London: Over half a billion dollars were poured into British financial technology companies in the first half of 2017, over a third more than the same period last year, trade body Innovate Finance said yesterday, in the latest sign the fast-growing sector is so far weathering Brexit.
UK-based fintech startups pulled in $564m of venture capital investment in the first six months of the year, more than half of which came from outside Britain.
That was up 37 percent from the first half of 2016, and put Britain in third place globally for fintech investment, behind the United States and China.
Some had worried that Britain’s vote last June to leave the European Union would see Britain lose its status as the main European hub for fintech, a sector that ranges from mobile payment apps to digital currencies like bitcoin, and one that the government regards as a key source of economic growth.
The latest figures paint a promising picture, with investment up almost 50 percent on the second half of last year in the aftermath of the Brexit vote.
That still lags 2015, when a record $676m was invested in the first half of the year and over $1.3bn billion for the entire year. But from July 1 to July 23, the sector has already raised another $155 million.
“We saw a period of uncertainty over the summer last year but I would say that by around the third quarter, things were starting to recover,” Innovate Finance’s chief financial officer, Abdul Haseeb Basit, told Reuters.
The government has identified fintech as a priority area, saying it provides 60,000 jobs and contributes around $9bn to the economy.
Investors say Britain’s prowess in both conventional finance and technology, as well as light-touch regulation, its pro-business culture and even the fact that it is Anglophone make it difficult for other centres to compete, though many as Berlin and Paris are trying.
Basit said while passporting rights which give firms licensed in one EU country the right to trade freely in any other, had been a big concern for investors after Brexit, those worries had eased. Even if Britain loses passporting rights, that would affect only 20 percent of the almost 300 startups that are members of Innovate Finance.
Globally, fintech investment for the first half of the year stood at $6.5bn. Just over half that went into US startups and $1bn into China.
