With a thriving scene of financial companies in the North East and a wealth of support mechanisms in place, the region is perfectly placed to build a fintech business and there’s no longer a need to be based in London, writes Aaron Holmes, CEO and Founder of Kani Payments.
Northshoring can be defined as a business moving all or part of their operations from the South to more cost-effective locations in the North. With typical business hubs like London coming with astronomical costs for businesses large and small alike – and with new economic pressures driving those costs up even further – more and more companies are looking for alternative industry hotspots to relocate or start their business in.
One clear example of this is the UK’s fintech industry. When you think of UK fintech, your mind likely goes straight to London. But Newcastle has put itself on the global fintech map and is fast becoming one of the most exciting and appealing locations for dynamic financial services and fintech players.
Driven by a rich heritage in tech development and lower cost business conditions, Newcastle is proving to be a major pull for start-ups. Regional fintech hubs like these are all helping the UK to attract record levels of investment, with a massive £2.4 billion in equity funding secured just in the first quarter of 2022 alone, on the back of a record year for fintech acquisitions in 2021.
And, having built my own company from my Northern hometown of Newcastle upon Tyne, I strongly believe that you don’t need to be based in London to make it in fintech – with the right disruptive idea, budding firms can make it anywhere.
How Newcastle established itself as the biggest fintech hub outside London
Newcastle has been the home of a thriving financial economy for generations. The city is home to some well-known names in UK financial services and technology, like Newcastle Building Society, Virgin Money (formerly Northern Rock), and software giant Sage, the UK’s second-largest technology company.
Newcastle’s historic financial services market has helped to create what is now a thriving fintech ecosystem – drawing from a wide range of technology and data skills, professional services, and a strong support environment. It is also being driven by the lower cost of doing business; the convenient location between the existing finance hubs of London and Edinburgh; a diverse pool of talent; and an existing reputation for tech and data research, the region is massively growing its roster of fintechs.
Newcastle and the wider North East area have long been hotly tipped as the places to be for operational fintechs, thanks to Newcastle’s reputation as a UK Science City – which boasts four national centres of excellence specialising in big data, energy, ageing and marine science, and two world-leading universities. It is also now the best represented region outside of London for Tech Nation’s Fintech Growth Programme initiative, and was even named as an emerging fintech hub in the 2021 Kalifa Review of UK Fintech.
With the North East Fintech Strategy 2022-25 from industry analysts Whitecap Consulting now published, the growing importance of the area to the UK’s fintech industry is abundantly clear and the success of its companies demonstrates that you don’t need to be based in London to make a mark.
The North East comes with a host of incentives for businesses
The North East’s many economic and social advantages are also fresh incentives for organisations in the area to ramp up skills training relevant to fintech companies. We’ve got a critical mass of fintech firms in the North East and local infrastructure that can support businesses to grow and put graduates in jobs.
Local universities such as Northumbria University and Teesside University have even started fintech courses, which will be a strong pull for people to the region, in turn supporting new businesses as they grow.
I believe that businesses across the North need to collaborate, not compete, and learn from other regions and organisations so that our post-Covid-19 economy can come back even stronger. What’s more, the fintech scene is only going to accelerate – and I’m proud that my company, Kani Payments, is in a really strong position to be a key part of that.
A strong Northern economy is critical for Kani Payments, its employees and the wider industry. Named with a nod and a wink towards the “canny” Newcastle term, and which also means to be good with money, we are a software as a service (SaaS) platform which exists to reduce payments data complexity. I currently lead Kani from its Newcastle upon Tyne head office and am an enthusiastic supporter of the North-East fintech hub.
Leading by example
Kani’s objective is to make life easier for disruptive fintech and payments businesses, by giving them a system that’s capable of ingesting data from any company that they work with in the payments ecosystem, and giving them the tangible outcomes that they need. We take raw file data, which is very difficult for a human to interpret and figure out what’s going on, and we translate it into a much more understandable format.
We also have a business support layer that helps fintech businesses better understand the complex payments ecosystem through payment reconciliation technology and upskilling in-house finance teams.
Supporting the growth of the Northern economy will also help to solidify the future of our sector in the North East and ensure that me and my team can continue to help companies all over the world – from our small corner of the globe. In just under four years, Kani has already reconciled over €15 billion in transactional payments data for our customers, and our success is taking us global.
We now work with fintechs, challenger banks and payment players all over the world to disrupt decades-old data reconciliation processes. I’m proud to say that my company is a fintech success story – and I hope that we can use our growth to guide other companies on a similar path.
I want to give back to the area that has given so much to me by creating jobs and opportunities that stimulate further growth. In our own way, we’re contributing to the growth of Newcastle and the North East as an area ripe with opportunities for dynamic fintech businesses.
Clearly, the North East has an incredibly bright future ahead, and it’s a real privilege to play a part in the region’s upward trajectory. I am confident that our region will continue to have a bright fintech future, driven by the support of organisations such as Dynamo North East, Sunderland Software City, Invest Newcastle, Innovation Centre for data and Newcastle University, as well as companies like Kani Payments.
In this way, I am confident that we can inspire other fintech entrepreneurs to turn their ideas into reality, and showcase that you don’t need to be down south to go global.