The challenges facing Welsh fintech – and the opportunity ahead

Cardiff could become a magnet for innovative businesses, says Koo Aseeley, Partner at Dow Schofield Watt’s Corporate Finance team in South Wales.

Fintech has been one of the highlights of the Welsh economy in recent years. The industry has its roots in the region’s existing financial services firms, in particular UK market leaders such as Admiral and, which have spawned a new generation of up-and-coming fintech businesses such as Delio, Shipshape and Acquis.

Its success is in part due to the funding and support from a range of different agencies. Fintech Wales provides a supportive ecosystem while the Development Bank of Wales, the Innovation Investment Capital fund, Swansea Bay City Deal and local angel networks have all helped to nurture the industry’s growth.

However, the industry still has challenges to overcome. In our experience, there are two key barriers to growth:

  1. Finance

Access to finance remains a challenge for early-stage fintechs. With limited opportunities to raise funds locally, many are forced to look outside of Wales for investment. Existing funders are doing a great job, but if the local industry is to continue growing, a wider range of VC investors with a local presence is needed, as in other growing cities such as Manchester and Birmingham.

The launch of the £130m Investment Fund for Wales (IFW) will go some way towards plugging the funding gap, and will attract co-investment from other sources, introducing new investors to the potential within the region.

  1. Expertise

Another key challenge is that fintech start-ups often lack the ability to tell their business growth story in a way that inspires the confidence of investors. Suitable professional support is the key to overcoming this, so it is heartening to see the ongoing growth of the advisory community in Cardiff. The breadth and depth of local expertise will support the growth of the fintech sector, amongst other sectors, in the future.

Despite the challenges, we believe that Wales – and Cardiff in particular – now has a stronger infrastructure for fintech start-ups than most UK cities. Cardiff is a fast-growing city that offers a skilled workforce, much lower operating costs than London and a high quality of life. We believe that there is a great opportunity not only to develop our local fintech industry but also to attract new businesses from outside the region and put South Wales firmly on the map as a leading fintech hub.

Find out more about funding options for Welsh businesses at Investment Fund for Wales, or if you are a Welsh start-up in the fintech space, looking for guidance in navigating these challenges and securing funding, send a message to Koo in the contact form below. Our experts at DSW Corporate Finance have a deep understanding of the local ecosystem and can provide the support you need to thrive.