The official charged with promoting London globally as a financial services center sees Atlanta as a potential node in a network of cities sharing strategies to capitalize on “wave of innovation” disrupting the sector.
Peter Estlin, elected for the one-year term as lord mayor of the City of London — the financial district of the broader global metropolis — sees the future of what might be the world’s richest square mile focused on adapting to change rather than holding onto its 20th-century advantages.
Atlanta’s role as an electronic payments hub an emerging entry point for U.K. companies tackling the broader U.S. market makes it an attractive partner on the road to expansion and diversification.
“The UK is seen as a global leader in fintech, but the scale of its market is actually dependent on the scale of activity around the world. I regard us as increasingly having high degrees of specialism and capability, and actually huge levels of innovation, but the U.K. itself is a relatively small market,” Mr. Estlin told Global Atlanta in an interview at the Wavespace digital innovation center in EY’s Atlanta office.
Leading a delegation to Toronto, Chicago and stopping in Atlanta Friday, Mr. Estlin has sought to observe the North American scale of some targeted sub-sectors, from so-called “insurtech” to payments, where Georgia shines with 70 percent of transactions in the U.S. processed by companies operating here. He brought innovative U.K. firms along, including cross-border debit card provider Revolut, small-business finance platform Liberis and biometric authentication software company iProov.
“Clearly from a payment standpoint, Atlanta stands out,” Mr. Estlin said, but he discovered that there is more to the hub here than a presence of large companies like Worldpay, which has British roots and was recently acquired by Vantiv.
Atlanta is innovating on the education front through the Georgia Fintech Academy, which is bent on providing a qualified workforce for a sector already employing more than 30,000 people in the state.
Beyond a productive conversation with founding director Jim Senn of the academy on re-skilling workers for the modern economy, Mr. Estlin also spoke with Atlanta leaders seeking new ways to privately fund growth companies.
Atlanta’s Engage Ventures is in part backed by IntercontinentalExchange, or ICE, which is based in Atlanta but owns the New York Stock Exchange and other important markets including in London. ICE CEO Jeffrey Sprecher and Mr. Estlin talked about ways Engage might collaborate with Elite, a platform offered by the London Stock Exchange that pairs capital with scaling advice and assistance.
Part of this interaction is a realization that fostering innovation means looking at new modes of financing growth in an age of record private capital, Mr. Estlin said.
“I’m not saying IPOs aren’t a mechanism for raising finance, but they are 20th century. They are not necessarily the 21st century way of funding,” Mr. Estlin said. “(Raising funds) has all to do with networks; it’s not necessarily to do with IPOs. It has to do with creating connectivity between people, and those people have access to funds and they’re coming in horizontally, not necessarily directed through an exchange.”
Mr. Sprecher of ICE has publicly questioned whether markets as they are now will be the funding platforms of the future as arrangements like blockchain and cryptocurrency emerge. But London, of course, hasn’t abandoned traditional asset managers: Mr. Estlin was set to meet with officials from Invesco, which recently recommitted to Atlanta with a $70 million investment that will create 500 jobs at its international headquarters. (Invesco is also an Engage partner.)
Meanwhile, London is seeing a groundswell of innovation, despite the doomsday headlines about the drop in IPOs amid uncertainty around Brexit, Mr. Estlin said.
The day before his arrival in Atlanta, The Economist mused, “Can the City Survive Brexit?” while Bloomberg ruminated on how companies in a country with the “world’s fastest-shrinking stock market” are repurchasing shares at recent record levels amid tanking valuations.
The lord mayor acknowledged some banks and funds are setting up offices in continental Europe for fear of losing the “passporting” mechanism that lets them offer banking services across the European Union. That move, while slower than predicted, as benefited cities like Dublin, Frankfurt and Amsterdam. But Mr. Estlin argued that the broader restructuring of financial services around innovation is leading to more growth in London.
“We’ve got record levels of foreign direct investment and venture capital coming into the U.K., record levels of employment growth,” he said. “For every job that has gone to the continent, five jobs have come into London.”
A further spin: The impending exit from the EU is forcing London to refocus on agility.
“One of the skill sets that we’re having to develop in people is that level of dealing with ambiguity, a level of resilience, the ability to adapt and change. We’re in an environment today where we are seeing the scale of change an unprecedented level of speed, and as human beings, how are we adapting to that?”
That’s where Atlanta comes in, offering partnership opportunities like the Payments 20, a high-level conference initiated in 2017. It’s designed to get leading players in London and Atlanta collaborating to shape the future of payment regulations on cybersecurity, convenience, compliance and more. (The next meeting will bounce back to London in October.)
“Atlanta as a community is much more externally focused than perhaps some of the communities we’ve seen,” Mr. Estlin said of his rationale for stopping through. And that mindset helps communities avoid “choking themselves” by snuffing out external sources of growth.
WATCH ?: A very productive visit has come to an end! Hear some of my thoughts on the #fintech scene here in #atlanta and the opportunities to work with startups in the UK? @UKinAtlanta pic.twitter.com/GmPc6N5krm
— Lord Mayor of London (@citylordmayor) June 28, 2019
He said Atlanta companies might also benefit from using London as a platform for global growth, as some local fintech giants like Kabbage and Cardlytics have already done.
“What we said to Metro Atlanta Chamber yesterday — and we genuinely mean it — is that the U.S. is a huge market, but the significant difference in the U.K. is that London is an international market,” Mr. Estlin said.
Brexit or not, the future will be defined by innovation and connectivity rather than regulation, Mr. Estlin contended, and Atlanta and London are poised to used their existing ties and scale, along with other global hubs, to drive conversations on “21st century issues” like data, intellectual property and international taxation.
“To me, a vision for the UK is founded around two fundamental principles: We continue to use our creative energy to drive innovation, but the second is to use our history, our diplomatic capabilities and effectively our trading relationships, to create a core framework that is dealing with the rules of the road for the 21st century.”
The lord mayor was hosted in Atlanta by the British Consulate General. His visit also included stopping in at Consul General Andrew Staunton’s residence for the British American Business Council’s annual garden party.
Learn more about British fintech investment in Atlanta here: