Financial tech start-ups centre stage in London

The marbled floors, luxury stores and corporate skyscrapers of London's Canary Wharf financial district aren't the typical surroundings for high-growing technology start-ups.

Yet in the heart of the British capital’s banking establishment, a cluster of fledgling companies have set up shop.

On the 39th floor of Canary Wharf’s tallest building, a co-working space (imaginatively called Level39) now houses roughly 80 start-ups primarily focused on technology related to financial services like mobile payments and banking security.

Run by Canary Wharf Group, which operates the financial district that also is home to financial giants like JPMorgan Chase and Morgan Stanley, the office space has become part of London's growing focus on financial technology, or FinTech.

As many of the banks in London have shrunk in the wake of the financial crisis, former investment bankers and information technology specialists have been forced to leave their well-heeled corporate jobs.

With limited options at other financial companies, many have turned to the British capital’s growing tech community, using their knowledge of complex financial markets and connections within the banking world to start new companies.

Started in March 2013, Level39, which charges start-ups a monthly fee to use the office, is an effort to take advantage of London’s budding reputation for financial start-ups.

Along with the co-working space, it has held hackathons for PayPal, innovation workshops for major British banks and networking events to connect its fledgling companies with London’s established financial community.

"We are really just getting started," said Eric Van der Kleij, who runs the co-working space and previously headed Tech City Investment Organisation, the government body that promotes London's wider startup community.

“FinTech is all the rage. The city’s expertise helps Britain to compete on a global basis.”

After expanding onto a second floor in the Canary Wharf skyscraper, Level39 now is trying to build on its connections within the financial community to expand into retail and e-commerce.

That includes potentially opening up the malls operated by Canary Wharf Group to tech start-ups that want to pilot new technologies and partnerships with local retailers.

Like other corporate-backed co-working offices and start-up incubators that have popped up across Europe, Level39 has tried to blend start-up culture with mainstream business, often with mixed success.

While the small tech companies get access to first-rate office operations, including panoramic views of the city’s Olympic stadium, and weekly mentoring programmes, the office feels more sterile than other working spaces in grimy East London.

The quiet, communal working areas feel more like a dentist’s waiting room than a trendy tech center, and the 200-person event space – complete with matching furniture and artwork – is reminiscent of the bland corporate offices that dominate the rest of Canary Wharf.

The start-ups must win over the local financial industry, which has often been wary to embrace new technologies like low-cost foreign exchange transfers and cheap wealth management smartphone applications that may undermine their existing business models.

"There's a realisation starting to percolate through the financial sector that it's time to change," said Van der Kleij. "From a slow start, most of the big banks have now come here for access to innovation."

Incubator
In a sign that some banks are starting to embrace London's tech scene, Barclays has teamed up with TechStars, which runs early-stage tech accelerator programmes for other large companies like Disney, to launch its own finance-focused incubator in June.

Each of the 10 companies will receive $20,000 in start-up capital, office space in East London and access to Barclays’ executives and potentially its business operations worldwide.

Greg Rogers, an American who oversees the programme at TechStars, says the programme has received applications from Britain, Europe and the United States, with a major focus on either new payments technologies or financial planning applications.

“FinTech is one of the fundamental drivers for London’s tech sector,” said Rogers. “It’s where the city has a competitive advantage.”

- © 2014 New York Times News Service