The power of clusters: driving UK fintech forward

Kane Fulton, April 23, 2021 8 min read

The Kalifa Review of UK Fintech was launched in February and identified 10 fintech “clusters” across the UK that are producing high-growth fintechs and have significant potential  for further growth and development.

To understand what is driving activity in UK fintech clusters, we spoke to founders and ecosystem stakeholders based in five hubs: Birmingham; The Pennines; Cardiff and South Wales; Edinburgh and Glasgow; and Bristol and Bath.

What does it mean to be a scaling company based in a high-growth fintech cluster? And what challenges must a cluster overcome to fulfil its potential? Read on to find out. CEO Louise O’Shea

South Wales and Cardiff

The Kalifa Review identified an emerging fintech cluster in Cardiff and South Wales with expertise in the banking, lending, and quote aggregators subsectors. Cardiff-based was the first quote aggregator to come to market in the UK almost two decades ago – and CEO Louise O’Shea is proud of the company’s influence in the market.

“We’ve always been based in Wales and the fact that three of the top four aggregators followed in our footsteps to be based here is a testament to the strength of our subsector,” says Louise. “We’ve grown a wealth of knowledge over the years so there’s certainly a lot we can share within our cluster.”

For Louise, the recognition of Cardiff’s fintech expertise is an important milestone for companies within the cluster. “The report means that as businesses, we’re able to be even more active in developing innovations and skills, while creating additional jobs in the industry,” she says. “This will only accelerate the opportunity for positive change and help position us as being world leaders in fintech.”

Louise praises the South Wales cluster’s collaboration efforts (through bodies Fintech Wales and Fintech Awards Wales, in addition to Tech Nation), alongside the region’s cultural attractions and opportunities for outdoor experience in nearby nature. But she says that finding funding is an ongoing challenge for companies in the cluster, one that is being tackled by Fintech Wales. University clusters are also vital to sustain a good pipeline of business talent, she adds.

Gareth Lewis, cofounder and CEO of Cardiff-based Delio, a digital platform for private market investment, says that South Wales’ status as an emerging fintech cluster has helped his company make vital connections.

“Due to its small size, we’ve been much more close-knit as a fintech community and there’s more chance for firms to stand out than is sometimes possible in larger hubs like London,” he says. “Instead of being a small fish in a big pond, we’ve been able to make valuable connections with local councils, the Development Bank of Wales and fellow fintechs from across the region.”

Through those connections, Delio has been supported in finding funding, building its brand, and setting up partnerships with Welsh clients like GS Verde. But in the longer term, raising the profile of fintech activity in Wales more generally is still a key challenge, Gareth says, adding, “By focusing on true homegrown success stories, we can demonstrate how these companies are rooted in Wales.”

PM Connect CEO and founder James Macfarlane


Birmingham has been identified as an established fintech cluster with expertise in the banking, lending, and payments subsectors. The report noted a growing financial services presence in the city, boosted by HSBC’s recent relocation of its UK Retail Banking Head Office from London.

“There is no doubt that fintech is thriving in general in Birmingham,” says James Macfarlane, CEO and founder of global payments company PM Connect, who sees HSBC’s move as a catalyst for attracting fintech expertise to the city. “With the recent announcement of Goldman Sachs opening its tech hub here, following in the footsteps of HSBC and Deutsche Bank – who have large tech functions in the city – it only strengthens the ecosystem and Birmingham’s rising star.”

James says that Birmingham boasts a “real burgeoning tech ecosystem”. He points to business support that is being provided by Birmingham Tech, the West Midlands Growth Company and the recently formed SuperTech cross-sector partnership, in addition to educational institutions such as School of Code that are topping up the city’s skills pipeline.

PM Connect has grown to a team of more than 60 people and is active in more than 40 territories. In the US, it has onboarded the NBA and the WWE to its service, which enables mobile carriers to generate revenue by delivering promotional content from those companies. In the UK, clients include EE, Orange and Vodafone.

James says that sourcing tech talent locally has been critical in developing his company’s international operations, which accounts for the majority of its business. “Birmingham remains the best location for us to be headquartered, offering both the tech talent to support planned growth and a vibrant place to work for our dynamic and driven team,” he says.

For all of its positive traits, Birmingham still has untapped growth potential in its fintech sector, given what might be expected from the UK’s second city, the Kalifa Report notes. James believes that now is the time for the sector to act. “It’s a big step for the Kalifa Review to recognise Birmingham’s fintech pedigree, but we must continue to drive on and further build on this momentum,” he says.

Collctiv CEO and cofounder Amy Whitell

The Pennines

The Pennines (covering Manchester and Leeds) was highlighted as an established fintech cluster with expertise in the regtech, lending, and payments subsectors. According to the report, the cluster has 135 fintechs, the highest cluster count of companies outside of London, with 13% of high growth fintechs nationally headquartered there.

Julian Wells, director at Whitecap Consulting, Fintech North and Fintech West, believes that the cluster has all the ingredients for fintech to thrive – including a vibrant digital sector and a strong educational system that produces around 70k graduates annually from 14 universities.

“The combined population across the Leeds and Manchester city regions alone is around 6 million, which reinforces the fact the cluster is an economic cultural powerhouse,” he says, stressing that fintech expertise in the north of England extends beyond The Pennines. “Fintech is gaining traction in the whole of the North – it is much broader than regtech, lending, and payments, including big areas such as retail and business banking.”

For Julian, a key strength of fintech in the North lies in many fintech firms being founded by people who have deep experience in the sector and understand its problems. He provides the example of Manchester’s strength in ecommerce, which he says is reflected in fintechs focused on payments and consumer finance. Similarly, he sees evidence of Leeds’ heritage in retail banks, building societies and the lending space being visible in the city’s finance, data and regtech companies.

Amy Whitell, CEO and cofounder of payments company Collctiv, hails Manchester as an “incredible” place to start a fintech business due to its supportive startup environment. “Manchester feels more collaborative and less competitive than London,” she says. “We’ve been able to find a non-executive director with fintech experience, and we are fortunate to have investment from an early-stage VC and an angel investor based in the North.”

Bankifi founding partner and CEO Mark Hartley praises local initiatives in Manchester, but his overall experience of the ecosystem lies in stark contrast with Amy’s. Access to capital has been his company’s main challenge, and he says that work needs to be done to “level up the playing field outside of London”.

“In all honesty, we’ve benefitted very little [from the cluster], and I really hope any future initiatives really promote regional fairness and equal opportunity, or better still are skewed towards the regions and away from the total London centricity which we have now,” he says. “Government incentives at a central and local level should make it easier and far more beneficial to start and scale a business in the provincial cities.”

Sustainably CEO and cofounder Loral Quinn

Edinburgh and Glasgow

The Kalifa Review identified an established fintech cluster between the Edinburgh / Glasgow Corridor with expertise in the regtech, payments, and wealthtech subsectors. According to the report, Scotland hosts the third largest volume of fintechs in any UK cluster and has particularly benefited from FinTech Scotland, a body that has supported the needs of its local fintech ecosystem since its formation in 2018.

In a relatively short time, Fintech Scotland’s achievements have included increasing the number of fintech SME firms in Scotland from 26 to 155 today, collaborating to establish a £22.5m Global Open Finance Centre of Excellence, and achieving formal European cluster excellence accreditation.

Sorcha Lorimer, founder at Edinburgh-based regtech company Trace, praises the support her data privacy company has received from being based in the cluster. “The central Scotland fintech community is an incredibly supportive collective,” she says. “There’s a positive backdrop here – being a fintech, you know you have a number of champions and advocates in your corner.”

Achieving market access, impact and securing funding are key challenges for Trace, which is looking to tap into community support to hire “exceptional” people with startup experience. “I think this sector does a good job of connecting fintechs to industry and flying the flag for Scotland and the UK on the international stage,” says Sorcha.

Edinburgh-based payments app company Sustainably has also benefited from cluster collaboration – especially academic and banking partners. “The payments subsector is strong in the cluster and, as the landscape evolves, I believe it will continue to play an important part,” says cofounder Loral Quinn. “Having access to capital and networks to scale is a challenge for all startups and being part of the cluster has helped us get greater visibility and success with this.”

Loral points to The Logan Review as an example of an initiative improving Scotland’s startup ecosystem. Sustainably itself contributed to Fintech Scotland’s roadmap and the Kalifa Review. When it comes to scaling challenges facing her company, Loral highlights regulatory hurdles that cannot be solved through cluster-based support.

“There needs to be stronger regulatory technical standards that are consistent and can be applied across the EU and global markets to enable fintech startups to scale efficiently,” she says. “This is a huge barrier to growth in the sector, including the 90-day re-authentication and universal API standards.”

FinTech West director Stuart Harrison

Bristol and Bath

Bristol and Bath is identified as an emerging fintech cluster with expertise in the business banking and insurtech subsectors. As noted by the report, the cluster is one of several where there is less concentration on certain fintech subsectors, producing a more even spread of companies working across all fintech verticals.

This is recognised by FinTech West director Stuart Harrison, who says that the fintech cluster in the South West has emerged from the region’s general strengths in tech, as opposed to a particular appetite for financial services.

Stuart highlights Bristol and Bath’s strength in technology innovation, skills, and knowledge. He praises the cluster’s tech talent, collaborative community, and higher education institutions – including the “world-renowned” SETsquared programme backed by the University of Bristol. “Throw a significant financial services base into the pot with close proximity to London, and it’s not hard to see why fintech in the Bristol and Bath cluster is booming,” he says.

Several companies based in the South West have participated in Tech Nation’s Fintech growth programme – including LOQBOX, Tumelo, Duesday, and Just Move In. Stuart says that increased awareness of the region’s fintech strength is helping to foster collaboration among organisations across a variety of sectors. They include local enterprise partnerships (LEPs) and collaborations between fintechs and professional services. To capitalise on this, he is keen to see fintech capabilities developed both within and beyond the Bristol and Bath cluster.

“Through the early efforts of Fintech West, subsequently highlighted by the excellent Whitecap Consulting FinTech Ecosystem Report and now the Kalifa Review, many recognise what great potential fintech has for the South West,” he says. “However, it must be the whole region, as many of the traits of the Bristol and Bath cluster are shared across the South West – particularly the technology prowess and technical collaboration.”

Community, North West, Scotland, South West, Wales, Yorkshire