more northern businesses in the ‘regulatory sandbox’ very soon!
The merger of Tech City UK and Tech North into Tech Nation (whose alumni boasts Skyscanner, Deliveroo and Monzo) has further focused attention to the North, which now benefits from its frequent visits (and touring cohorts). In recent years, we have seen interest from Nordic-Baltic and Latin American start-ups exploring the North on the search for collaboration opportunities and potential bases from which they can launch into the UK market. Excitingly, the Department for International Trade delegations from the Nordic-Baltic countries and Western Europe are scheduled to visit the North once again in the coming months.
Whilst there are a huge number of opportunities, there are also challenges that must be overcome.
Over the last couple of years, there has been a boom in early stage capital available to start-ups in the North. One great example is Mercia Fund Managers, which manages part of the British Business Bank’s Northern Powerhouse Investment Fund (NPIF) and has committed to investing £108 million of equity and debt funding to support growing SMEs based in the North. However, awareness of the types of funding available and exactly what must be done in order to obtain funding trails behind London. For start-ups and investors alike, the right team, solid financials and a robust business plan are imperative to securing funding. Organisations like NorthInvest are pivotal in connecting start-ups to mentors and investors, facilitating introductions to angel investor networks, and advising start-ups on maximising their chances of securing funding. Initiatives such as these will only help more local businesses secure local funding.
Co-working spaces are invaluable in allowing start-ups to secure office space in prime locations at an affordable monthly price and be around other likeminded individuals at the same stages of business growth. The Platform Building in Leeds and WeWork and Headspace in Manchester are great examples of collaborative spaces where tech entrepreneurs, start-ups and scale-ups can come together to share ideas right in the heart of the city. However, tech hubs remain few and far between, especially in Leeds.
Both cities benefit from international airports, close motorway links and trains to London in just over two hours. Investment in infrastructure, in particular transport, is an issue that seems omnipresent, and improvements need to be made to local transport so that those living in surrounding areas can travel quickly and economically into the city centres. However, it is also important to recognise the significant progress that has been made in the past few years, in particular you can now travel by train between Leeds and Manchester in less than 50 minutes, and the work that will be done in the future with the arrival of HS2 and station redevelopment projects.
We need to prepare primary, secondary and higher education students now for the workplaces of tomorrow. A FinTech’s success is dependent on the usability and scalability of the products it builds, many of which are application based and built on complex algorithms and code. There is a nationwide shortage of coders and developers, which must be addressed.
Collaboration is key to the North’s future successes on the global FinTech stage. Both cities need to realise that whilst their aims are aligned, they have different strengths to play to. Leeds has a thriving insurance, credit referencing and retail-banking offering, being home to several of the largest building societies and First Direct, an early tech focused consumer banking business. Like Leeds, Manchester has a strong legal and financial services offering, and it is also home to many leading manufacturing, advanced engineering, life sciences and digital and technology companies. Leeds and Manchester both want to be the global FinTech hubs of tomorrow. We need to work together and, perhaps most crucially, share ideas and best practices in order to achieve our ambitions.