A recent report by Accenture highlighted London’s position at the forefront of Europe’s FinTech surge.

It revealed that in 2013, 53% of Europe’s FinTech (which, for the record, stands for financial technology) deals and 69% of its total tech funding took place in the UK and Ireland, with London leading the way.

Though London has some fundamental advantages over other European capitals indeed, it is beginning to face competition from other cities, particularly Berlin.

London: Investment, infrastructure, expertise

One of London’s key advantages is the proximity of its financial institutions to its startup scene around Old Street. While this might seem like an obvious point, it is a major contributing factor to what has happened in the sphere of FinTech in the UK. The city’s greater share of funding and deals is the result of the maturity of this particular space compared to the rest of Europe.

Access to readily available talent, a steady influx of money and a more seasoned VC scene has spurred a crucial head start for FinTech startups in London. It has also provided them with a more solid footing that they’ve undoubtedly taken advantage of.

I’m afraid to say that groups of former consultants operating in the FinTech VC space in Berlin and Paris are, on average, not at the same level as their London-based competitors.

London simply has more VCs who have operated in this market for longer or have significant experience in the wider financial services sector. In short, they ‘get’ the FinTech space.

Another major advantage for London is the predominance of the English language as well as its historical ties to the US.

However, as Accenture pointed out, the European FinTech scene is still dwarfed by that of New York and Silicon Valley.

Unsurprisingly, a lot of US-based talent – both VC and entrepreneurial – are drawn to London because they find it easier to make the switch, or operate in both markets, as compared to other cities in Europe. As FinTech companies often need to operate on a global basis from day one, this offers London-based startups another important edge.

Berlin is beginning to make its mark

With the overall boom in Berlin’s tech scene, the city is only now beginning to wake up to FinTech. The buzz in startup activity is encouraging entrepreneurs – who may not necessarily have tons of experience in the financial industry – to take a stab at launching a FinTech startup.

Contrary to popular belief, their lack of industry expertise isn’t necessarily a disadvantage, either. Many of these entrepreneurs think differently about the sector and often come armed with creative approaches to solving problems.

The difficulty of attracting FinTech talent is also being overcome. With English becoming more widely spoken in Berlin and the German economy remaining robust, more VCs and entrepreneurs from the US are considering Berlin as a destination for their business. It’s certainly still behind the flow of expertise in London, but there are signs that inroads are being made.

The FinTech landscape in the rest of Europe

The situation in Paris, Europe’s other major tech hub, is very different. The simple fact is that the FinTech scene in Paris cannot compete. It doesn’t even seem to be on the map when it comes to interesting FinTech businesses. The reason behind this is not entirely clear, however, regulatory issues coupled with an overall smaller financial industry could be severely restricting the sector.

Scandinavia – particularly Copenhagen and Stockholm – seem to be the dark horses in the European FinTech race. There are a number of interesting businesses operating in this space, such as Klarna.

It would also be remiss to ignore Eastern Europe. Historically, the area has had a lot of developers and many of them have gained significant experience building software for US and European banks.

But let’s get back to the two cities mentioned at the beginning. Though London’s preeminence in FinTech won’t be eroding anytime soon, Berlin is taking this space very seriously and is on its way to catching up. As its market matures, the German capital will naturally attract more experience and talent to help level the playing field with London.

Featured image credit: r.nagy / Shutterstock