Birmingham Tech Week: The rise of the West Midlands as a fintech hub

Julia Streets, CEO and Founder, Streets Consulting

Originally published on Finextra 11/10/2021

We are tremendously excited about the prospects of creating positive change that the third annual Birmingham Tech Week – self-billed as a festival of digital, technology and innovation across Birmingham and the West Midlands – is set to bring. The event, put on by Birmingham Tech, a not-for-profit community initiative, aims to raise the profile of the Birmingham and West Midlands tech scene.

The region seems to be doing alright so far. Joining the ranks of HSBC’s domestic headquarters and Deutsche Bank’s “centre of excellence”, global banking giant Goldman Sachs recently announced it was opening an office in Birmingham. The Financial Times pronounced Goldman’s decision as having “confirmed England’s second city’s rise as a finance and tech hub”.

What is surprising (as well as encouraging in terms of potential), is that Birmingham is considered as punching below its weight. Published in February 2021, the Kalifa Review of the UK fintech sector pointed out that while Birmingham held a place as one of the 10 UK clusters of strong fintech activity, it was nevertheless “below potential, with greater upside to come”. 

The Review identified a Five-Point Plan of recommendations to achieve the UK’s vision of retaining its position as a global leader in financial services. I thought it would be an interesting exercise, therefore, to use the framework of the Kalifa Review to speak to various champions from the Birmingham and West Midlands area to examine where we find ourselves seven months on from the Kalifa Review, and what still needs to be done.

Point 1: Policy & Regulation

There is already an established fintech scene in Birmingham and the West Midlands, but Hilary Smyth-Allen, the Executive Lead at SuperTech, whose purpose is to spotlight the strength of the West Midlands financial and professional services related technology base, believes there is more to do. “Our job is to stimulate innovation and support new business growth whether new entrants or tech-led service creaton. That’s our mission, but there are no silver bullets,” admits Smyth-Allen. Clusters play an important role, but how they function and deliver economic growth for the UK is challenging given the nuances of the interface of policy and regulation with geography. As she comments, “We are a leading hub within an English region, as compared to those in devolved nations. For example, the HM Treasury Envoy for England represents two established hubs, spanning three cities with a further four emerging hubs elsewhere. Collaboration is essential therefore, but so too is being relevant to your immediate community.”

Point 2: Skills

Hisham Farag, a Professor of Finance at the University of Birmingham and Director of Research at Birmingham Business School, points out that Birmingham is blessed by its first-rate education system that includes nine universities, two of which are in the top 100 universities worldwide. These young, culturally-diverse graduates provide a tier of talent that can help support financial institutions in the area. “Providing the right pool of talent and skills will be great for businesses, and great for strengthening the ecosystem for fintech in the region,” noted Farag. Further, research collaboration between the university and regional business partners is particularly encouraged. 

Mattia Parati, Academy Dean at The Payments Academy which provides educational courses to improve the knowledge and skills of all payment professionals, has a particular interest in bridging the gap between academia and industry. “What we are missing is the skills to carry over the knowledge from economic and business management graduates into the practical fintech and payments industries,” noted Parati. He feels there needs to be more of a focus on recruitment, as it is recruiting companies that can drive talent in the right direction of delivering skills into standards set by industry. 

Point 3: Investment

With a home in London and working most of the week in Birmingham, Mike Bristow, CEO and Co-Founder of CrowdProperty, decided to set-up the company’s headquarters in Birmingham. By not setting CrowdProperty’s office in London, his fixed cost base has been halved. “This means I can build a better resourced business that can invest more in building infrastructure and competitive advantage that enables us to scale quickly,” enthused Bristow. He points out that while the depth of the talent pool may not be as deep as London, there is also less demand, so he can recruit very talented software engineers directly from the West Midlands region. In addition, he believes that being in Birmingham allows the company to stand out more because there are fewer startups in the region. “We can build an attractive employer brand to excite people to come to us,” Bristow pointed out. In terms of attracting investment, Bristow believes that money is available to invest in good businesses, regardless of region. West Midlands firms need to go out, build networks and be ambitious to obtain capital. “We need to remind everyone there are great businesses coming out of Birmingham, which will inspire local entrepreneurs to say, ‘I can be like that too’.”

Farag agreed, “West Midlands is the new growth capital of the UK. Birmingham is not only the youngest major city in Europe, with nearly 40% of its population under 25, it is due to be highly connected with strong transport links upon the arrival of HS2, and has one of the largest financial and professional services sectors in the UK.”

Point 4: International

International firms might well be interested in the West Midlands area, with its 5G test bed, breadth of universities, and the amazingly deep and high-tech pool of talent. In order to drive through international collaboration, however, there is an incredible opportunity in the business attraction and tourism programme of the Birmingham 2022 Commonwealth Games, according to Smyth-Allen. “Yes, it’s a festival of sport, but it’s also a business festival with trade delegations that will allow businesses to build links with India, Australia, Canada and Singapore, in other words the beating heart of international markets,” remarked Smyth-Allen. Trading relations are part of what will help businesses to succeed, and such an international footprint will only help the West Midlands and UK plc.

Point 5: National Connectivity

Nurturing the high-growth potential of the top 10 fintech clusters is something that Julian Wells, Director of Whitecap Consulting, as well as Director of FinTech North and FinTech West, is very familiar with. “There are multiple regional clusters and communities developing across the UK, and over the past 18 months we have seen the idea of national connectivity becoming even more relevant,” said Wells. “The move to a remote working model has highlighted that geography need not be the barrier it previously was considered to be in key areas such as employment, access to market, and the ability to engage with investors. These regional ecosystems need to continue to proactively progress their own development and fly the flag for fintech regionally, nationally and internationally.”

Celebrating innovation

Birmingham Tech Week comes at an interesting time as the world is gradually opening up again after pandemic lockdowns, and face-to-face gatherings have begun to take place once again. Speaking of the effects of Covid-19 on the fintech industry, Peter Cunnane of Innovate Finance commented, “Over the last 18 months it has obviously been a very challenging time for many across the economy and wider society. During that time Innovate Finance has worked closely with the government and others to support our startups and scale-ups to ensure that the economy does keep moving, and that those opportunities for growth as we come out of this Coronavirus period are still there.”

Bristow acknowledged the importance of supporting events such as Birmingham Tech Week, as they provide local entrepreneurs with the confidence to go out there and raise capital, as well as an opportunity to work together to attract talent into the region. “The fact that Kalifa Review pointed out that the UK has more than ten percent of the world’s market share in fintech, highlights what a strategic sector fintech is for the UK globally and for the future of UK plc,” he observed. “And that cannot just be centered in London. Because if you’re not centered in London, you can resource your business better and grow better.”

The festival of Birmingham Tech Week has a lot to celebrate as the West Midlands region is well on its way to being established as an international tech hub, bringing with it the creation of more digital jobs and exciting, scalable innovation. 

Julia Streets

Julia Streets

Founder and CEO,
Streets Consulting