"FinTech" is the technology relating to the delivery of financial services, with clients generally being small financial technology companies. FinTech includes the holding of financial data and the distribution of digital products, where connectivity, security and legislative protection are all important factors.
Often these companies will have technology that negates the need for or revolutionises existing financial systems and corporations. They are prime targets for private equity investment as they are seen as an opportunity for larger companies to increase market share.
The Isle of Man Start Up Fund and Fintech Activities on the Island
The Isle of Man has established a £50 million fund specifically designed for start ups on the island, and is opening an ICT university to encourage the next generation of IT whiz kids.
Types of FinTech activity appearing on the island include:
- Block chain applications
- Cash and investment management platforms
- Currency transfers
- Digital currencies
- Financial and share trading
- Investment securitisation
- Money transfers
- Processing purchase and sales data
- Smartphone financial applications
The History of FinTech
In the past ten years there has been a significant expansion in technology, with increasing numbers of customers going online to make purchases. Many industries have developed online platforms and a number of new ideas have come to the market, such as: IT payment systems, marketing and customer information databases, digital currencies, online banking, online investment, and online gambling.
The incredible speed of change has left many jurisdictions and corporations struggling to keep pace with the requisite amendments to "legislation" and "infrastructure". Many jurisdictions have simply not had the capacity or investment resources to participate in this growing sector.
The Isle of Man and Emerging Industries
In 2001 the Isle of Man was the first jurisdiction to introduce legislation designed to benefit e-gaming and gambling firms and, subsequently, a number of such organisations have established themselves on the island. To maintain this growth the island has invested heavily in its IT and utility infrastructure, which has helped to establish the Isle of Man as a leading offshore "technology" jurisdiction.
The establishment of FinTech organisations in the Isle of Man is a natural development, as this industry relies on the same basic infrastructure as e-gaming: e-connection security, high-quality secure data storage facilities, security in terms of power supply, strong local skill set, legislative protection and jurisdiction stability.
Why are FinTech Companies Attracted to the Isle of Man?
- Connectivity from the island via five discrete fibres. This ensures that the island's connectivity is maintained at all times with a "self-healing ring" providing a robust infrastructure and minimising the possibility of any downtime.
- The island has established a development fund of £50m to invest directly in start ups on the island, with performance being judged on employment and innovation, not just on profit.
- The island has huge transmission capacity (numbered in terabytes). This effectively "future-proofs" the island's telecoms needs and is fully supported by the Government in terms of any additional investment requirements.
- The Isle of Man has invested in power stations, is self-sufficient in terms of power supply and is therefore not reliant on external countries to meet its power needs.
- The Isle of Man has a history of being at the forefront of leading technologies; for example, it was the first country in Europe to launch 3G data networks, has an excellent 4G network and is committed to invest in improvements to the network ready for 5G.
- The island is to launch an on island ICT University in 2016 to attract and train the next generation of IT professionals.
- The Isle of Man offers five "state of the art" data hosting centres: Continent 8, Domicilium, Manx Telecom, Netcetera and Wi-Manx; each built to the highest specifications.
- The island has introduced an exemption from work permit regime for ICT skilled individuals.
The Isle of Man offers an attractive tax regime:
- Zero rate of corporation tax.
- No capital gains tax.
- Income tax: a 20% higher rate (capped at £125,000 per annum) and a 10% lower rate.
- Key worker concessions exempting owners of businesses that create jobs from elements of income tax for three years.
- A tax free allowance for relocation packages of up to £20,000, to incentivise positive immigration.
- No inheritance tax.
- The Isle of Man is part of the EU VAT system. This is vital for most trading companies and, particularly in relation to source based transactions, location in a VAT jurisdiction may well be critical in the future.
- Financial and Political
- The Isle of Man has AA+ Standard and Poor's rating, and the island's Government is committed to retaining this rating and maintaining a balanced and transparent budget. The Isle of Man also has an excellent reputation within the OECD and the EU.
- The legal system and legislative practice are based on UK principles, with the added advantages of being able to adapt to change and being less bureaucratic than in many other jurisdictions.
- The island offers political stability and an experienced professional workforce, with an entrepreneurial spirit.
How can Dixcart Help?
Dixcart Management (IOM) Limited has a long history of encouraging and helping start ups and can assist FinTech entrepreneurs with the formation of an Isle of Man entity, facilitate an introduction to local banking institutions and coordinate relevant licence applications.
In addition the Dixcart Business Centre in the Isle of Man provides serviced office accommodation, located in Douglas, the island's capital, and offers:
- Private office suites accommodating 1 – 12 desks
- Internet on a superfast fibre connection
- Access to meeting room facilities
- Reception services
- Flexible, short term licences
- Access to business advisers, legal and accounting professionals.
Dixcart Management (IOM) Limited is licensed by the Isle of Man Financial Services Authority
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.