The UK is home to many of the world’s largest financial technology companies—more than 1,600 firms— and the number is set to double by 2030. Much of the success of fintech in the UK comes from its high concentration of activity, which brings access to a more comprehensive financial ecosystem, as well as room for innovation, investment, and respect for regulatory frameworks. There is also no shortage of talent available, equipped to handle the industry’s demands and an ever-changing landscape, along with consumers who are open to its adoption.
As one of the most prominent leaders in fintech, the UK’s industry is seeking more ways to grow. Investments in the sector slowed rapidly and declined in 2022, mainly due to the cost-of-living crisis and rising interest rates. While fintech investment was largely spared from major blows, companies are now eager to look for opportunities to increase resilience and innovation to prevent further losses.
Opportunities for growth
Fintech is already more widespread than ever, with these technologies becoming a staple in day-to-day business. A card machine is no longer relegated to just the till; innovations from different fintech companies have enabled portable and mobile card machines for payments on the move. These machines’ ability to accept all kinds of payments and currencies brings consumers a sense of convenience and satisfaction. More investments into improving this technology will likely be critical for fintech companies.
Embedded finance services are also experiencing a boom in business, with around 60% of UK adults using them in the last year. This includes Buy Now Pay Later (BNPL) payments, e-wallets like PayPal, and purchasing insurance when buying a high-value product, among many other services. This growth is also evident in how embedded finance companies such as UK-based Liberis receive resources that further grow their businesses. Liberis recently received an additional €30M (or £26M) in funding to extend its services beyond the UK and the rest of Europe, providing small and medium-sized businesses with more financial control and funding options. With various UK fintech companies seeing a rise in the economy, the industry is set to also see growth from there.
Besides growth within the fintech business landscape, advancement is beginning to emerge in other ways, such as through education. Essex Business School launched a master’s course in fintech in 2020 in response to new opportunities brought about by technology that traditional finance courses did not cover. The number of students enrolling in the program has skyrocketed, mainly due to the new demands the industry expects of new professionals entering a highly digitalised field.
Challenges in the industry
Despite the success of UK fintech, firms aren’t exempt from trials. Inflation has been a significant blockage to growth, and tech firms often struggle to scale in such a climate. A poor sense of marketing and a lack of understanding of the industry landscape or its available technology create fractures for startups and firms, which are already floundering due to increased prices. Concerns regarding fintech adoption are also gaining more attention, such as the proliferation of cyberattacks and a shortage of professionals equipped to deal with them. If fintech companies want continued growth and success, these issues must be addressed to increase customer, partner, and investor resilience and trust.
Overall, the fintech landscape in the UK is ripe with opportunities for even more development this year. Though economic events remain unpredictable, businesses can benefit from an even stronger industry that can withstand challenges and learn from them.
