London’s fintech scene could be a winner from the Covid crisis
We all know the Covid-19 pandemic has been, and for too many remains, a devastating time.
It’s easy to be pessimistic, too, even as vaccine rollout speeds up. Life will not go back to ‘normal’ quickly – the events of the last ten months will have profound repercussions for health services, businesses, debt and fiscal policy.
However, we have also glimpsed the potential opportunity for the post-Covid economy: the huge acceleration in technology adoption, both corporate and personal. And that’s good news for London.
Read more: Why the Chancellor is optimistic about the future of London
Anecdotally, a number of start-ups have big hiring plans in 2021, and there is pent up investment money available for the right projects. The UK retains its ability to recreate new jobs, which will be essential as the shape of the economy changes: the IMF recently predicted that tech and automation would create more jobs than it destroys.
During the pandemic, the share-prices of big tech and digital infrastructure firms around the world surged, not just because they were “Covid-proof” safe-havens in the face of low growth and flattened interest rates, but because our collective behaviours were changing.
Online shopping, food delivery apps and remote working have all existed for years, but our adoption and acceptance of them has accelerated in the last 10 months in a way that could have taken several years more.
During 2020 London was the British city with the highest rate of home-working, due to its strong presence in the services sector. The financial sector, in particular, has realised that it can spend less money on offices: even the normally conservative Standard Chartered bank is said to be considering letting nearly all of its 85,000 global workforce work flexibly in future.
Technology alone will not eradicate the choice of corporate location. Brexit may have dented some of London’s flagship activity in financial markets, but in fintech and wholesale professional services, London retains a gravitational pull due to its depth of experience, diversity of expertise and natural links to the US.
Some of the London-headquartered power names in tech and data are involved in a series of mega-mergers; trading screen aggregator ION bought a controlling interest in Acuris in 2019, the London Stock Exchange Group is still navigating the regulatory maze in its merger with Refinitiv, and, most recently, data giant S&P Global valued NASDAQ-listed but London-headquartered IHS-Markit at $44bn in a merger deal. These are likely to solidify London and the UK’s position, not erode it.
London was already a hub for many growing fintechs; the new world order will enhance London’s other natural charm, that of a global outlook. We at Tellimer continue to attract international engineering talent to work in our UK headquarters, but modern tech also allows us to work with colleagues – as well as serve clients – based all over the world.
The storm clouds of vast public debt, lockdowns, Brexit and maybe even the threat of the break-up of the UK loom above, but the rapid adoption of technology and its democratisation give the UK an opportunity to be at the front of what could be a significant 2021 bounce.