Financial technology, commonly known as ‘fintech’, has increasingly become a key emerging sector in the West Midlands business community.
A supportive start-up community across Birmingham and the wider region has seen new players enter the market while more established companies have opened up operations here as they see West Midlands’ potential.
BusinessLive teamed up with our sponsor NatWest to host a roundtable discussion in collaboration with SuperTech WM and the West Midlands Growth Company about the fintech sector.
We heard from key members of the community about the current trends and issues facing the sector.
The roundtable was hosted by Yiannis Maos, the founder and chief executive of Birmingham Tech, a community initiative designed to inspire the next generation of entrepreneurs, help businesses scale up and create a collaborative environment.
- Joel Blake, founder of GFA Exchange
- Ryan Cartwright, UK network senior manager (West Midlands) at British Business Bank
- Karolina Kuszowska, business development manager at West Midlands Growth Company
- David Mellor, associate director at Whitecap Consulting
- Yiannis Maos, founder of Birmingham Tech and panel chairman
- James Powell, regional enterprise director at NatWest
- Amar Rana, founder of CrediCar
- Victoria Roberts, director of fintech delivery panel and insurtech board at Tech Nation
- Hilary Smyth-Allen, executive lead at SuperTech WM
- Julia Streets, founder of Streets Consulting
- Jof Walters, co-chairman of fintech at SuperTech WM
- Josh Winfield, regional ecosystem manager at NatWest
The conversation was started by David Mellor who is associate director for Whitecap Consulting in Birmingham, an independent consultancy helping organisations analyse, develop and implement growth strategies.
His company published a report last year into the fintech sector and he said the main takeaway from it was its “fantastic potential”.
“We were always aware of the strong contribution fintech was going to make to the region simply because of the volume of organisations here but what we found as the key marker was around the start-up and scale-up businesses,” he said.
“That really gave us an indication of the health of the sector. We established there clearly was a fintech cluster already here but also significant potential in the region and more scale-ups than start-ups when compared to other regions.”
Hilary Smyth-Allen is the executive lead of SuperTech WM, a professional services tech supercluster, and also West Midlands sector policy lead at Greater Birmingham and Solihull Local Enterprise Partnership.
She told the panel: “An interesting reflection has been this perception there is not a lot going on here but that is just the internal versus the external.
“We are moving a little bit more slowly than in other regions but we are doing so with substance. If you are in this sector, you can see fintech is leading and others are following and it can show you what can happen in a decade.
“We will not be behind again on my watch. Let’s make sure we respond to the community but also ask ‘What are we missing?’ and leverage off the true assets of the business, professional and financial services sector.”
Julia Streets is the founder and chief executive of Streets Consulting, a business development, marketing and communications consultancy.
She was asked what the strategic priorities were and what trends were being seen among the businesses she consulted with.
“One is the realisation the world has shifted massively and fintech has proved its worth and value like never before and another is that organisational structures, culture and leadership have changed,” she said.
“Leadership mindsets have therefore shifted about what sort of partners you want with you. Are you looking for traditional models of investment or maybe investors who think very differently as well?
“Thinking about collaboration and growing nationally and internationally because we work very differently these days has opened people’s minds.”
Victoria Roberts is the director of the fintech delivery panel and insurtech board at public/private UK network Tech Nation.
“We are very clear there shouldn’t be a ‘hub and spoke’ model where everything comes back to London, it’s more that local clusters will be there to provide support to start-ups,” she said.
“As they start to scale, for example, a Birmingham company might want to tap into something that’s happening in Edinburgh or draw on a specialism that’s happening in Wales.
“We do still have a lot of the investment coming from London so how do we make sure there are the appropriate showcasing channels for local and regional fintechs to access that support as well?”
James Powell is regional enterprise director at NatWest for the Midlands, Wales and South West, supporting entrepreneurs to start and scale their businesses through events, mentoring and access to entrepreneur communities.
He said: “Our fintech accelerator programme was designed from our existing ‘Accelerator’ scheme in which we invest a lot in the support and development of the entrepreneurs, their mindset and their teams. We look at how we can take them to market and identify opportunities to scale and grow.
“We have between 50 and 100 businesses on each intake and they then start to form those local communities inside our hubs but also that national community of fintechs that can share best practice and ideas.
“It’s also important we keep alumni engaged and they can pay back by sharing their stories and what they have learned with those up and coming businesses.”
Run by NatWest, the Accelerator programme offers entrepreneurs various opportunities aimed at helping them scale up.
They get free office space, Wi-fi and printing, one-on-one coaching, mentors, legal and tech advice, and access to the bank’s network.
The programme lasts six months and is fully funded by the banks.
It was started to help the bank regain trust in the business community, but since then it has grown and the markers to define the programme’s success has changed.
Josh Winfield is the regional ecosystem manager at NatWest for the Midlands, looking after its eight programmes to support businesses, chiefly Accelerator for established businesses and Business Builder for new concepts and fledgling entrepreneurs.
He said: “We have to be seen to be approachable and one thing we’ve noticed in the local ecosystem is that an entrepreneur is an entrepreneur – whatever the business, there is a human being behind it.
“What we see within fintechs is there is a huge level of skill and intelligence around what it is trying to do but there are those barriers that exist for the human being and those anxieties that come with being an entrepreneur.
“We try to focus on the person as much as the business so we can facilitate those introductions and access to a network of individuals who can support business growth.
“We have been approached while we’ve been under wraps by a lot of businesses which are keen to understand what it takes to get an innovation into a corporation like ours.”
Joel Blake is the founder and chief executive of GFA Exchange, a fintech company that helps financial lenders identify which clients are and are not likely to grow to reduce risk and cost.
He was asked what was needed from an entrepreneur’s perspective to support a company through the various stages of growth.
“There’s a need for much more agility of business models and infrastructure as fintechs. If you look at it in terms of the impact of the pandemic, we really had to adapt to the continual disruption that our target market was going through.
“They didn’t have the answers themselves. That agility was essential. There has been a shift in leadership among both fintech start-ups and their target markets which is again down to trying to respond to a new world but not knowing what it looks like.”
Jof Walters is the co-chairman of fintech at SuperTech WM and the co-founder of Million Labs which provides funding, development and education to people launching tech businesses.
“It has been interesting in this region as there has been a challenge for start-up founders to knock the bung out of the bottle and get their first piece of technology to market,” he told the discussion.
“Getting funding for that part of the journey is really impossible and requires founders to slog their way around investment entities or find enough friends to help them get the technology built.
“This means we often only see people who have reached a life stage where they are well resourced and can take a gamble on building something and doesn’t encourage diversity.
“We see founders every single day and there is absolutely no correlation between a good idea and access to capital.”
Amar Rana is the founder and chief executive of CrediCar, a Birmingham-based fintech which has developed a pre-approval credit decision engine powered by AI.
He said one of the biggest challenges facing early-stage companies was industry regulation.
“Fintech is a highly regulated industry so, if we want to increase the number of start-ups versus scale-ups in Birmingham, then we need to have that regulatory expertise in place,” he said.
“If we are looking at the growing start-ups then we really need to focus on that. We need to make sure entrepreneurs can validate the regulatory aspects of their proposition but regulation normally gets in the way of innovation.”
Ryan Cartwright is UK network senior manager in the West Midlands at British Business Bank and supports the delivery of the Midlands Engine Investment Fund across the region.
He was asked how the industry ensured investment was made accessible to entrepreneurs.
“We operate in the start-up, scale-up and growth space and sometimes it’s difficult to know where to put your efforts in the region,” he told the panel.
“We create a huge amount of start-ups but there seems to be a gap in terms of how much of that translates to scale-up so the focus at the moment is there.
“It’s really difficult to direct support and funding to that whole spectrum of the growth journey. We have all the component parts, it’s just trying to bring them all together.”
Karolina Kuszowska is a business development manager at inward investment agency West Midlands Growth Company and supports companies looking to expand or relocate to this region.
She said: “Before the Whitecap report was published, we were not proactively targeting fintech companies or had a proposition for them.
“That report created a basis for us to feed that proposition and we have seen a lot going on in the region. We are now seeing a growing pipeline of fintech companies and we can proactively target them.
“We talk to a lot of people to ensure we have a compelling proposition for the fintech sector.”