Britain’s digital finance industry, more commonly known as the fintech sector, has hit a multibillion-pound peak of investor interest. Banking app Revolut confirmed last week that it had raised another $800m from big investors including the Softbank Vision Fund, pushing the bank’s valuation to $33bn (£24bn). It came just weeks after Wise, the forex transfer business, listed on the London Stock Exchange at nearly £9bn. Fintech startups may struggle to be eligible for Rishi Sunak’s £375m Future Fund, launched on Tuesday, unless their technology is genuinely at the cutting edge of R&D, such as artificial intelligence. But if Revolut’s recent funding round is any indicator of wider investor appetite, promising British fintech firms will still receive plenty of interest from the private sector. “I’m very positive that we will see additional and similar success stories in the UK coming down the track,” said Janine Hirt, chief executive of the UK’s fintech lobby group Innovate Finance. British fintech firms continue to attract huge amount of international investment, second only to the US, Hirt added. According to Hirt, this is due to London’s continued strength as a financial centre where most business is done in English, its access to top tier universities, a diverse talent pool, and strong support from regulators and government. And the latest industry figures confirm investor appetite for homegrown fintech firms is only growing. Even before Revolut’s funding round was announced last week, UK fintech firms had attracted $5.7bn worth of venture capital investments through 317 deals in the first half of the year. That easily outstripped the $4.3bn secured across the whole of 2020, but also broke the $4.6bn record set in full-year 2019 by about 26%. Among them are firms that could follow in Wise and Revolut’s footsteps. Companies such as online payment firm Checkout.com, and Rapyd, a service provider for the cross-border payments industry, are among a growing list of firms on investors’ radars. Alon Kuperman, an executive director at venture capital firm and Revolut investor GP Bullhound, said the diversity of London’s talent pool, which has attracted entrepreneurs from all over the world, has driven the success of UK fintech firms. “That melting pot creates a very unique environment for innovation, where people can solve problems just based on very rich and diverse experiences,” he said. So it is no surprise that Wise and Revolut’s success began when it tackled foreign currency exchange, an issue facing foreign nationals including the company’s respective Estonian and Russian founders, he said. “On top of that,” said Sarah Kocianski, head of research at fintech consultancy 11:FS, “you’ve also got a huge historic financial centre, with a lot of financial talent, already in London.” That kind of cross-pollination means entrepreneurs can draw on the expertise of established firms, and even poach some of their former staff. “But we also have quite a lot of tech talent because of British universities like Cambridge or Imperial, where there are huge scientific and STEM departments that are well respected,” she added. Brexit had undoubtedly made it harder for entrepreneurs to move to the UK, but groups like Innovate Finance have been pushing for concessions for fintechs, like the recently announced “scale-up visa” which is meant to help growing firms hire highly skilled staff from overseas. “We’ve been working very closely with government to ensure that it is actually catering to the fintech community,” Hirt said. Regulators including the Financial Conduct Authority and the Bank of England’s Prudential Regulation Authority have also encouraged competition across financial services in the wake of the 2008 banking crash, in an effort to counter the spate of mergers and acquisitions that concentrated risk across a handful of lenders. The result was a more cooperative relationship with startups and the creation of programmes such as the fintech “sandbox”, which allows early-stage companies to test out their products for a limited number of customers before the firms are licensed, all while being supervised by the regulator. That is on top of steps to encourage greater sharing of data, through so-called open banking rules, and tech that allows payments to be cleared and transferred between banks in real time. “The regulatory sandbox, the early adoption of open banking legislation, and the Bank of England’s Real-Time Gross Settlement renewal programme are just some examples in terms of how the UK has been at the forefront in an international context in relation to supporting fintechs,” said John Cronin, an analyst at stockbroker Goodbody. Meanwhile, the Chancellor has been trying to drive reforms that would convince startups to list on the London Stock Exchange, and ensure growing firms do not abandon the UK once they are large enough to go public. They include allowing companies to distribute dual-class shares, where founders and pre-floatation investors controversially maintain the bulk of voting rights after their initial public offering. But most importantly, investors and entrepreneurs are holding out hope that the UK government secures greater access to international markets for UK fintech firms – particularly a post-Brexit EU – in a way that will make it easier for them to go global. “The less friction we have, the quicker they can scale,” said GP Bullhound’s Kuperman.