During the third quarter of this year, challenger banks Starling and Monzo both acquired office space in Cardiff city centre: Starling Bank took 14,000 sq ft of Grade B space at Brunel House, its first letting in Cardiff, and Monzo Bank signed for 6,000 sq ft of additional Grade A space at 2 Kingsway.

Monzo Bank’s original decision to move into Cardiff in 2017 successfully put the city on the map as a potential fintech hub for both established and start-up firms. Starling Bank’s decision to follow Monzo indicates that a new wave of fintech firms could now be on their way into Cardiff, presenting new and exciting prospects for the city’s economy.

Challenger banks have changed the face of digital banking in recent years: without physical branches they use the ease and accessibility of online banking to secure customers, as well as generating intelligent reports on spending habits to offer savings tips and acting as a digital financial advisors.

Both Monzo and Starling have been around for less than six years and have risen rapidly during that time. Monzo currently has over 2 million customers and Starling is expecting to reach 1 million customers this year.

Starling Bank will soon open its first office in Cardiff, which will be its third UK location after London and Southampton, with plans to expand further into Europe. The online only bank which launched in 2014 is currently recruiting for a number of roles in the city, including researchers, product designers and data scientists. In October 2019 it raised £30 million of venture capital in a deal lead by Merian Chrysalis investment. The funding will support increased investment into the bank enabling it to accelerate its Europe expansion.

Monzo Bank, meanwhile, currently employs in excess of 150 people in the city, but this expansion will see that number rise to over 300 within the next few years. Monzo’s expansion was helped along by nearly £1 million in backing finance from the Welsh Government. Monzo considered a number of alternative locations within the UK as well as overseas before settling on Cardiff.

The Welsh Government’s decision to assist Monzo’s move into the city indicated that council leaders may be keen to reach similar deals, attracting other fintech firms to Cardiff. There are many examples internationally of cities that have become known as hotspots for tech firms due to government support attracting companies whose presence then attracts similar companies. Once there are a few firms in an area, others follow and clusters are formed.

One example of this can be seen in Montreal where a video game cluster was formed in 1997 after subsidies were offered to any gaming company contemplating moving to the city. Today Montreal is known as a global hotspot for developing video games – further indicating why Cardiff could easily become the new UK hotspot for the fintech industry.

Cardiff is expected to see total GVA growth from the insurance and financial services of 4.2 per cent over the next five years rising to 14.3 per cent over the next 10. This demonstrates the wider benefits from the growing financial service sector in Cardiff, so we hope – and expect – to see it go from strength to strength in the coming years.

Further information

Read more: Spotlight: Cardiff Offices