A recent article in CityMetric highlighted how Sheffield’s economy is lagging behind the rest of the country’s. In particular, it doesn’t have a vibrant financial sector, which most modern cities with a strong economy do. Money makes the world go round, and a strong financial sector is essential to stimulating growth in the broader economy. The fastest growing part of the financial sector is fintech, and Sheffield should develop a fintech sector now.
The article, by Jonn Elledge, mentions several metrics where Sheffield is ranked at the bottom of the table. The city ranks poorly in terms of new start-ups, patent applications, wages, and several other measures. A high percentage of the workforce works in the public sector.
To build a strong financial sector, the city needs to attract capital. As the article points out, education is not the problem. Sheffield University offers courses in finance up to Masters level so there is no shortage of finance graduates.
The city needs to take advantage of the fact that it has plenty of well-qualified finance graduates. To do this, it needs to encourage entrepreneurship, attract entrepreneurs in the fintech industry, and attract venture capitalists and other investors.
Certain parts of the financial sector are almost 100 percent digital. For instance, many of the companies that offer in trading markets such as CFDs, Forex, and other instruments offer these services exclusively online. These companies don’t need a presence everywhere they operate.
However, the growth area within the financial sector is fintech. Fintech companies aim to solve inefficiencies in the financial sector using technology. Most of them are small start-ups, backed by venture capital firms, and they also happen to employ graduates with qualifications in finance and computer science. Sheffield has the graduates but needs the venture capitalists and entrepreneurs.
Birmingham has managed to build a thriving fintech scene around the fact that accommodation is more affordable than it is in London. Sheffield can do the same if it can offer incentives to investors and entrepreneurs.
Of course, the notoriously slow broadband doesn’t help matters. This is the first problem the city will need to address. No city will be attractive to tech or finance entrepreneurs if it can’t offer competitive broadband infrastructure.
Next, it needs to develop technology hubs with a focus on financial start-ups. The city will need to subsidize rentals for the hubs to get the ball rolling. And, then, the city will need to launch a marketing campaign to emphasize Sheffield’s lower cost of living and the number of well-qualified graduates in the city.
Wherever venture capital goes, entrepreneurs will follow. The city can also attract VCs by providing low-interest loans to those funds or by matching their investments. This will entail the city taking some risk but potential rewards could be significant. The point is not to support the entire industry but to create an entrepreneurial culture that attracts other investors and entrepreneurs.
Cities compete for the fastest growing industries and those industries can stimulate an entire economy. The best way for Sheffield to improve its economy is to attract the companies in the fastest growing industry in the world – fintech.
