• At Kemp Little, we are known for our ability to serve the very particular needs of a large but diverse technology client base. Our hands-on industry know-how makes us a good fit with many of the world's biggest technology and digital media businesses, yet means we are equally relevant to companies with a technology bias, in sectors such as professional services, financial services, retail, travel and healthcare.
  • Kemp Little specialises in the technology and digital media sectors and provides a range of legal services that are crucial to fast-moving, innovative businesses.Our blend of sector awareness, technical excellence and responsiveness, means we are regularly ranked as a leading firm by directories such as Legal 500, Chambers and PLC Which Lawyer. Our practice areas cover a wide range of legal issues and advice.
  • Our Commercial Technology team has established itself as one of the strongest in the UK. We are ranked in Legal 500, Chambers & Partners and PLC Which Lawyer, with four of our partners recommended.
  • Our team provides practical and commercial advice founded on years of experience and technical know-how to technology and digital media companies that need to be alert to the rules and regulations of competition law.
  • Our Corporate Practice has a reputation for delivering sound legal advice, backed up with extensive industry experience and credentials, to get the best results from technology and digital media transactions.
  • In the fast-changing world of employment law our clients need practical, commercial and cost-effective advice. They get this from our team of employment law professionals.
  • Our team of leading IP advisors deliver cost-effective, strategic and commercial advice to ensure that your IP assets are protected and leveraged to add real value to your business.
  • Our litigation practice advises on all aspects of dispute resolution, with a particular focus on ownership, exploitation and infringement of intellectual property rights and commercial disputes in the technology sector.
  • We have an industry-leading reputation for our outsourcing expertise. Our professionals deliver credible legal advice to providers and acquirers of IT and business process outsourcing (BPO) services.
  • We work alongside companies, many with disruptive technologies, that seek funding, as well as with the venture capital firms, institutional investors and corporate ventures that want to invest in exciting business opportunities.
  • Our regulatory specialists work alongside Kemp Little’s corporate and commercial professionals to help meet their compliance obligations.
  • With a service that is commercial and responsive to our clients’ needs, you will find our tax advice easy to understand, cost-effective and geared towards maximising your tax benefits.
  • At Kemp Little, we advise clients in diverse sectors where technology is fundamental to the ongoing success of their businesses.They include companies that provide technology as a service and businesses where the use of technology is key to their business model, enabling them to bring their product or service to market.
  • We bring our commercial understanding of digital business models, our legal expertise and our reputation for delivering high quality, cost-effective services to this dynamic sector.
  • Acting for market leaders and market changers within the media industry, we combine in-depth knowledge of the structural technology that underpins content delivery and the impact of digitisation on the rights of producers and consumers.
  • We understand the risks facing this sector and work with our clients to conquer those challenges. Testimony to our success is the continued growth in our team of professionals and the clients we serve.
  • We advise at the forefront of the technological intersection between life sciences and healthcare. We advise leading technology and data analytics providers, healthcare institutions as well as manufacturers of medical devices, pharmaceuticals and biotechnological products.
  • For clients operating in the online sector, our teams are structured to meet their commercial, financing, M&A, competition and regulatory, employment and intellectual property legal needs.
  • Our focus on technology makes us especially well positioned to give advice on the legal aspects of digital marketing. We advise on high-profile, multi-channel, cross-border cases and on highly complex campaigns.
  • The mobile and telecoms sector is fast changing and hugely dependent on technology advances. We help mobile and wireless and fixed telecoms clients to tackle the legal challenges that this evolving sector presents.
  • Whether ERP, Linux or Windows; software or infrastructure as a service in the cloud, in a virtualised environment, or as a mobile or service-oriented architecture, we have the experience to resolve legal issues across the spectrum of commercial computer platforms.
  • Our clients trust us to apply our solutions and know-how to help them make the best use of technology in structuring deals, mitigating key risks to their businesses and in achieving their commercial objectives.
  • We have extensive experience of advising customers and suppliers in the retail sector on technology development, licensing and supply projects, and in advising on all aspects of procurement and online operations.
  • Our legal professionals work alongside social media providers and users in relation to the commercial, privacy, data, advertising, intellectual property, employment and corporate issues that arise in this dynamic sector.
  • Our years of working alongside diverse software clients have given us an in-depth understanding of the dynamics of the software marketplace, market practice and alternative negotiating strategies.
  • Working with direct providers of travel services, including aggregators, facilitators and suppliers of transport and technology, our team has developed a unique specialist knowledge of the sector
  • Your life as an entrepreneur is full of daily challenges as you seek to grow your business. One of the key strengths of our firm is that we understand these challenges.
  • Kemp Little is trusted by some of the world’s leading luxury brands and some of the most innovative e-commerce retailers changing the face of the industry.
  • HR Bytes is an exclusive, comprehensive, online service that will provide you with a wide range of practical, insightful and current employment law information. HR Bytes members get priority booking for events, key insight and a range of employment materials for free.
  • FlightDeck is our portal designed especially with start-up and emerging technology businesses in mind to help you get your business up and running in the right way. We provide a free pack of all the things no-one tells you and things they don’t give away to get you started.

Focus on fintech

Fintech in the UK

Financial technologies, otherwise known as fintech, are experiencing a boom of innovation and development. The UK is uniquely placed to grow this booming sector, due to London’s position as a world-leading financial centre and trading hub, a supportive approach from the financial services regulator, the Financial Conduct Authority (“FCA”), and good availability of finance – a fact not lost on the Government, who have singled out the fast-growing sector as one for growth, expansion and investment (see “Financing for fintech companies” below).

Whilst some might consider the UK weaker in “traditional” fintech businesses (these “facilitators” are larger technology firms, already well established within and supporting the financial services sector), emergent fintech companies are growing from strength to strength. These “disruptors” are typically small, growing, innovative firms bringing financial services directly to consumers using new technology. Whilst traditional fintech players tend to focus on providing, supporting, and maintaining the existing infrastructure, emerging fintech players tend to work around the existing financial service providers and disrupt the more traditional business models.

Reports commissioned by UK Trade & Investment (“UKTI”) identify four key sub-sectors within fintech – payments, software, data and analytics, and platforms. According to the UKTI report, the estimated annual revenue generated across the sector as a whole is £20 billion, with the estimated market size of the payments sub-sector accounting for half of that. The payments sub-sector continues to grow and the Government has introduced a new payment system regulator to ensure that the existing payment system, operated by established players in the market, is open to new companies – the intention behind the new regulator is to remove one of the barriers to entry to this sub-sector and create further opportunities for new entrants (see “Regulatory developments for fintech” below). Significant players in the payments sector include Transferwise, GoCardless and Astropay.

Although currently the smallest sub-sector, platforms still have huge growth potential, with several unique platforms having developed in peer-to-peer lending, such as Funding Circle, personal wealth management, like Nutmeg, and trading. Data and analytics is also developing significantly, in particular in the insurance market – for instance, approximately a third of the UK population now use financial aggregators to choose their car insurance.

Financing for fintech companies

According to a recent Accenture report, fintech investment in the UK and Ireland was up 136% to US$623 million in 2014, and the UK and Ireland accounted for 42% of European investment.

Access to finance is a perennial problem for start-ups and emerging industries – however, there are many different sources of funding available to fintech businesses in the UK. Several accelerator and incubator schemes have emerged in the UK, such as Level 39, Startupbootcamp and Techstars, which enable young companies to grow by providing a network of contacts, mentorship and, often, office space, to enable them to seek initial funding.

Venture capital and private equity funds are also investing in the fintech space – one noticeable development is that established financial services firms are investing in young companies in the hope that it will generate innovation for their own businesses. Over the past five years, American Express, BBVA, HSBC, Santander and Sberbank have all developed investment vehicles, and in February 2015 AXA, the insurance and investment management firm, launched a €200 million fund to act as “an accelerating force for start-up companies” in its areas of business.

There is also lending available to smaller businesses through various venture capital funds supported by the British Business Bank, set up by the UK Government, such as the Business Angel CoFund, the Enterprise Capital Funds and the VC Catalyst Fund.

Regulatory developments for fintech

Project Innovate

In June 2014, the FCA launched Project Innovate, an initiative aimed at encouraging innovation in financial services by supporting innovative businesses. The main focus of the project is the Innovation Hub within the FCA’s policy team, who are dedicated to helping innovator business understand the regulatory framework and how it applies to them, assisting in applications for authorisation to ensure that the business understands the regulatory regime, and providing support for up to a year after the business is authorised. 

Since the Innovation Hub’s inception, it has provided or is in the process of providing ongoing assistance to 91 firms as their requests for support met the eligibility criteria. The regulator has provided informal steers in 34 cases and also received 137 requests for support that did not meet the eligibility criteria. Firms either received limited support or an explanation why the FCA could not help in a particular instance.

Amongst the initiatives in train within Project Innovate:

  • In June 2015, the FCA published a paper calling for input on “regulatory barriers to innovation in digital and mobile solutions.” The FCA is calling for views from businesses who seek to use digital or mobile solutions in the provision of financial services including from innovator firms (both authorised and new entrants), accelerators, telecom businesses, software firms and technology businesses. The FCA want to hear whether there are any specific rules or policies that cause barriers to innovation and whether there should be any rules or policies that should be introduced to facilitate innovation.
  • Later in 2015, the FCA will consult on fresh guidance on how businesses can outsource data storage to the Cloud, while remaining compliant with regulatory requirements, in response to concerns raised by a number of innovative businesses as they have sought to design efficient and cost-effective business models.
  • The FCA is exploring the feasibility of regulatory “sandboxes” – safe spaces in which businesses, both authorised and unauthorised, can “experiment with innovative products, services, business models and delivery mechanisms without immediately incurring all the normal regulatory consequences of engaging in the activity in question.” The results will be published in autumn 2015.

Payment Services Regulator

The largest sub-sector of fintech, payments, has also seen a change in regulatory approach. The Payment Services Regulator (the “PSR”), set up on 1 April 2015, regulates the payment services industry. The PSR’s main objectives are to promote effective competition in the markets for payment systems and payments services, promote the development of innovation in payment systems and payment services and ensure that payment systems are operated and developed in a way that considers and promotes the interests of service users.

The PSR Policy Statement sets out how the PSR will regulate the payment systems industry – it also contains Terms of Reference for two market reviews relating to the supply of indirect access to payment systems and the ownership and competitiveness of infrastructure provision. 

Initially, six interbank payment systems and two card payment systems have been designated by HM Treasury for regulation:

  • BACS
  • Cheque and Credit
  • CHAPS
  • Faster Payments Scheme
  • LINK
  • Northern Ireland Cheque Clearing
  • MasterCard
  • Visa Europe

The remit of the PSR extends to all participants involved in these regulated payment systems. This has been interpreted to include the operators managing those systems, the payment service providers using those systems and the infrastructure providers.

The PSR is generally positive to the innovative activity in the provision of payment services to the UK public and, in particular, welcomes the introduction of digital wallets, the growth of contactless devices and payments, new developments such as Paym and firms such as PayPal.

Trends in fintech M&A

Typically, where investment leads, M&A follows, and the fintech sector is no different in that respect. There have been a number of high profile acquisitions in the fintech sector over the past few years in the United States, and it appears that the UK is not far behind.

In April 2015, Finnish firm Basware, a provider of e-invoicing and purchase-to-pay solutions, acquired Procserve, a UK public sector e-procurement provider, reportedly for approximately €25.9 million. In August 2015, online payment provider Optimal Payments plc closed their acquisition of rival Skrill Group, a digital payments business, from CVC Funds and other shareholders for approximately €1.1 billion. This follows an acquisitive 12 months for Optimal Payments, who called the Skrill deal “transformational,” having also acquiring Ukash, another competitor, and Canadian mobile developer Fans. The company has also reportedly already started the process of identifying new candidates for acquisition and, currently listed on AIM, is seeking admission to the London Stock Exchange. Also in August 2015, CSC, a US technology provider, announced its acquisition of Fixnetix, a UK trading technology group for an undisclosed amount. The deal is expected to close in the final quarter of 2015.

The US IPO market is looking strong, with fourteen IPOs of fintech companies in the last three years.  In the UK, payment processing company Worldpay had London’s biggest stock market listing of the year in October 2015, with a valuation of £4.8 billion when the shares initially listed. Whilst some in the fintech sector don’t consider Worldpay to be a truly innovative fintech business – although initially so, Worldpay was bought by RBS in 2002 and quickly became more corporate. It was then bought by private equity groups Advent International and Bain Capital in 2009. However, it is clearly a comparable business, and is a good indication of the appetite for listings of similar businesses in the UK. If the Worldpay IPO is successful and can demonstrate that the UK stock market supports fintech businesses, further fintech flotations may be seen in the future.

For more information, please contact Charles ClaisseHead of Corporate.