Report: Finance For Fintech
London Stock Exchange Group and TheCityUK publish today their first Finance for Fintech report, revealing insights into the scale, ambitions and barriers to international growth facing global fintech companies. The independent survey, carried out by YouGov, interviewed more than 400 fintech companies across eight countries (Australia, Germany, Hong Kong, Israel, Singapore, Turkey, UK & USA), all of which have had at least Series A funding rounds or above.
.@LSEplc 400+ fintech companies in eight countries surveyed on their growth ambitions, finance and regulatory needs. Our landmark report #financeforfintech @TheCityUK @YouGov #fintech #IFGS2018 https://t.co/TKMyji2ymZ pic.twitter.com/ia6PSn1051
— LondonStockExchange (@LSEplc) March 21, 2018
The report will be launched at London Stock Exchange Group’s Fintech Investor Forum today and presented at TheCityUK Eurasia Fintech Forum. This is alongside HMT’s International Fintech Conference, forming part of Fintech Week taking place across the City of London.
Dr Robert Barnes, Global Head of Primary Markets and CEO Turquoise, London Stock Exchange Group:
“The cross-border ambitions of innovative fintechs are transforming the global financial services sector. But in order to thrive, these innovators need access to long term growth capital and a supportive global regulatory environment. The UK offers both. Today’s report shows that the UK is one of the top three global markets for fintechs considering raising finance and expanding internationally. UK-based fintechs overwhelmingly see the process of raising public market funding as most straightforward compared to peers.
“Sitting at the heart of UK’s financial ecosystem, London Stock Exchange Group is the natural funding partner to a sector that is reshaping the global financial services landscape. We are proud to support these businesses throughout their growth journeys, offering them access to deep liquid pools of international investor capital for the long-term.”
Marcus Scott, COO, TheCityUK:
“The UK has positioned itself at the forefront of the fintech revolution. Its success is underpinned by the strength and heritage of the UK’s world-leading financial and related professional services ecosystem, helping to make Britain one of the best places in the world to start, grow and scale a fintech company. However, global competition is fierce and it is incumbent on industry, government and regulators to remain agile and work collaboratively to ensure the UK maintains this leadership position into the future.”
John Glen, Economic Secretary to the Treasury and City Minister:
“Our fintech sector contributes £6.6 billion to the UK economy each year, and employs over 60,000 people across 1,600 companies. As this report shows, we’re a global leader in fintech not by accident, but by design – our outstanding expertise, robust regulation and fair taxation gives us an edge above the rest, and we’re committed to ensuring that it stays this way.”
Key findings from the research:
- Fintechs are cross-border in their growth aspirations
72% plan to expand into new countries
The US (33%), China (30%) and UK (24%) are the top three markets for businesses looking to expand internationally
- Fintechs have their sights set firmly on significant growth
Companies expect to grow revenues by an average of 80% over the next three years,
Those that have reached Series D funding rounds or above anticipate achieving average growth rates of 320%
46% have long-term plans to build themselves into large privately owned businesses and 33% are aiming to float on a public market
73% believe they will need to move into or develop new market sectors in order to grow; 73% believe they will need to develop new technology to drive at least part of their expected growth
- Fintechs will continue to raise capital, increasingly through the public markets
35% say that raising finance is their top priority, ahead of R&D (34%), international expansion (31%), and sales and marketing (30%)
85% of fintech companies surveyed are very or reasonably likely to raise funds on the public markets (equity & debt) within the next three years
New York (43%), London (38%) and Hong Kong (32%) are the top three markets where fintechs would consider issuing equity or debt
- Barriers to expansion
Competition (43%) and wider economic confidence (35%) are seen as the largest barriers to growth
66% identify at least one government controlled factor, such as regulation/compliance, access to skilled staff and costs to business, including tax as a barrier to growth
- UK-based fintechs
Expect 88% growth over the next three years; higher than the average of the 8 countries surveyed (80%)
Compared to their peers in other countries, UK-based fintechs see the process of raising money through the public markets as more straightforward with fewer barriers
43% of UK-based companies identify the US as their priority market; 35% of US-based companies identify the UK as their main non-domestic market.
Source: London Stock Exchange Group
Nasdaq aims to support new markets for digital assets, cryptocurrencies and NFTs.
Regulatory reporting is an important part of MiFID II.
The offering makes it simple for firms to track their sustainable derivatives positions.
Buy side wants more efficient workflows and access to data.
Phase 5 of the uncleared margin rules (UMR) took effect from September 2021.