Julian Wells of Whitecap Consulting presented the strategy which has been developed in response to a national strategic review of fintech and shared the opportunity for North East growth and progress with the region's fintech community, including start-ups, higher education (HE) institutions and public and private sector businesses and sector champions.
The Kalifa Review, which identified the Newcastle and Durham areas as one of the top ten fintech clusters in the UK, showed the fast-growing sector generates £11bn of GVA for the UK each year. In response to this and with the support of key stakeholder organisations in the region, Whitecap has developed a high-level, three-year strategic plan for the region that focuses on creating more and better jobs, develops a collaborative, sustainable, growth-focused fintech hub, and fosters regional, national, and international connectivity.
An introduction to the NE fintech strategy
Julian explained that the report has identified the opportunity to create more than 2,000 new jobs in the North East by the end of 2025, taking the size of the sector’s employment to more than 7,700 jobs. In addition to new job opportunities, the GVA created by fintech is forecast to increase 11% per year, to reach £431m in 2025, and the number of fintech firms is expected to nearly double to 81 (currently 45). He set out the strategic priorities and a detailed action plan led by pillars of clear leadership, increased collaboration, and development of resources.
Before handing over to a panel session, Dawn Dunn, Digital and Tech Lead at Invest Newcastle (part of NewcastleGateshead Initiative), inspired the audience to take action and work together to make the strategic plan a reality.
“Now is the time to accelerate, grow and build on our strengths. To do that we needed a collective and defined strategy. This report doesn’t give us all the answers, it’s here to set the base for us to collectively make it a reality. The North East fintech strategy is critical to the future growth of the sector and will support the development of our international strategy and position as a leading, collaborative, and diverse fintech cluster. We have seen phenomenal growth, and this strategy will support us to define the opportunity to investors within national and international markets. This is our first step towards delivering a tangible strategy that will ensure that the sector continues to create jobs, develop talent, and attract inward investment.”
Collaboration, innovation and accountability are key to success: panel session
James Thwaites from Whitecap Consulting led a panel session to discuss the strategy report and how the region practically takes the recommendations forward.
The panel included: Paul Armstrong from Womble Bond Dickinson, Karen Elliott from Newcastle University Business School, Edward Twiddy from Atom Bank, Vince Robson from Northumbria University, Wayne Bryant from Dynamo North East and Rachel Burdis from Invest North East England.
James kicked off the session by discussing the UK as a superhub and how the region can benefit and lead the way with real leadership and collaboration but stressed that we must “carry the can” and take on the challenge. He added that it was essential that we “use our full region’s strength to create an eco-system that helps the entire sector to succeed, by creating an identity and using steering groups to collectively lead”.
The audience were keen to know more about higher education, and asked how the universities are collaborating to create a regional hub for research and progress?
Karen Elliott explained that whilst this isn’t an easy task or straightforward, the universities are working together to try and break down the barriers. “It’s a work in progress, but more collaboration is happening with projects and spin out businesses from the universities. The universities are trying to bring together businesses and academics through networks and this should drive more and more collaboration.”
Edward Twiddy added some great examples of how university spin out businesses accessing the same start-up funds are driving industrial and academic collaboration and encouraging more conversations around industrial funds.
The panel then moved on to discuss the identity of the fintech sector in the North East and how we best promote the region to develop funding mechanisms and drive inward investment.
Rachel Burdis discussed the need to not only make it clear what our assets and facilities are as part of that identity, but to put the ‘why the North East?’ front and centre to attract businesses, innovation and talent to the region. "We need to make sure this doesn’t become a ‘report’ but a steer for our eco-system and a framework to help us to succeed, a check point for us to ensure we have access to finance, understand the challenge of skills and resource and develop those quickly to allow the sector and eco-system to grow. We need to play to our strengths and regional opportunities."
Moving on to work patterns, the geographical spread of talent and the idea of a physical fintech hub or hubs in the region, the panel discussed the balance that is needed to engage talent and businesses but also offer a more collaborative space for those working in the region.
Edward Twiddy explained that any physical hub must have a real purpose and draw, going beyond a physical space for collaboration and must offer a real benefit to those otherwise working from home, which is a real trend in this sector. He added that it has to be about culture, progress and creating spaces where this strategy is able to become a reality, where we can become competitive and innovative.
James Thwaites added that the labour market and available talent is a big focus of the strategy and how we balance access to available skills and talent alongside promoting the North East as a vibrant place to work and live is key to success. We have to ensure that the North East is attractive enough to avoid talent leaving the region to work elsewhere.
As well as promoting the region as a great place to live and work we also balance workforce salaries nationally, to ensure that salaries are competitive enough to reduce the number of people choosing to work remotely from the North East for national and even global businesses.
James explored the progress already made in the North East and how the region was benefitting from fintech investment, and asked Paul Armstrong how this compares to what he sees within his client base.
Paul Armstrong discussed the growth right across the North East and how the sector has progressed. “The story of growth and diversity that the report tells is very much reflected in what we are seeing with our clients, from start-up to scale-up, the level of activity and innovation is really pleasing to see. The report is a positive step forward and the findings and recommendations will be key to success, but I do think we should applaud what the sector has already achieved and what is happening right now to drive growth.
How important will the collaboration between higher education and business be?
Co-creation was a key theme of the day, with everyone agreeing that whether it’s development of resources, building the right skills for the future or developing the right fintech university programmes, academia and business need to come together.
Karen Elliott added that success should be led by joining the dots between research, funding, academics, and research, making everything more accessible.
What can those succeeding in the sector and start-ups do to drive success and what can we learn from others in the sector?
Paul Armstrong referenced the need for everyone to give back to the sector to drive success, whether this is creating programmes to support those starting out, creating knowledge banks or asking those who’ve been through the start up journey to give back by sharing their experience of the challenges and opportunities with others starting a business.
Paul also added that professional services firms need to be willing to invest time and energy into start-up firms, something that Womble Bond Dickinson is committed to doing even more of.
Wayne Bryant from Dynamo added that we should be looking to learn from other digital and tech sectors in terms of growth and collaboration, in particular he noted that we can learn from the successes of cyber given how closely linked it sits with fintech. “We should explore what has worked well and how we take the best learnings from cyber to enhance and action what the strategy sets out.”
To round off the panel discussion speakers explored the funding landscape and opportunities for businesses to access finance.
James highlighted that a huge proportion of funding in the sector is coming from venture capital, private funding and Government schemes, given the nature of the first to market solutions and increasing number of start-ups. From intellectual property to university spin offs and funding for research, the panel explored the options available and the role of business and education in driving investment in the region.
The audience went on to ask more around new research and university spin offs and how universities can help drive more IP and patents for the sector to build further excitement and investment in the North East.
Vince Robson from Northumbria University noted that each university is in a different state of maturity when it comes to supporting student businesses to develop new research and innovations, and whilst higher education's role is very much to support businesses and ideas to grow there is a fine balance when it comes to funding. A lot of funds are business led, meaning universities can’t apply for them directly and so the university needs to support start-ups to understand the types of funding options available, such as Innovate UK and R&D funds and help them to build their business case and ideas to apply for them. The universities’ role is to support that funding ecosystem with the funds it has available, but then also do a job to help spin-offs to find their route to market and additional funding with a solid business plan.
The resounding feeling from the panel was that funding will play a fundamental role in the success of the North East fintech strategy and so we must all work together to help ideas to develop and businesses to access the right funds, but that success can’t be solely reliant on funding - accountability and collaboration in the region will be key to put us on the map for success and global inward investment.
To end the session Julian urged the North East fintech community to collaborate and lead.
The investment in fintech in the North East so far has already paid dividends, with a 58% increase in the number of firms operating in the fintech sector over the last three years, including an 81% increase in the number of fintech start-ups and scaleups, nearly a third of which are organisations that have chosen to expand their operations into the North East.
The key to successful implementation of this three year strategy will be the way the region takes ownership of the actions and works collaboratively to deliver them. The opportunity for the North East for both inward investment success and attracting new fintech and tech firms to the region is huge.
Sarah Daun, Partner at Womble Bond Dickinson spoke about the report and the role everyone has to play in the success of the strategy.
“The sector is already going from strength to strength, but the success of the fintech strategy lies in constructive collaboration and all of us at Womble Bond Dickinson and in the region have to do our part to support that. It’s about facilitating discussions, bringing the right skills, specialists and organisations together and sharing our knowledge of the region and national and global expertise to support fintech businesses and the North East community to thrive.”
“We have proud roots in the North East and strong, sector-focused teams in both digital and financial institutions, with specialists who not only understand the North East landscape but the national and global picture. Through our UK and transatlantic team, we can not only support those regional businesses looking to expand but also those exploring global growth and investment into the region or into global markets across the Atlantic."
Key regional stakeholders who supported the report includes Atom bank, Dynamo North East, Fintech North, Invest Newcastle, Invest North East England, Newcastle Strategic Solutions, Newcastle University, North East ROCU (North East Regional Organised Crime Unit), North of Tyne Combined Authority, North Tyneside Council, Northumbria University, and Sage.