Speaking at FinTech North’s fifth annual conference in Manchester, chairman Chris Sier, the HM Treasury fintech envoy for England, warned of a ‘potential’ crisis for fintech amid financial turmoil in the UK. It is estimated that as much as £500million has been wiped off the UK’s stock and bonds market in 2022.
“Fintech is potentially in a bit of a crisis at the moment,” said Sier in his welcome speech to delegates. “The people that have been investing in you and flooding money into the cryptocurrency markets and into the distributed ledger markets are now burned. By quite a lot of money.
“People investing in capital markets are burned. The valuation of venture capital funds and private equity funds has fallen. They have less money to give away; they are failing. So if you’re looking to raise money right now be prepared to struggle; it’s not good.”
Despite the gloomy outlook, Sier suggests “there is huge value out there” and that investors will look to back “things that are solid”, especially those “that are provably well governed” and “mitigating risk”.
“So if you are an exciting fintech that wants to grow but is cursing, regulation, think again,” he said. “If you’re a fintech that is willing to play the game of the regulator, play the game of making sure your consumers are well protected, there is massive opportunity for you.
“If you are frothy and exuberant and talking big about your company but not talking about how you manage the risks, you’re probably going to struggle right now. Control yourselves, control the way you present yourselves. Be measured and you’ll find the money because it’s there. But it’s not there for the unconstrained growth that comes with some things.”
Sier referenced the collapse of cryptocurrency exchange FTX as an example of a failure of both governance and compliance. He added: “Compliance has a role to play and fintechs that look at compliance have a very strong role to play.”
FinTech North‘s Manchester 2022 conference took place at the University of Manchester’s Whitworth Hall on 24 November. The hybrid event attracted more than 180 delegates across the day and featured 45 speakers. It also attracted 17 companies to its fintech showcase.
Panel discussions put the spotlight on female entrepreneurship, the Manchester fintech scene, as well as research and innovation.
Peter Cunnane, director of international and national initiatives at Innovate Finance, delivered an update of the UK’s fintech status.
While Whitecap Consulting highlighted its work in partnership with key regional stakeholders for a new report focusing on the fintech ecosystem in Greater Manchester. A full report is slated for a February 2023 release.
The final panel of Fintech North addressed the lack of funding for female entrepreneurship. Heather Waters, regional eco-system manager, NatWest, revealed: “Only one in five entrepreneurs are female. The single biggest barrier is access to finance. Less than one per cent of VC investment goes to all-female teams.”
FinTech North is also part of the FinTech National Network, announced in 2019. It connects fintech hubs, such as FinTech Scotland, FinTech Wales and FinTech West, and supports financial innovation across the UK.