In for a penny: what the world can learn from the UK’s fintech industry


I recently celebrated three years living in the UK, having moved here from Tokyo in late 2013. I wanted to see another part of the world and seek out opportunities that I might miss if I stayed home following my graduation. So I secured a visa and headed west in search of work.

As a Japanese expat I read this article in City AM with interest. The reasons Makoto Fukuhara lists for choosing to launch his fintech startup, Skwile, over here chimed with my own motivations for travelling the 5,700 miles to the UK.

A country in flux

There’s no doubting the potential Japan has to become a major technological force in the coming years. But right now its business culture is in a state of flux and still needs to adapt to new ideas and ways of working.

Research from the World Economic Forum, published last year, indicates that the problem is self-perpetuating. More than 80% of Japanese companies say they have difficulty finding qualified employees, while one in four workers feel they lack the skills required to do their jobs properly.

But my country is showing signs of addressing these shortcomings. Stanford researcher Kenji Kushida claimed recently that Japanese businesses and individuals are beginning to shift their mentality from favouring stability and corporate loyalty to prioritising innovation and creativity. And, crucially, they’re backing this up with resources.

CaFE culture

While Japan plays catchup, the UK is reaping the benefits of a rich and long-running startup culture – and fintech sits right at the heart of it. I’m a big advocate of this new wave of startups that aim to disrupt the established elite in the finance industry, so I decided to get in touch with Makoto to learn more about his startup. Skwile offers a product called CaFE (Cashflow Engine), which plugs into accounting software. It helps small businesses manage their cashflow more effectively and identify any issues long before they arise.

Help from on high

Makoto credits the UK’s “open and collaborative” culture for the success of its fintech industry. But it goes further than this. The UK government has been open in its commitment to help make the UK the “global capital of fintech” and has launched a number of initiatives to help startups flourish.

Regulatory body the Financial Conduct Authority (FCA) works closely with UK startups to help them navigate regulation. The scheme, dubbed “Project Innovate” recently announced the first batch of firms to enter its “regulatory sandbox”, a place where they can test new products and business models with consumers in a protected environment.

The FCA’s role in fostering innovation is so revered, in fact, that the organisation has been approached by the Hong Kong Monetary Authority (HKMA) to share its insights and best practices. Perhaps Japan will be next.

Government assistance is welcome and is certainly helping to grow fintech in the UK. Other factors include a tech-savvy user base in London, ample opportunity for startups to attract capital and an excellent existing infrastructure due to London’s longstanding position as a key financial services hub, according to recent research from Ernst & Young. The proof is in the pudding; the UK fintech market is worth an estimated £6.6 billion, more than US hotspots California and New York, despite UK startups receiving just a fraction of the investment.

All roads lead to the user

But innovation alone is not enough to guarantee success. UK fintech brands like Monzo, Curve and Atom Bank are succeeding because they understand the changing needs of their audience; this shift in banking habits is why fintech startups have been able to disrupt in the first place. Consumers want a new type of financial service, one rooted in trust. One that’s easy to use. One that is mobile. I’ve said before that Monzo ticks these boxes – and the startup is now approaching £1 million in transactions, having racked up 100,000 users.

Curve, a startup that syncs all your debit and credit cards into one app-enabled card, recently launched a cashback scheme and was praised in many quarters for its frictionless experience – the startup’s USP is “making life and commerce more convenient for consumers” – and its user experience (UX) reflects that.

If you aim to be a purely digital bank with no physical branches or call centres, then a smooth and intuitive UX is more crucial than ever. It’s something that Atom Bank knows all too well. Atom is dedicated to providing truly personalised experiences for each user, even down to the way they navigate the app, as explained by the startup’s Head of User Experience Nick Wiles in a recent interview.

“Even if two people open the same type of account on the same day, over time, their experiences will be different based on how the app has adapted to their needs and requirements. The requirement for us is no longer to provide, say, top-left navigation. The users are driving it through their activity. The users get a customer experience based on their activity. It’s an idea that really creates a bit of a stir until people try it.”

Contagious innovation

These exciting UK startups that place the user first are now being joined by the best the rest of the world has to offer. And that includes Japan. Real-time payroll platform Doreming, originally from Fukuoka, Japan, recently joined Level39, a London-based tech accelerator for finance, cybersecurity and retail companies. The startup is attempting to change the way those without bank accounts access their salaries by enabling them to cash them as soon as they have completed a project. This innovative and frictionless approach is designed to make life easier for businesses and the "unbanked" by creating different ways of working.

It’s this notion of new experiences that is driving fintech in the UK more than any other factor. The success of the industry is a shining example of what the UK has to offer. When you get things right at the very top, innovation can thrive – but only if the right startups are there to take advantage. The UK has certainly got that mix right; it’s only a matter of time before Japan – and the rest of the world – follow suit.

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