UK FinTechs Seek Government Support After SVB Collapse

British FinTech startups are concerned their country has lost its standing in the financial world.

According to a Saturday (April 15) report by the Financial Times, FinTech founders say the U.K. government needs to do more to make sure the nation remains a financial center, whether that means tapping into new funding or reforming listings.

“I think everyone’s a bit jaded,” said Christian Faes, chair of mortgage lender LendInvest, which went public in 2021. “There was no doubt London was the center of FinTech [ . . .] That’s been waning for a number of years.”

The U.K. government has long called for the country to become a center for FinTechs. When current Prime Minister Rishi Sunak took office in October of last year, his ascension was met with enthusiasm among crypto enthusiasts because of his support for the “hub” plan in his time as chancellor.

“However, a lot has happened in the digital asset sector since then,” PYMNTS wrote recently, including the collapse of Silicon Valley Bank (SVB), which catered to a lot of FinTech startups.

In March, British banking giant HSBC announced plans to purchase — and invest $2.1 billion in — failed lender Silicon Valley Bank’s U.K. operations.

As the FT report notes, FinTech execs say that deal was a better option than SVB UK going out of business, though many of them are worried about a culture clash between the two banks.

And Philip Hammond, a former U.K. chancellor and chair of crypto company Copper, wondered whether HSBC could provide the support riskier early stage companies need.

“Businesses are asking themselves whether, for all the rhetoric, it will be possible for that rather distinctive culture [of SVB UK] to flourish inside a behemoth like HSBC,” he said.

James Hickson, founder and CEO at European revenue-based lender Bloom, praised the purchase in an interview with PYMNTS last month.

“HSBC is a good safe haven for depositors,” Hickson said. “It was the right decision.”

However, he asked the same question as Hammond: How does a legacy bank that was not necessarily designed with entrepreneurs in mind preserve “the energy” that a tech-focused challenger bank such SVB brought to the ecosystem?

“A challenge they’ve got is to ensure that the culture does not get destroyed in the process and that all the factors that made SVB successful, including its ties to the VC [venture capital] community, are not lost,” Hickson said.