London-based fintech companies raised more funding from venture capitalists in the first six months of 2021 than in any other year. This suggests that the British capital has remained central to the European digital financial services market even after Brexit. Moreover, it is building this position more and more resolutely.

The fintech industry is undergoing tremendous development, which could completely transform financial services compared to what we know today. It is enough to think about the emergence of Google, Amazon or Facebook in this market. There are analysts, as reported by Fintech News, who also see the big banks of the next era in big technology companies.

On the other side, however, are fintech startups building on new opportunities. Investors pumped $ 5.3 billion into these London firms in the first half of the year, up from $ 2.1 billion for the same period in 2020, according to new research from Dealroom and London & Partners.

Coronavirus and fintech investments

According to Reuters, the recovery in London followed the global rise in fintech investments following the impact of closures due to the coronavirus epidemic in digital financial services, including salaries and trade

Between January and June, Fintech companies raised $ 54.1 billion worldwide, exceeding the total amount earned in the previous two years. In Europe, much of the market growth was concentrated at London fintech companies, accounting for more than a third of the region’s funding. Globally, London ranks second behind San Francisco and slightly ahead of New York, the research found.

Figures from local entrepreneurs and investors show that the British capital remains a leading fintech center may remain even after the country has left the European Union and the COVID-19 epidemic has caused significant economic damage. “Current investment data is a vote of confidence in the UK fintech sector,” said Anne Boden, CEO of starling neobank

Starling is one of London’s fintechs that received significant funding this year. The company raised £ 322 million ($ 444.88 million). Other significant investments included the payment company SaltPay with $ 478 million and the payment service provider Checkout.com with a market value of more than $ 1 billion.

Despite the growth, there are still concerns about

“The loss of the passport after Brexit means that licensing and international expansion are no longer the easiest in London. London therefore has a higher added value. It should move to a model that focuses on the role of the global center rather than the European one, “Charles Delingpole, CEO of ComplyAdvantage startup, told Reuters.

The new research came after Wise, one of London’s best-known financial technology company successfully debuted on the stock exchange and valued at more than £ 8 billion ($ 11 billion).

Breakthrough of Wise

Wise, formerly known as TransferWise It was founded in 2010 by two Estonian entrepreneurs, Taavet Hinrikus and Kristo Käärmann. The company owes its existence to the fact that the founders were frustrated by the pepper charges charged for sending money between the UK and Estonia. Therefore, a new method for processing cross-border transfers at a real exchange rate has been developed, the CNBC reported.

The service has become popular among the British and has since spread rapidly around the world. Wise claims that more than 10 million customers use the service, who send £ 5 billion ($ 7 billion) worth of money across borders every month. Wise is a competitor in the remittance market to Western Union and MoneyGram, as well as start-up fintech companies such as Revolut and WorldRemit.

Unlike many venture capital technology companies, Wise has been profitable for years. The company first reached a break-even point in 2017. It doubled its profit to £ 30.9 million ($ 42.7 million) in 2021, while its revenue rose 39 percent to £ 421 million.

The company, whose largest owners are Valar Ventures, a trademark of Peter Thiel, has decided to list its shares directly on the London Stock Exchange, using a rare method used by music provider Spotify in the United States three years ago. he was one of the early adopters of direct listing when he listed on the New York Stock Exchange in 2018. The US workplace messaging application, Slack and Coinbase cryptocurrency exchange, has also been made public through direct IPOs

Unlike traditional IPOs, companies that go directly to the stock exchange do not issue new shares and do not raise new capital. This procedure also eliminates the need for investment bankers to guarantee the issue. However, Wise has been advised by banks such as Goldman Sachs and Morgan Stanley. thus avoiding the payment of expensive subscription fees and possible mispricing of shares. Wise was last valued at $ 5 billion in a secondary share sale. Because Wise goes public directly, there is no pricing process that companies typically go through in an IPO, and the price of shares is determined by the market after listing. (We now know the issue has resulted in $ 11 billion.)

The listing of Wise is a big gain for London, which is looking to attract more successful technology companies after Britain exits the European Union. The successful direct launch will also strengthen the booming UK fintech sector, which has produced multi-billion dollar “unicorns” such as Revolut and Checkout.com and attracted $ 4.1 billion in venture capital investment last year, CNBC summed up. .

London Fintech Week

For the first time since the outbreak a fintech event was held in London that could be attended in person. Senior decision-makers representing the most innovative financial services companies gathered at Fintech Week from 12 to 16 July to discuss London’s position as a hub in the fintech sector after Brexit

Rajesh Agrawal, London Business Deputy Mayor for Foreign Affairs said that between 2015 and 2021, the number of London-based fintech startups increased by 64 per cent and there are currently 3,018 fintech companies based in London, the largest number globally.

Chris Skinner, Fintech Week And the president of London explained: “I think shareholder capitalism, the Milton Friedman model, is already dead. The next century, and it’s starting now, is stakeholder capitalism. Let’s do whatever it takes, to make a profit while doing good to society, doing good to the planet. That’s the fundamental difference: goal-oriented businesses that focus on stakeholders rather than shareholders. ”

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The post Fintech explosion appeared first on World Weekly News.

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By: Sandra Loyd
Title: Fintech explosion
Sourced From: worldweeklynews.com/fintech-explosion/
Published Date: Sun, 15 Aug 2021 02:22:27 +0000