Dawn Dunn, Cluster Engagement Manager, 24th February 2021
February’s spacecraft landing on Mars could be the only excuse to have missed the launch of Bottlepay; a Newcastle based start-up revolutionising international micropayments through cryptocurrency.
An £11m round of seed funding and a £50m valuation gives a certain level of confidence to founder Pete Cheyne and his team, who boast renowned hedge fund manager Alan Howard among their investors. However, this impressive organisation is just one of element of the burgeoning fintech cluster in north east England.
It’s almost two years since technology network Dynamo North East, identified the region as having both the means and the motive to convene a fintech cluster in an area that was already home to global accounting software giant Sage, and Atom, the UK’s first digital only bank – which has just raised an additional £40m from existing investors.
Newcastle has some of the familiar urban delivery centres that accompany financial services including Virgin Money, Tescobank and WorldPay, but also enterprise level organizations with a strong north east heritage, such as the Newcastle Building Society who, in addition to serving its traditional customer base – acts as parent company to Newcastle Strategic Solutions. This technology arm ‘white labels’ software savings platforms to almost 20 household names, including Aldermore Bank.
Global Banking-as-a-Service provider, Railsbank, also put down roots in the north east when they acquired the business assets of Wirecard Card Solutions Ltd (a wholly owned subsidiary, but distinct legal entity of German based Wirecard AG). They acknowledge the city offers not only a wealth of payments expertise, but also an ideal location from which to operate an extensive supply chain.
But what of the disruptors, the start ups, the mavericks and the outliers? These new and exciting elements of the ecosystem are thriving. In 2020 Fintech North published the results of regional research, showing that “the north east can offer growing fintech firms a highly attractive base from which to build their future growth”, it identified the high level of support and business infrastructure available to fintechs at a formative stage of development, and highlighted it as the only region to host a cluster dedicated to the sector (through Dynamo North East).
Historically the payments industry was recognised as a steady, volume based market, with moderate profits but strong potential, particularly with the advent of open APIs. The north east remains home to Flexecard (acquired by payments giant EML in 2019), SagePay and Global Processing Services, and also Aaron Holmes, a young entrepreneur who had considerable experience in payments prior to launching Kani, a company who realized the potential of applying artificial intelligence to transactional data sets that lie behind a fintech’s fascia – bringing automation to reconciliation, reporting and other back-office finance tasks that usually take weeks – the result? Kani help fintechs and challengers launch and scale faster with confidence and accuracy in their data.
The pandemic accelerated payment processing irrevocably.
Kani was in good company, Honcho Markets launched it’s reverse auction platform, Caspian received significant investment from NASDAQ, charity payments platform Donr expanded, Community Bank software company Incuto had set up another office in Durham, and a clutch of start ups had established their first base outside of London (investors, we have your back – lower overheads).
Dynamo North East builds networks to accelerate this level of activity, which will drive growth beyond the next decade, and together with the public sector they are committed to attracting the brightest and the best into a region renowned for its lifestyle offering. There are preparations for a virtual fintech hub, Durham has a long term development strategy that features fintech, and the Local Enterprise Partnership has earmarked the sector for their ground breaking Innovation Development Programme, a blueprint designed to prime further economic activity.
The north east has two Russell Group universities, in addition to a further three offering enhanced data science and fintech undergraduate programmes. The National Innovation Centre for Data and excellent further education colleges means a strong talent pipeline and their links with local employers such as payments monoliths DWP and HMRC can only serve to grow the sector.
An increased level of activity from consultancy firms is invariably a good indication of economic opportunity, and the north east welcomes their growing number with open arms; if there is one area they are certain to be eyeing post pandemic, it is fintech.
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