Why Is UK Fintech Shifting Focus To Different Countries, And What Does It Mean For Startups?

More UK fintech leaders are thinking seriously about building outside of the UK, with survey results showing growing frustration inside the startup community. For example, a survey from The Entrepreneurs Network, reported by Digit, found that only 3% of British founders believe the UK government understands what entrepreneurs need.

Just 4% said they trust Labour to understand the realities founders face, while 86% agreed Keir Starmer’s government shows little understanding of entrepreneurship.

The numbers tell a very uncomfortable truth for a country long proud of its startup scene. Digit reported that 21% of founders are considering leaving the UK to scale their businesses elsewhere. Another 67% said Britain is a difficult place to scale, 76% said raising investment has become harder, and 63% said hiring new staff is more difficult.

Why Else Are Founders Frustrated?

Those frustrations go beyond tax or paperwork – many founders say the issue is about growth capital, regulation and the cost of building teams in the UK.

The white paper Accelerating the Unicorn Landscape in UK Fintech, published by Innovate Finance and Boston Consulting Group, says the UK has built an impressive fintech sector but the issue is that it struggles to keep later stage companies at home.

The report says, “The UK has created phenomenal fintech unicorns and high growth firms that have transformed financial services for the better. The sector is also producing substantial value for investors. But to reach its full potential, and continue powering growth in the UK economy, it needs to be properly supported.”

Another thing that is contributing to this is investment behaviour. The report found UK pension funds now allocate only around 4% of their assets to UK equities, down from more than 50% 25 years ago, which leaves less domestic growth capital available for scaling fintechs

Why Is South Africa Being Spoken About?

South Africa has become a serious destination for UK fintech expansion, with Cape Town appearing repeatedly in expansion plans.

This is not a new relationship with companies like ClearScore, that have been building in Cape Town for years.

Justin Basini, Co-founder and CEO of the ClearScore Group, said, “South Africa, and Cape Town in particular, has been an important part of the ClearScore growth journey for many years. Cape Town is the first place we opened an office outside the UK, and it has played a central role in our success ever since.”

He adds, “As we invest in the next stage of growth, Cape Town is becoming our second major tech hub outside London, with the team here helping build technology that will support our future, including our agentic AI ambitions and wider platform capability. The depth of engineering, product and design talent in the city makes it the right place to build. This investment reflects our long-term confidence in Cape Town and South Africa.”

ClearScore is not alone in this because even Carrie Ramskill, chief operating officer at HGS UK, said, “South Africa, the second-largest economy in Africa, is known for a large, well-educated, digitally savvy workforce, with four universities ranked among the top 500 globally.”

“At HGS, we launched a customer experience (CX) hub in Cape Town, South Africa, a little over a year ago to support both new and existing customers. The country – and the city in particular – offers a strong combination of customer journey expertise, AI, digital transformation technology, and significant implementation experience in a high-value delivery location.”

For many UK businesses, the attraction makes sense because Cape Town does not have a massive time difference as the UK (it’s currently a one hour difference), English is a main language used in business and hiring costs are lower than London.

Matt de la Hey, CEO and co-founder at inploi, said, “The UK can also be an expensive place to hire – particularly in tech – and when you’re building a business, you’re looking for the right mix of skills, experience and cost. Increasingly, you can credibly look almost anywhere for it.”

He also said, “Cape Town earns the spotlight for a simple reason: it works.”

Is There Hope For UK Fintech?

The story is not all bad because according to the data, founders are just frustrated, they aren’t exactly defeated. It says many fintech leaders want to keep building in the UK, but need more solid conditions to do it.

The report said, “These are founders who believe in the UK, have built here deliberately, and want to continue doing so.”

The UK also keeps some strengths that still keep it at the top, for example, London is still one of the world’s best known financial centres and the Financial Conduct Authority sandbox is well respected. Fintech is still a good area for investment and talent.

Government action is also pushing with reforms such as the FCA Scale up Unit and improvements when it comes to authorisation timelines, changes to listing rules and pension reforms designed to bring in more domestic capital for growth businesses.

Jacyn Heavens, CEO and Founder of Epos Now, said, “I would double and triple down on London as the centre of excellence for fintech and technology; it is the jewel in the crown. This involves reducing visa requirements for talented people and subsidising businesses, especially in AI and technology.”

What UK businesses and investors should take from this is that building abroad no longer means abandoning the UK. Many are choosing a hybrid model: keep headquarters or commercial teams in London, then build engineering, product or customer teams in places like Cape Town, Toronto or Sydney.

UK fintech is not disappearing it’s just becoming more international because founders are following the best and easiest routes to growth.

The UK now faces a simple test and that is: can it make staying feel just as attractive as going abroad?