West Midlands FinTech - ECOSYSTEM REPORT 2020
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West Midlands FinTech
ECOSYSTEM REPORT 2020
In partnership with
© Whitecap Consulting
Table of contents add region graphic
West Midlands Ecosystem Summary 3
Forewords 5
Greater Birmingham & Solihull LEP 6
Whitecap Consulting 7
Innovate Finance 8
West Midlands FinTech Ecosystem Research 10
Introduction and approach 11
Definitions and Methodology 11
Overview 12 Research area:
Findings And Recommendations 17
This report focuses primarily on the activity
Availability Of Talent 20 in the geographical area covered by the
Strength Of The Overall Financial Sector 22 West Midlands Combined Authority, which for
the purposes of this report has been defined
Strength Of The Overall Tech Sector 25
as the three LEP areas within the region
Strength Of FinTech Startup/Scaleup Community 27 (Greater Birmingham & Solihull, Coventry
Relationship between Startup/Scaleups & Established & Warwickshire, and Black Country). It
29 uses economic data from this region,
Financial Sector
supplemented by our own primary research.
Funding For FinTech 32
Physical Spaces/Hubs 35
Interaction And Communication Between Key Players 37
Press & Media 38
This report was commissioned by GBSLEP on behalf of the three LEPs in the West Midlands
The Role Of Universities 41 conurbation and the West Midlands Combined Authority.
Participating Organisations 43
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© Whitecap Consulting Published May 2020
WEST MIDLANDS
FINTECH ECOSYSTEM
- SUMMARY
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© Whitecap Consulting
West Midlands FinTech Ecosystem Summary 2020
West Midlands region FinTech sector FinTech startups & scaleups
4,500,000 1,900,000 122 firms 60% established FS/
FinTech firms 24 firms, 87% B2B
population workforce employing
20% Tech 20% startups & 534 people 21% B2C
136,862 7,265 firms scaleups
people working FS & Tech firms
in FS or Tech 48yrs 8 yrs
93% 7,377 average age
of founders
average age
of firms
164,000 9 people working
in established estimated FinTech
students Universities related roles
organisations
71% 54%
£99bn 6.3% £411.7m 6.2% have main office
in the region
are startups
GVA of UK GVA GVA (estimated) of UK FinTech GVA
FinTech in West Midlands region West Midlands region highlights
1. Largest asset management FinTech hub 4. Significant potential for Fintech startups 1. It is the largest conurbation 4. Proximity to London is being
in Europe (Engine Room). and scaleups – the region has a outside London with a recognised as current and future
financial services and Tech economy population of 4.5 million. asset, with the current strong
2. Core strength in the development that could sustain around 100 FinTech transport links to London to be
of technology and software in the 2. Birmingham is home to HSBC UK,
startups and scaleups. enhanced by HS2.
asset management, investment and the first and only major UK bank
mortgage lending sectors. 5. 2 of the 19 regionally based FinTech to complete a full relocation. 5. Birmingham is the youngest
firms to participate in the FCA Sandbox major city in Europe, with
3. It will be the first multi-city 5G
3. 46% of the FinTech startups and to date have been based in the West under 25s making up 40% of
test bed in the UK ready to
scaleups in the West Midlands are Midlands. population.
trial new 5G applications and
scaleups, which is proportionally very
services at scale. 6. There are more students here
high when compared to most other 6. Key FinTech locations: Birmingham,
than any other UK region, across
regions we have researched1. Solihull, Warwick, Leamington Spa.
9 major universities.
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Other Whitecap Consulting FinTech Ecosystem projects have studied Leeds City Region, Greater Manchester, North East, Bristol.
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© Whitecap Consulting
WestFinancial
Established Midlands FinTech
& FinTech firms & Support Ecosystem FinTech
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& FinTech
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©Whitecap Consulting
FOREWORDS
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© Whitecap Consulting
Greater Birmingham and Solihull LEP
FinTech is an incredibly exciting sector both regionally centres, increasingly high quality of life and availability
and nationally, offering huge growth opportunities. This of funding streams to create a fertile environment in
report provides an overview of the current state of the which FinTech can flourish. Our focus now should be on
FinTech ecosystem across the West Midlands, along with connecting and enabling organisations to collaborate and
a set of recommendations to enhance our capabilities share ideas, while also providing access to our established
further. It demonstrates our strong foundations and why financial services sector.
we are ideally placed to become a significant centre for
GBSLEP welcomes the findings of this report and remains
FinTech in the future.
committed to providing clear strategic direction and
The building blocks for a thriving FinTech ecosystem are support. The recommendations made in this report provide
already embedded in our region, with a strong and well- us with clear markers that point the way towards creating
established history in Financial Services, a youthful, diverse the right conditions for our burgeoning FinTech ecosystem
Tim Pile, Chair, Greater Birmingham & Solihull and expanding workforce, and a host of incubators and to develop. Yet, existing strengths are not sufficient alone,
Local Enterprise Partnership (GBSLEP) innovation centres. We are home to over 7,625 financial and the recommendations also make clear that there is
services and tech firms including leading financial a great deal that we need to do to nurture accelerated
institutions such as HSBC UK, Deutsche Bank, Lloyds, as well growth of the sector.
as associated professional services firms with significant
It is now up to all of us across the region to commit to
financial services teams present in the region, such as PwC
action. I encourage those in the business community to take
and Deloitte.
an active role in driving these recommendations forward to
A supportive FinTech ecosystem can play a key role in help ensure we unlock the significant untapped potential
advancing the region’s reputation as a high-value business identified in this report.
and professional services location. This report revealed
This comprehensive review was commissioned by GBSLEP
over 120 firms already operating within the West Midlands
and authored by Whitecap Consulting based on extensive
ecosystem, delivering an estimated GVA of £411.7 million
research and analysis in collaboration with multiple industry
per annum (or 6.2% of total UK FinTech GVA).
stakeholders. The delivery of such a detailed and far-
Combine this with our status as the first multi-city test bed reaching report would not have been possible without
to trial new 5G technology at scale, our excellent university their contribution and support, and I would like to give my
base with more students than any other UK region, and our personal and profound thanks to each of them for taking
expertise in technology and software, it is clear that there is the time to share their insight with us.
enormous potential to support more FinTech start-ups and
Working together across the private, public and education
scaleups here in the West Midlands.
sectors, I am confident that we can turn this potential into a
This is the time to capitalise on these opportunities. Utilising reality for West Midlands.
our combination of talented people, world-class research
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© Whitecap Consulting
Whitecap Consulting
We are pleased to present our inaugural assessment of the startup and business funding. However, the dynamic is quite
West Midlands FinTech Ecosystem, conducted on behalf of different in other parts of the UK, including the West Midlands.
Greater Birmingham & Solihull Local Enterprise Partnership Our analysis across all UK regions, including the West
(GBSLEP), which has involved us actively engaging with the Midlands, shows that the focus tends to be less on
region’s FinTech community. startups and driven more by established financial services
organisations seeking innovation and collaboration. This has
This is a region with strong and deep heritage in the financial been driven by increasing competition, new technology,
sector, having been the original base for well-known increased customer expectations and legacy IT systems;
banking brands such as Midlands Bank and Lloyds Bank. reflecting the wider shift to a digital economy.
Our analysis has found there is potential in FinTech in the
For established financial service organisations who
region, based on the proximity to London, depth of the talent
have evolved their systems and processes over time, it is
pool, and the strengths in financial and professional services
increasingly difficult to operate efficiently and effectively
Richard Coates, Managing Director and technology. The recent creation by The Investment
in a digital world. In contrast, the newer entrants have
Whitecap Consulting Association of a FinTech hub (The Engine Room) at Wesleyan
more of a flexible strategy, ideally suited to an ecosystem-
in Birmingham could prove to be a pivotal development.
based approach and are well placed to exploit specific
In our role as a regionally focused strategy consultancy, we opportunities including developments such as Open Banking.
are exposed to many high growth sectors across the UK and
The issue of legacy technology in the financial sector is not
have been actively involved in FinTech since we founded
a new one, but the major change now is a move towards
the company in 2012. Since that time, we have worked with
openness and the adoption of different operating models
established financial services organisations, tech providers,
with multiple supplier relationships. The challenge of adapting
FinTech startups and scaleups, universities, PE and Corporate
to this new digitally orientated operating model is something
Finance firms, the public sector and inward investment
that is a common theme in our work with established
organisations on a range of FinTech related projects.
organisations in the financial services and technology sectors.
FinTech provides a material economic growth opportunity
FinTech has evolved from disintermediation to collaboration,
for the UK, and for the West Midlands. On a national level,
and within a few years it will be the way financial services
the sector is expected to create approximately 30,000 more
is delivered. Also, the technology and data competences
jobs and over 1,600 new businesses by 20301. According to
that underpin FinTech are highly transferable to other industry
Dealroom2, since 2013 European FinTech companies have
sectors; a key factor in regional economic development.
created over 2x more value than any tech sector in Europe.
Additionally, the annual report from Tech Nation3 in 2019 We would like to take this opportunity to thank all
confirmed the UK remains the global leader for scaleup stakeholders in the West Midlands who have helped us
investment into FinTech firms, generating £4.5bn in funding produce this report, which hopefully will contribute to future
between 2015 and 2018. growth in this exciting and rapidly developing sector across
the region.
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UK FinTech – State of the Nation 2019, Department for International Trade It is clear that London is a major centre of the sector on both
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The State of European FinTech 2019, Finch Capital & Dealroom, October 2019 a national and an international basis, with an emphasis on
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UK Tech on the Global Stage - Tech Nation Report 2019
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© Whitecap Consulting
Innovate Finance
The numbers speak for themselves. The innovation in FinTech to the top. This is of immense importance as we enter
financial services has resulted in over 100,000 new jobs the global race for talent and access to the brightest minds
across the UK, and the sector continues to attract record in the space. By investing and laying the groundwork for the
amounts of investment. In 2019 the UK FinTech sector next generation of innovators and entrepreneurs, we are
retained its role as the top-ranking investment destination in creating opportunities for the FinTech leaders of the future,
Europe, with venture capital and private equity investment who will become ambassadors for the UK’s global growth.
growing 38% year on year to a new record of $4.9bn,
There is a clear opportunity for the government to set the
despite a year of political challenges and uncertainty.
parameters for UK FinTech to remain competitive on the
As a nation, we have embraced FinTech with open arms. global stage. By better understanding the needs and key
Our progressive regulation has encouraged innovation focus areas for the sector, we can boost the industry and in
and a large part of our success is down to just this. Yet, in turn support the economy as a whole. This will bring benefits
Charlotte Crosswell, Chief Executive, common with many industries, the COVID-19 pandemic not just in London and the South East, but to those vibrant
Innovate Finance has presented the FinTech sector with significant challenges, FinTech hubs across the UK.
but also many opportunities. Innovators and entrepreneurs
Whilst London is acknowledged as the global epicentre
need a framework that allows them to thrive, so it is vital that
It is my pleasure to contribute to this report on FinTech in in the world of FinTech, other regions of the country play
we continue to develop and adapt regulation in ways that
the West Midlands, a region which plays a significant role an important role in building a diverse and robust national
create the right conditions for FinTech to prosper. To date, the
in the UK economy and one with a long-standing heritage FinTech ecosystem - from Northern Ireland and Scotland,
UK is the best place to start and scale a business – and we
to the West and North of England. We need to ensure we
in financial services. We have been keenly following the need to make sure that remains the same for years to come.
shine a spotlight on these regions to showcase their success
evolution of FinTech across the UK and are delighted to As we begin to operate in a ‘new normal’ post-COVID-19, and contribution, to in turn drive further growth and attract
see the ecosystem taking shape in Birmingham and the FinTech firms will continue to play a critical role. It is at times investment across all areas.
wider West Midlands. like these that we really see the value of their innovative
At Innovate Finance, we have recognised this potential and
thinking, agility and bravery to try something new.
Innovate Finance is the independent industry body that the FinTech National Network has been established with some
represents and advances the global FinTech community in We are looking forward to moving forward later in the key partners to foster collaboration between national hubs
the UK. Our mission is to accelerate the UK’s leading role in year with the major independent review of the UK FinTech and encourage innovators up and down the country. If we
the financial services sector by directly supporting the next sector, announced in the March 2020 budget. Innovate can combine this network with local and central government
generation of technology-led innovators. Finance has long been advocating for an in-depth look at support, as well as access to patient capital to scale
the sector and we are confident that this important review companies, the future of UK FinTech will be even brighter.
The UK is the global leader in FinTech and over the past
will underpin the future growth and prosperity of the sector
decade, the country’s position as a trailblazing force in the This will form the basis to engage with international markets
across the whole of the UK.
sector has been growing from strength to strength. Building as a united front, ensuring our great reputation as a FinTech
on our long-standing financial services pedigree, and Talent will accelerate growth across the FinTech sector, so nation, and enabling us to continue setting the pace for the
injecting it with innovation and transformative technology, we need to ensure we continue to blend the skills of finance, industry on an increasingly competitive international stage.
the results have transformed all areas of financial services. engineering and computer science that has propelled UK
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© Whitecap Consulting
16 photo Consulting © Whitecap credit: Innovation Birmingam
ECOSYSTEM
RESEARCH
2020
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© Whitecap ConsultingWest Midlands Ecosystem Reseach 2020
Introduction and approach Definitions and methodology established financial services or tech is working in
FinTech. We have conducted primary research
Welcome to the inaugural report into the West Midlands FinTech can be defined as the application of to establish the number of jobs within FinTech
FinTech Ecosystem, commissioned by Greater Birmingham technology to improve financial products and startups and scaleups and have adopted a proxy
& Solihull Local Enterprise Partnership (GBSLEP). This report services. methodology to estimate overall FinTech sector roles
has been produced by Whitecap Consulting as part of the
This makes it a very broad category, in which it is within the three categories listed above.
implementation of the Local Industrial Strategy, a regional
economic plan for the West Midlands. acknowledged to be extremely challenging to
To calculate the FinTech workforce and GVA we
categorise companies and jobs, especially in the
Since September 2019 we have conducted an analysis of the have adopted the following methodology:
absence of standard measures such as SIC codes.
FinTech activity in the region, which has included more than
• Estimated FinTech workforce = 5% of combined
40 individual interviews, focus groups, an online survey, desk In this report we have differentiated between three FS workforce (derived from TheCityUK data)
research, and insight gathered from relevant events, meetings different types of companies directly operating and tech workforce (derived from Tech Nation
and the course of our ongoing consulting engagements in within the FinTech sector: data) in the research area + all identified workers
FinTech across the UK. within FinTech startup & scaleup firms (Whitecap
• FinTech startups and scaleups - pure FinTech
Throughout the projects, GBSLEP has been an actively business models, often with a focus on disrupting primary research).
engaged partner, and upon completion of the research the sectors they work in.
• Estimated regional FinTech GVA = estimated
process, we jointly hosted a discussion group in January to FinTech workforce X GVA contribution per worker
• Established Financial/FinTech - established
share the preliminary findings with a group of approximately 30 entities, offering financial products or services. (using UK average).
stakeholders. This enabled the report to be finalised and ensured
• Tech firms - businesses operating in multiple In the absence of any current publicly available
the next steps could be planned in an inclusive manner.
markets (must include serving financial services estimate, the 5% estimate is based on a broadening
In various guises we have actively engaged more than 100 or FinTech).
of a previous EY estimate from 2015 which suggested
people in the production of this report, to ensure we are able
Categorising jobs within FinTech is also challenging, 5% of the FS sector is categorised as ‘FinTech’.
to put forward a considered, well informed and data rich
report. The output is intended to serve as a building block for as it is not the case that everyone working in
stakeholders across the region to support the development of
the FinTech sector in the West Midlands. Report authors:
Research & support team:
Julian Wells David Mellor Daniel Ryan
Director & FinTech Lead Associate Director (Midlands) Jake Fox
Whitecap Consulting Whitecap Consulting Emma Harrison
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© Whitecap ConsultingOverview
The research has taken place at a time when the West To help understand the level of interest in the sector, an its identity and make a clearer statement about its offer.
Midlands is establishing itself as a thriving tech centre. analysis was conducted of the regional media mentions of This theme was a general one, not specific to FinTech. This
Momentum is building from developments such as HSBC FinTech in relation to the West Midlands. The first time FinTech invariably led to discussions around brand and proposition,
UK’s new head office, the creation of UK’s first large-scale was mentioned in the media in relation to the region was which is not an unusual theme in exercises such as this.
5G testbed (West Midlands 5G), the Birmingham 2022 2013, when there were two articles. In 2019, there were
Being selected as the centre for HSBC’s UK retail bank
Commonwealth Games, and the new HS2 rail link which around 550 articles related to FinTech and the West
has been a significant statement for financial services in
will improve the region’s national connectivity. Midlands, which helps illustrate the growth of the sector
Birmingham and has created significant positive sentiment.
nationally and internationally.
The close proximity of the West Midlands to London is an This news has given the region a headline story that it has
asset which can be developed and leveraged. This is an The early stage FinTech firms in the region are been able to build its narrative around. During the course
advantage over other regions of the UK, but arguably geographically dispersed, and those in Birmingham are of conducting this work there appeared to be an upturn in
previously contributed to keeping the development of the based in different hubs or office locations. FinTech is not just positivity towards FinTech in the region. The announcement
FinTech sector in the region at a relatively early stage. The about startups though, and there are a significant number of The Engine Room hub at Wesleyan was well received, as
balance has now shifted to this geography being a key of established financial organisations in the region. The was the fact this research was taking place.
differentiator in catalysing growth. decision by the Investment Association in 2019 to establish
The Engine Room, a FinTech hub based at Wesleyan in
This research has found the West Midlands has significant Birmingham, has played a key role in bringing FinTech to the
potential in FinTech, aligning with ‘next generation services’ fore and providing national PR exposure. This new hub will
which has been identified as a major new market within help to build the FinTech community in the West Midlands
the West Midlands Local Industrial Strategy. The region has region, providing a focal point as activity continues
strong financial and tech sectors, with a relatively small to grow, and providing a FinTech theme to a growing
but growing group of early stage FinTech startups and digital economy already benefitting from the initiatives of
scaleups. The need for more collaboration and increased Innovation Birmingham and other progressive organisations.
clarity around the region’s FinTech proposition are being
recognised and there is an increasing amount of activity in The FinTech sector is relatively new in the region, but it is
the region. Inventive new approaches to funding are also quickly becoming a rallying point for the resurgence in tech.
providing a boost. There is a healthy debate as to how specialised the region’s
offer becomes, as the breadth of its professional and digital
This research has identified untapped potential and a strong cluster is seen as a benefit. The research interviews found
and growing interest in FinTech in the region. It estimates, positive sentiment about FinTech as a speciality, and the
the West Midlands is contributing 6.2% of the UK’s FinTech growth of the sector could help provide resilience to the
GVA, compared to the 6.3% of the UK in all sectors. This regional financial and professional services economy.
research has also estimated a potential 7,375 people in the
West Midlands working in FinTech related roles. There is an opportunity for the West Midlands to enhance
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© Whitecap ConsultingFuture potential
The region’s untapped potential in FinTech is significant, Asset & wealth management speciality • Since 2016, Birmingham has been the most popular
and there is an opportunity to accelerate the • With an existing group of FinTechs in Warwickshire such location for people moving out of London.
development of the FinTech sector in the West Midlands. as Moneyinfo and WealthWizards, this has the potential
Commercial sustainability
To capitalise on this opportunity, strategy and leadership to become a sector strength, which is further enhanced
is required, and the commissioning of this report illustrates • Operating and property rental costs in the region are
by The Investment Association’s decision to open the
the desire of key stakeholders in economic development favourable when compared to London, which when
Engine Room, a Birmingham based accelerator.
such as GBSLEP to play an enabling and supportive role. combined with access to talent and universities can
This initiative is part of the Engine programme that the
permit FinTechs to operate on longer cash runways
Based on interviews conducted to develop this report , Investment Association runs, which used to be called
and less aggressive valuations. This can improve return
there is a risk that a focus on FinTech could become a focus Velocity. This creates what is believed to be the largest
on investment and allow greater development or
on the startup community rather than giving support to asset management FinTech accelerator in Europe.
adoption time, arguably nurturing more stable and
experienced businesses. It is important that future activity Whilst not excluding or disincentivising other FinTech
sustainable business models.
does not become limited to networking and business variants, an identifiable speciality helps distinguish
the region strategically, as well as boosting regional Diversity
support with ill-defined outcomes or outputs. The region
would benefit from further attraction of large brand names credibility and outreach. • The region’s size and complexity are well suited to test
establishing a regional presence, examples of this have propositions on representative cross sections of society,
Access to talent
already been seen but should remain an area of focus and can reflect behaviours, concerns and cultural
• Accessing experienced talent remains a challenge in
going forward. responses to new FinTech propositions.
all regions, the West Midlands is the largest population
The West Midlands is not currently represented by a HM centre outside London. The region’s nine universities Access to financial services community
Treasury FinTech Envoy. Whilst there is no direct evidence create a large graduate pool and graduate retention • FinTech organisations are dependent on a close
to suggest this is holding back the region’s progress, it in the region is improving. Harnessing the talents of the interaction with financial sector and regulatory
represents a missing link to the UK FinTech scene and a broader non-graduate community, creates significant organisations. The region’s financial services sector
missed opportunity to connect with the UK-wide network of additional potential, particularly given the relative youth is large and growing, and whilst there are currently
Envoys. of the population profile. apparently few internal tech teams from the major
players in the region, London is close at hand, and local
The West Midlands has the potential, and incentive, to Proximity to London
tech capability is growing rapidly.
grow rapidly as a FinTech hub. It has distinct advantages • The region’s close proximity to a major global financial
compared to comparable cities, including: and FinTech centre is a current and future asset Following the completion of the initial research findings,
and provides an opportunity to leverage value by Whitecap tested these differentiators with stakeholders
collaborating with and supporting London, as opposed and found general acceptance.
to competing with it.
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© Whitecap ConsultingStakeholder quotes - key growth opportunities
“HS2 will be great for Birmingham. Birmingham should “There’s a coherence to regional and national “Our HSBC UK head office is now well-established in
make the most of it. Birmingham’s heritage is about strategy. The retail banks are all here. Access, the region and our aim is for the region to thrive as a
building and innovation.” comparison, simulation and switching should be easily financial services centre and the role of FinTech is a
Iain Tait, CIO, Delta Financial Systems available to start / scale ups. We can link to co- vital part of that. A growing financial services cluster
funding and the third sector as well.” will strengthen the region’s ability to attract and retain
“HS2 won’t lead to Birmingham being a dormitory Mark Hart, Professor of Entrepreneurship, Aston Business School the talent that we all need.” ”
town of London. With 5 universities, our assets, Jon Bramwell, Managing Director, Large Corporates,
housing, a burgeoning city, where the next centre is, “The differentiator is a horizontal. Disruptive tech is Midlands & East Region, HSBC UK
is Birmingham. We need to create a pull, tell enough a capability that can feed into all sectors, including
stories, get some optimism and we’ve got a real FinTech. ‘Digital is the golden thread’ is a phrase “Proximity to London is very positive, yet we don’t
chance.” used by Andy Street. We can create an “Innovation market ourselves as being convenient to London.
Julian Beer, Deputy Vice Chancellor, Birmingham City University Engine” which can break down barriers or sectors and London is commutable, but Birmingham could have
use the horizontal “innovation” message to support advantages in cost of living, quality of life, and
“We opened an office in Bromsgrove as there was a the FinTech vertical.” connections back to London.”
better supply of the people we wanted, and it gave Iain Mansell, Networks & Partnerships Manager, West Midlands Stephen Hunt, CEO, BNP Paribas Personal Finance
us a better central location for our work across the rest Innovation Alliance
of the UK.”
Mark Lofthouse, Chief Executive, Mortgage Brain “Birmingham needs to create an identity to compete.
It could be a centre for good developers and coders.
“The UK tech sector as a whole continues to grow and They are coming out of top end universities in the
mature. We need to make sure that projects such as region.”
5G put us on the map as a region where development Jack Knight, Deputy CEO, The Investment Association
and innovation can happen at scale.”
Tim Kay, Sector Lead - Technology and Media, KPMG “Cyber is a massive issue. Birmingham is one of
the cities which could become a cyber centre of
excellence.”
Iain Tait, CIO, Delta Financial Systems
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© Whitecap ConsultingAreas requiring the most attention over the next 2-3 years Biggest obstacles to growth of FinTech in the region
“There is no overall guiding strategy or cohesion within the region. We need to bring “We need to bolder in telling our story on a national and international stage. We
it together and to generate a sense of mission. Strategise it. Feel that it is something have the entrepreneurial talent and success stories; we need to promote them to
that knits together.” investors, government, and scale-ups outside of the region to show why they should
Iain Tait, CIO, Delta Financial Systems relocate companies, talent and capital.”
Tim Kay, Sector Lead - Technology and Media, KPMG
“We need to create more awareness, more publicity, more buzz. At the moment, if
FinTech is mentioned you hear Shoreditch, Manchester, Silicon Glen, but you never
“If we are going to create a FinTech sector here then it needs to be to service the
hear Birmingham. Creating more awareness and buzz would be a great start.”
global sector and not just the local economy as things are so fluid and we need to
David Stewart, Chief Operating Officer, Wesleyan
match our ambition with business opportunity.”
Hilary Smyth-Allen, Executive Director, BPS Birmingham
“Bringing more people together would be valuable. The professional services firms
do it but in a sporadic way. It doesn’t always progress, even though I know all of
them see financial services as important to their business. Encouraging more regular “For me, London is the biggest obstacle. A high % of FinTech companies are already
opportunities for people to meet would be helpful.” established there and hubs, communities and collaboration are far in advance of
Jeremy Wood, Chief Executive, Dudley Building Society the West Midlands area. The key to growth is to provide the same potential value by
setting up in the West Midlands as could be achieved elsewhere.”
“The West Midlands is a regional success story. Its unparalleled strategic location, Michael Daniels, Head of Operations, Obillex
established business eco-system, and leading talent pool across the financial services
spectrum makes it a natural choice for any organisation and demonstrates why the “The great thing about Birmingham is we get our heads down and just do it; the downside
region has emerged as a leading destination for financial and professional services.” of Birmingham is we get our heads down and just do it, and no-one ever knows.”
Matt Perkin, Head of Region, Midlands & South West, Zurich Richard Marshall, CTO, Wealth Wizards
“We can create something here, but we should guard against isomorphism, and
make sure we’re not just doing something to look like somewhere else. We should
create something that looks like Brum.”
Andy Newnham, Deputy Director of Business Engagement, University of Birmingham
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© Whitecap Consulting24
photo credit: CW Images / Alamy Stock Photo
© Whitecap ConsultingFindings and recommendations
Talent Key findings Suggested Stakeholder Actions: Key Stakeholders:
• Talent is replacing market proximity as main driver • Focus on using quality of life and other measures to re-orientate • Universities
London commuters to roles in the region.
for company location. • Training providers /
• Increase interaction between bootcamps, universities and bootcamps
• London’s proximity means some people commute financial services / tech businesses to expand talent pool to non-
or move to London, although more Londoners now graduates. • Policy makers
return to the Midlands than go the other way.
• Increase FinTech specialisation and course content in universities. • Employers active
• Talent potential is very high, given the size and in FinTech related
• Potential for a marketing campaign to strengthen the image of sectors
diversity of the population within the region, and
the region as aspirational area to live and work.
strength of universities, with interventions such as
bootcamps helping unlock talent in non-graduate Suggested GBSLEP Actions over the next 12 months:
communities, and FinTech courses increasing • Create a FinTech cluster to increase interaction between talent
employability of graduates. providers FS and FinTech businesses to further increase graduate
retention.
• There are some talent shortages and a skills
gap, particularly where there is a need for and • Design and launch a FinTech Development Programme and
overlap of experienced tech and FS skills, but this is consider talent as a key focus area and potential future
differentiator.
experienced in most regions.
Established Key findings Suggested Stakeholder Actions: Key Stakeholders:
• Promote tech team expansion amongst existing institutions
financial • Already strong with presence of several major
brands and strengthened by HSBC UK’s relocation. (through influencing ‘anchors’ such as HSBC, targeted messages
• Inward investment
organisations
sector and proposing interim initiatives such as holding regular regional
• Decision-making, especially on FinTech, previously ‘tech surgeries’). • Major financial
often out of region. The business / financial / services employers
professional services offer is “full service”offering, Suggested GBSLEP Actions over the next 12 months:
with growing focus on F.S. • Continue to collaborate with West Midlands Growth Company
to support financial sector inward investment strategy.
• Recent relocations and expansions in the
region (HSBC UK, PWC, HMRC) make the sector
increasingly vertically integrated, and capability in
region is broadening.
Tech sector Key findings Suggested Stakeholder Actions: Key Stakeholders:
• There are specialist financial services technology • Build on success of Birmingham Tech Week and develop stronger • Major tech
providers with a depth of expertise in regulated tech cluster activity and interaction (momentum already employers
financial technology. Leamington Spa is also a building) with increased events and interaction.
major gaming centre. • Regional tech
• Encourage greater support for tech bodies and encourage bodies/clusters
• Potentially due to the lack of a high-profile global tech greater collaboration and inclusivity.
brand, the region is not currently perceived as a tech • Create a clearer and bolder external brand for the region’s
‘hot spot’ in terms of external recognition, although activity.
major brands e.g. IBM have significant presence.
Suggested GBSLEP Actions over the next 12 months:
• There has recently been a resurgence in
confidence arising from Birmingham Tech Week • Engage the new FinTech cluster body with existing tech bodies.
and the growth in collaboration across community.
17
© Whitecap ConsultingKey findings Suggested Stakeholder Actions:: Key Stakeholders:
• The early stage FinTech sector is currently relatively • Identify FinTech as part of the broader business, professional and • Public sector
FinTech small in comparison to the region’s GDP and financial services (BPFS) sector action plan and a key sector for
inward investment. Inward investment
startups/ financial sector. •
organisations
scaleups • The Engine Room accelerator has already • Create a clear regional FinTech differentiator based on wealth
attracted new FinTech firms and has potential to management, access to talent, diversity and sustainability. • Regional tech
be a major FinTech hub outside London. bodies / clusters
• Appoint a marketing partner to develop brand.
• There are few startups; the region is stronger in • Operators of
• Assess opportunity for potential Catapult or equivalent. physical hubs / co-
scaleups, although many have a low profile within
the region. Suggested GBSLEP Actions over the next 12 months: working spaces
• There are some groupings of FinTech firms in • Launch a FinTech cluster body to encourage best practice and • Enterprise
Birmingham, Solihull and Leamington / Warwick. interaction. communities (eg
CICs)
• Large tech companies also cover FinTech as a • Launch a FinTech Development Programme to co-ordinate and
sector (Phoebus, Focus, IRESS, Advanced). accelerate progress in talent, funding and incubators. This is
an opportunity for a new entrant into region to directly support
FinTech Development Programme.
• Request a Treasury FinTech envoy appointment for West Midlands.
Relationship Key findings Suggested Stakeholder Actions: Key Stakeholders:
Encourage financial services companies to expand capability
between • The interaction appears to be limited, influenced
by the absence of technical teams in the region.
•
and tech teams or hold regular tech team surgeries in the
• Major tech
employers
financial sector FinTechs reported they are frequently diverted region.
Regional tech
and FinTechs to London, however the growth of capability •
bodies/clusters
through recent relocations and expansions should Suggested GBSLEP Actions over the next 12 months:
encourage more local interfaces. • Tech/FinTech
• Establish a FinTech cluster & FinTech Development Programme,
• There is currently no established cluster activity in using this as a driver to bring together the Financial Services, communities
FinTech. Tech and FinTech together in the region.
Funding for Key findings Suggested Stakeholder Actions: Key Stakeholders:
Maximise opportunity to use the Midlands Engine Investment
FinTech • The funding landscape perceived to be difficult to
navigate, and there are low deal flows.
•
Fund for FinTech sector investments.
• Funding community
• Public sector
• Angel investment and recirculation of capital is • Work with providers to navigate and streamline the funding
limited and perceived to favour sectors such as support structure and increase interaction with angel investors.
manufacturing. • Hold investment showcase events in the region.
• New initiatives are helping to streamline processes Suggested GBSLEP Actions over the next 12 months:
and increase investment actvity.
• Establish a funding stream within the FinTech cluster / FinTech
Development Programme, to increase availability of investment.
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© Whitecap ConsultingKey findings Suggested Stakeholder Actions:: Key Stakeholders:
• Multiple co-working spaces and accelerators but • Increase collaboration to unlock existing capacity and • Universities
Physical space limited collective impact; associated ecosystems capability across incubators.
Major financial and
/ hubs and collaboration are limited. • Utilise The Engine Room on multiple fronts, namely as: a central
•
tech organisations
• The Engine Room accelerator has the potential to location for cluster bodies; a venue for social and professional
generate real cluster momentum; it is already the development events; a showcase for investor events; and a • Current & potential
largest asset management FinTech hub in Europe. high-profile marketing asset for the region. hub operators
(including co-
• Other hubs are promoting digital tech, such as • Assess opportunity for potential national Catapult or equivalent. working spaces)
Innovation Birmingham, although there is no
specific FinTech theme. Suggested GBSLEP Actions over the next 12 months:
• Create an interest group within the FinTech cluster and set
objectives within the FinTech Development Programme to
streamline navigation and increase scale up performance.
Interaction Key findings Suggested Stakeholder Actions: Key Stakeholders:
between key • FinTech has not previously held a high profile in • Use FinTech as a ‘rallying point’ for tech resurgence and
collaboration across the region.
• Regional tech
players the region, and within the wider tech sector there
has not been a consistent form of interaction.
bodies/clusters
• Tech/FinTech
• There has been a perceived upward swing in Suggested GBSLEP Actions over the next 12 months: communities
optimism and collaboration following Birmingham • Establish a FinTech cluster & FinTech Development Programme to
Tech Week. help enhance interaction in ecosystem.
• Establish links to the national ecosystem by joining the FinTech
National Network via the FinTech cluster brand.
Role of the Key findings Suggested Stakeholder Actions: Key Stakeholders:
universities • A very strong asset given the size of the sector, • Increase FinTech content in courses and develop academic
thought leadership through ventures such as the Gilmore Centre
• Universities
with 164,000 students across 9 universities.
and the Sustainable Finance Innovation Centre. • Major tech
• Graduate retention is growing & collaboration employers
between universities and business is increasing.
Suggested GBSLEP Actions over the next 12 months: • Regional tech
• A formal qualification is already offered by • Encourage participation in a talent stream of the FinTech bodies / clusters
Coventry (MSc), while Birmingham, Warwick cluster / FinTech Development Programme / cluster to increase
and UCB are incorporating FinTech into their • Tech / FinTech
interaction with FinTechs and FS companies and ensure communities
curriculums. compatibility of course content with sector requirements.
• A new £3m FinTech research centre has
been created at University of Warwick, and
the University of Birmingham has launched a
Sustainable Financial Innovation Centre.
Summary of Actions:
• Agree a high-level vision for the region, recognising FinTech as a priority in the BPFS Sector Action Plan, and a priority area for inbound investment.
• Appoint a FinTech envoy to the Treasury to position the West Midlands within national FinTech strategy.
• Establish a representative cluster body, similar to other UK regions, to act as a focal point for the FinTech community and promote the region locally,
nationally and internationally.
• Pioneer a FinTech Development Programme to set objectives, oversee actions and deliver tangible outcomes.
• Invest in a marketing campaign to increase positive external perception and brand for FinTech in the Midlands, nationally and globally.
19
© Whitecap ConsultingAvailability of talent
The region is one of the largest and most diverse talent graduates not yet knowing their sector, and likely not yet
Talent potential is very high, pools in England. Birmingham is the youngest major city having testing, deployment, or development skills.
given the size and diversity of in Europe, with under 25s accounting for nearly 40% of its
Another challenge, and opportunity, is the scale of
the population in region, and population4. The region’s universities generate over 50,000
unexploited talent in the region. 55% of the population has
graduates per year. Talent is becoming an increasingly
strength of universities not been to university, which is one reason why there is
business critical issue, as companies locate to access
significant potential within the non-graduate community.
people and skills rather than their target markets, given
The School of Code and Digital Innov8ors are helping
London proximity has more positives global markets can now be accessed virtually.
address this; the latter is based at Solihull College and trains
than negatives, with a net gain of It is possible to commute to London from parts of the region, students in digital skills, working with organisations such as
people moving into the region but more Londoners are now moving to Birmingham than BNP Paribas.
heading in the opposite direction. Data released in July
from London The majority of the financial services tech firms interviewed
20195 showed 7,771 Londoners moved to Birmingham in 2018
said they do not necessarily need deep domain expertise as
- a rate of more than 21 a day. 728 more Londoners moved
the ability to define and find solutions to the problem is more
There are some talent shortages in to Birmingham than travelled in the opposite direction over
important. Frequent feedback indicated recruiting from
the course of the year.
the region, particularly in roles where non-traditional graduate sources created more engaged
experienced tech and financial As is the case in other regions, a perceived talent shortage and inquisitive personnel. School of Code specialise in
was reported by many interviewees, especially regarding developing more specialised skills, directly in line with
services capability overlap experienced talent that bridges tech and financial services. client requirements, but again recruiting from a diverse
It is possible the region’s financial and tech sectors are background.
harder hit than others by the proximity to London, but there
There are some significant employers in tech and FinTech
are signs of change and it should be noted that some of
related fields. One of the most prominent in the region is
the commentary around HSBC UK moving to Birmingham
Advanced, a software provider, which decided to locate in
focused on the positive impact of extending career ladders
Birmingham rather than Northampton for access to talent.
that previously caused senior people to leave the region.
It has built from zero to 400 staff, all based locally. The firm
The presence of nine major universities and size of the previously tried to recruit at entry level in Shoreditch but cost
region’s population are both seen as sources of huge of living was cited as an issue.
potential if they can be maximised. Recent initiatives are
In July 2018, the West Midlands Combined Authority secured
indicating up to 70% of graduates stay in region6, although
a Skills Agreement with government for up to £69m to
some perception remains that graduate retention in
support digital and technical skills, job opportunities and
the region is an issue. Furthermore, the universities are
productivity across the region. Initiatives emanating from this
increasingly aligning themselves to FinTech.
include the development of two Institutes of Technology (IoT)
4
Birmingham Economic Review 2018 However, the challenge of hiring and training graduates was to deliver higher technical education in the West Midlands.
5
Office of National Statistics
6
HESA frequently highlighted. The challenges referenced included
20
© Whitecap ConsultingStakeholder quotes
“The level and quality of pitched preparedness “We know there is a strong talent pool. FinTech talent “FinTech has two aspects: tech talent and financial
coming out of London exceeds that we see local, has traditionally been directed towards London, and services talent. It’s difficult to get the convergence
although it’s improving. We do have some good Birmingham has suffered most from that. Moving forward of both, particularly financial knowledge that
talent, but we still have some cultural challenges to proximity will be a good thing and this region can be a can translate to the technical side. What makes
address; the fear of loss of control by founders but also centre of excellence for talent, but with less cost.” us a FinTech is that we can put services and tech
angel investing lacks the same profile as in the South Jack Knight, Deputy CEO, The Investment Association together but it’s impossible without having people
East. I remain concerned that we will lose out as our best with financial skills and a mindset to do that. Being
talent migrates to London and the South East, driven “Technical talent is increasingly important within a FinTech is not about the digital transformation of
by opportunity and money. The circle then continues the insurance sector and collaboration between existing businesses – it’s about disrupting the existing
as these are the investor of the future, then invest in education and industry has never been more patterns of work.”
local companies in the South East. 73% of each pound Richard Marshall, CTO, Wealth Wizards
important. The region’s pool of leading talent and our
invested in equity in 2019 was pumped into London – access to highly-skilled graduates and apprentices
Beuhurst Equity investment the UK 2019.” from leading educational establishments provide a “We’re focused on regulated financial tech, so
Alex Toft, Head of Minerva Business Angles, Minerva competitive advantage.” people expertise can be hard and expensive and
Matt Perkin, Head of Region, Midlands & South West, Zurich having a cluster is helpful. Finding younger talent
is harder. We’re creating a digital division which
“With the majority of our workforce in tech, CoreLogic
“We need to be giving young people a route, we think will be more agile and attractive for new
UK is ideally placed to benefit from the region’s
especially non-graduates. Young talent is not just entrants to the tech jobs market.”
considerable talent pool. However, salary inflation
and increasing competition from other technology graduates.” Steve Andrews, Head of Managed Services, Focus Solutions
Eban Lovatt, CEO, Moneyshake
firms requires us to constantly rethink our recruitment
and retention strategy. Strong links with local
“Tech companies are increasingly employing right
universities, innovative approaches to recruitment “There are talented individuals in the region and
people then training them.”
and regular benchmarking of our employee value there’s an enthusiasm about the tech industry, but
Naomi Nash, Entrepreneur Engagement Manager, Tech Nation
proposition are essential to ensure we attract and there is a need for more experienced individuals to
keep the right people.” support companies in high growth industries and
Mark Blackwell, Chief Operating Officer, CoreLogic UK better opportunities to share their success stories.
There are promising initiatives by organisations such
as the School of Code, but it will take some time and
“Everyone we have hired in the last four years has effort to develop people and build the appropriate
been a graduate, most from within the region.” infrastructure for the region.”
Bob Hunt, CEO, Paradigm Mortgage Services David Baker, Investment Associate, Mercia
21
© Whitecap ConsultingStrength of the overall Financial sector
Financial services has a long history in the West Midlands, Paragon, Paradigm, and Precise Mortgages (part of One
The financial sector (FS) is strong, alongside other core sectors such as manufacturing. Savings Bank). Solihull based CoreLogic UK employs around
with HSBC UK’s new head office in Midland Bank and Lloyds Bank both originated in 120 people providing mortgage lending and workflow
Birmingham and the region undoubtedly has an existing management platforms. Its systems are now responsible for
Birmingham and major financial
strength in financial services, boosted by HSBC UK’s new approximately 80% of the UK’s residential property valuations.
organisations such as Deutsche head office. Although well known within their sectors, the presence
Bank having significant of these brands within the regional FinTech scene is not
Numerous major financial organisations have offices in the
operations, as well as various West Midlands. Historically, the region has been considered
particularly visible. This appears to be due to a combination
of factors, most notably because they tend to operate within
mid-sized organisations to be a base for operational and processing roles, but today
their sector verticals rather than interact regionally.
the region is now also benefiting from higher value jobs. It is
envisaged that growing the FinTech sector in the region can HMRC has been conducting a major review of its estate
help create further high value employment in the financial and is consolidating its offices into regional hubs across
Decision-making within the large
services sector. The perceived ‘over-heating’ of London the country. It has confirmed that its new West Midlands
organisations, especially on FinTech, may lead to more financial services operations locating regional hub will be based at the Arena Central complex in
did not generally take place in the and developing in the West Midlands, including established Birmingham city centre adjacent to HSBC UK, where around
region previously, and the overall FinTech firms. The West Midlands is not currently known as a 3,600 staff will be based from 2020. In October 2019, the
business and professional services base for technical functions of financial organisations, so this Government announced an additional hub in Birmingham,
is an area of opportunity. which will house 1,700 employees. Both hubs are due to
offer is broad rather than FS focused
open in 2021.
BNP Paribas Personal Finance, previously known as LaSer,
employs over 700 people in Solihull and operates in the The professional services sector which supports the
The professional services retail finance point-of-sale and motor finance sectors. The established financial services organisations is significant
organisation is based almost entirely in the region, with in size in the region. EY employs around 1000 people in
sector is very strong and
the exception of a small operation in Northern Ireland. The its Birmingham office, and announced in 2018 that the FS
expanding innovation team is based in Solihull. practice would grow to around 100 people by 2020. PwC now
employs over 2000 in Birmingham, an increase of almost 62%
Two of the top 10 building societies are based in the West
since 2016, and also completed a major relocation in the city
Midlands, namely West Brom and Coventry, with Dudley and
in 2019. KPMG employs 1300 people in Birmingham, and the
Tipton & Coseley also based here. Coventry Building Society
city is also home to Deloitte’s largest office outside London.
is the second largest of the 42 building societies in the UK.
Another significant mutual, Police Credit Union, which is the The region has an opportunity to become an even more
largest credit union to belong to the Association of British significant financial hub, and a 2017 report into the UK
Credit Unions (ABCUL), is based in Birmingham. NFU Mutual is market said the West Midlands could become be the third
A vision for a transformed, world-leading industry – Strategy&
7 headquartered near Stratford-upon-Avon. fastest-growing financial services centre in the UK.
and TheCityUK, 2017
There are some established mid-sized organisations in
the region including the likes of Primis, Secure Trust Bank,
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