With the world’s largest financial services sector and a booming tech sector, London is undoubtedly the capital for any fintech startup in Europe, combining the key ingredients for success: capital, talent, regulatory and government support and demographic diversity.
In 2015, investment in fintech companies around the world rocketed by 106% to US$13.8 billion through 653 deals, according to the Pulse of Fintech report by KPMG and CB Insights. London alone accounted for US$743.7 million through 50 deals.
The strength of London’s policy environment is coming from the supportiveness and accessibility of Financial Conduct Authority (FCA). Recent initiatives have allowed businesses to test out financial products and services in a proposed environment that is exempt from standard regulations.
Notably, the FCA launched over the summer the regulatory sandbox, which is designed to foster fintech innovation while remaining under the supervision of the UK’s financial regulator.
Which Startups are in the Sandbox?
In November, the authority unveiled the 18 fintech companies constituting the sandbox’s first batch.
Among the companies selected, Billon, Otonomos, Nivaura, Epiphyte, Govcoin, SETL and BitX are three ventures applying blockchain technology to varied areas in financial services.
Billon is an e-money platform based on blockchain technology that facilitates the secure transfer and holding of funds using a mobile app. BitX and Epiphyte provide cross-border money transfer services powered by blockchain technology. Govcoin, a technology provider that has partnered with the Department of Work and Pensions, is exploring the feasibility of making mobile emergency payments using blockchain technology. Otonomos offers a platform that represents private companies’ shares electronically on the blockchain, enabling them to manage shareholdings, conduct bookbuilding online and facilitate transfers. And Nivaura uses automation and blockchain for issuance and lifecycle management of private placement securities.
SETL provides a smart-card enabled retail payment system based on its OpenCSD distributed ledger technology. The company has recently raised US$39.5 million from angel investors, according to Bloomberg.
In November, SETL, Deloitte and Metro Bank successfully tested a new contactless payment card that enables retail payments to be processed and settled almost instantly by using blockchain technology. The car is expected to go into commercial product by the end of 2017.
Blockchain ventures are thriving in the UK, thanks to its financial regulator. “London is a financial center for fintech, and regulators get enormous credit for that,” Peter Randall, CEO at SETL, told Bloomberg.
Epiphyte, which moved from San Francisco to London, said the decision was influenced by the FCA’s welcoming approach toward fintech.
According to Edan Yago, CEO of Epiphyte, the FCA has “a better understanding of how to drive innovation than other regulators. Sandbox or no, the regulation in the UK was superior.”
Similarly to Epiphyte, Italian startup Euklid plans to move its headquarters to London, naming the “lighter regulatory environment” and large pool of investors.
Originally founded in July 2015, Euklid’s goal is to create a completely autonomous and transparent investment bank run by artificial intelligence and that does not charge clients management or entry fees of any kind.
The startup selected London’s Level39 as its new center of operations where it will implement its international strategies.
Last month, British state-owned Royal Mint announced a new partnership with Chicago-based CME Group to build a gold bullion trading market using blockchain technology. The platform, set to launch in 2017, will see the Royal Mint issue Royal Mint Gold (RMG), a digital record of ownership for gold stored at a bullion vault storage facility. It intends to disrupt the way traders and investors trade, execute and settle gold, providing greater efficiency, speed and lower operational costs.
London Blockchain Week 2017
London Blockchain Week in January 2017 will dedicate an entire week to blockchain and distributed ledger technology. On January 20, the Blockchain Week will kick off with the Hack-The-Block Blockchain Hackathon which will run until January 22. The challenge will focus on using blockchain technology in practical solutions.
On January 23 and 24, the Blockchain Conference will cover the latest trends and will feature presentations from top industry experts. Topics will include smart contracts, Ethereum and BigchainDB. Blockchain Week will finish on January 25 and 26 with two workshops. (Fintechnews Readers will get 20% Discount with Code “FTSW”)
Featured image via Pixabay.