Financial technology in the UK

The UK is the world’s fastest growing region for financial technology (fintech) inward investment. Many of the biggest players in FinTech have chosen to set up or expand their global operations in the UK.

Home to world-beating growth and opportunity

As the world’s fastest growing region for FinTech, investors can benefit from:

  • a strong demand from a sophisticated market
  • an excellent IT and transport infrastructure
  • one of the largest pools of financial and entrepreneurial talent in the world

In 2015, the sector had a turnover of about 6.6 billion GBP in revenue and attracted about 524 million GBP in investment.

The 4 strongest performing areas are:

  • payments, which currently attract a wide range of innovators
  • platforms, particularly peer-to-peer lending, trading, personal wealth management and aggregators
  • software for risk management, payments, asset management, capital markets, insurance and accounting
  • data analytics such as credit reference, capital markets and insurance

There is ample room in the market for established providers and disruptive technologies. Many different sources of finance are available and the sector is well served by angel and private equity investors, accelerator and incubator schemes.

Status and enthusiasm drives demand

Demand for fintech in the UK is strong, driven by London’s status as the global capital of finance. This concentration of financial services activity means great opportunity for fintech solutions providers, particularly in the areas of:

  • trading
  • regulation
  • data
  • compliance

UK consumers are early adopters and are open to new, innovative models of service delivery. They spend much more on e-commerce than their equivalents in Germany, France and the USA. Consumer adoption of FinTech is becoming mainstream. The EY FinTech Adoption Index states that around 14% of digitally active consumers identify themselves as FinTech users, rising to 25% in London.

Many small and medium enterprises (SMEs) have also adopted FinTech solutions, mainly in alternative finance and payments.

Nationwide digital talent

London is a world leader for financial and entrepreneurial talent and there are clusters of digital excellence across the rest of the UK. Employing about 61,000 people, the UK’s FinTech sector is one of the largest in the world, ahead of that in New York and bigger than the FinTech sectors in Singapore, Hong Kong and Australia combined.

Support for financial services companies in the UK

The financial services industry is supported in the UK by its regulator the Financial Conduct Authority (FCA). The regulators operate independently of the UK government to regulate financial firms providing services to consumers and maintain the integrity of the UK’s financial markets.

The FCA supports disruptive technologies and helps companies develop new business models through theirThe FCA supports disruptive technologies

The UK government offers a range of tax incentives and programmes to promote competition and innovation including:

  • the Enterprise Investment Scheme
  • the Seed Enterprise Investment Scheme
  • Entrepreneurs’ Relief
  • Research and development tax credits
  • the Patent Box scheme, where companies pay a lower rate of Corporation Tax on profits earned from their patented innovations

The government also has up to 50 billion GBP available to support finance and insurance for supplies from within the UK to buyers outside the UK. This support takes the form of guarantees, insurance and loans issued by its export credit agency, UK Export Finance.