Formed in 2019, FinTech Wales is an independent membership association and champion of the FinTech and Financial Services industry in Wales. Sarah Williams-Gardener, CEO, FinTech Wales, shares the areas they are nurturing to ensure the continued success and development of the Welsh FinTech sector.
Wales is one of the most attractive UK destinations for FinTechs, encompassing digital banking, wealth management, crypto, cybersecurity, payments, B2B services, financial planning, InsurTech and more.
Over 16,000 people are already employed in FinTech in Wales, which is set to grow significantly over the forthcoming years and our recently released FinTech in Wales 2022/23 market report found a 300% increase in investment, with £53 million in publicly announced investments up to October 2023.
The region benefits from a longstanding tradition in financial services, with a cluster of established banks and financial institutions operating here. This offers a supportive ecosystem and a skilled workforce for FinTech companies to leverage. Notably, this has also attracted challenger banks such as Starling, Monzo and Tandem to scale their operations in Wales.
Wales is also extremely well-known within the InsurTech and aggregator space. Industry pioneers like Admiral, Confused.com, Go.Compare and MoneySupermarket have paved the way for other FinTechs, particularly within motor insurance, to enter the market and flourish. The presence of these new and established successful companies has facilitated various national and international partnerships for Welsh FinTechs, as highlighted in our latest report.
Another flourishing sector within the Welsh FinTech ecosystem is ‘FinTech for Good’. We’re seeing significant effort from Welsh FinTechs challenging existing offerings within finance from around the world and providing fantastic tech solutions to help people improve their financial circumstances and quality of living.
Wales is also highly regarded for having one of the most inclusive and collaborative ecosystems in the world. Inspirational leaders within this community firmly believe in the power of collaboration and support. They also place great emphasis on nurturing talent emerging from Wales’ world-leading universities and education providers, making investments to develop the skills necessary for future growth. Whilst there’s still work to be done to ensure there is enough skills and talent to support the industry to continue to thrive, industry and academia are working together to create solutions for now and in the future.
Furthermore, the commitment shown by entities like Cardiff Capital Region, the Welsh Government and others in recognising FinTech as a priority sector also highlights its significance of this sector to the country and the belief in its potential for future expansion, which is essential for creating talent, attracting investment and supporting startups and scaling FinTechs in Wales.
Wales has also made substantial investments in its digital infrastructure to support technology-driven initiatives. As a result, high-speed Internet connectivity and advanced technology platforms are readily available, creating an environment where FinTechs can thrive. Additionally, the proximity to major financial hubs like London and Bristol presents opportunities for collaboration and access to potential clients and investors.
However, to ensure the continued success and development of the Welsh FinTech sector, we must emphasise the importance of attracting more funding to support future growth, maintaining government support and further developing the skills required. Furthermore, fostering collaboration with adjacent industries and key digital infrastructure providers is a priority.
A modern digital IT infrastructure
The current and foreseeable economic climate, where the focus of many firms has had to switch from growth to profitability, only serves to underline the strategic importance of having modern IT systems in place. Artificial Intelligence (AI) and Machine Learning (ML), for example, present major opportunities to FinTechs, helping businesses run more efficiently and compliantly while better serving the customer. But with this comes the challenge of ensuring the region offers FinTechs sufficient access to resilient and scalable digital infrastructure capable of supporting these demanding and often power-hungry technologies.
Moreover, the handling of huge volumes of sensitive financial data requires specialised, highly compliant IT. Ongoing regulatory updates, such as those related to e-money, anti-money laundering and capital requirements, require firms to be agile in adapting their IT systems to comply with changing laws. For example, the Consumer Duty regulations introduced last year requires FinTechs to ‘deliver good outcomes for retail customers’. This means the regulators will not tolerate IT outages that harm consumers, whether that’s leaving them unable to access products and services, leaking their data or something else. Given the heavy penalties the regulators can enforce, the Duty has put extra pressure on FinTechs to ensure their IT systems and infrastructure providers are 100% reliable.
Colocation and cloud
With so much at stake, we believe more FinTech companies must regularly evaluate whether it remains affordable or indeed best practice to keep all their IT systems on-premises. Increasingly, they will need an adaptable IT infrastructure to cope with future expansion, with the flexibility to adapt quickly and offer bespoke design, not to mention satisfy ever-growing IT and hybrid cloud power requirements. There are other risks too: fire, flood, power outages or the fallout from a physical or cyberattack. All can take vital systems offline resulting in loss of business opportunities, customers, reputational damage and even the potential of hefty fines. Equally, connectivity and easy access to high-speed low latency fibre connectivity is now more essential than ever, for ensuring a highly responsive end-user experience.
We see fit-for-purpose data centres as pivotal to the future growth and success of the FinTech industry in Wales. As an alternative to remaining in-house, IT servers and equipment can be outsourced to third party ‘colocation’ and cloud hosting data centres. For example, to a well-established provider such as Vantage Data Centers in Cardiff. Backed by service level agreements, modern fit for purpose facilities such as these can offer the critical infrastructure, security and round-the-clock support services necessary for keeping FinTech firms’ services continuously available – leaving them to focus on their core business.
Major data centres are also vital to interconnecting the region UK-wide and internationally, helping to create and support an ecosystem of telecom carriers and network service providers. Major providers such as Neos Networks and Virgin Media 02 – who are increasingly active here – together with the availability of high-quality data centre facilities are intrinsic to Wales attracting many more financial organisations, both from London and much further afield.
Overall, the FinTech industry in Wales has experienced significant growth, secured stable employment, made advancements in various sectors and has the potential for significant international expansion. Wales will continue to firmly establish itself as a leading global hub for FinTech innovation, setting the benchmark for excellence in the industry.