The United Kingdom serves as a prominent global fintech centre, boasting abundant expertise in financial services, a wealth of technological prowess, and forward-thinking regulatory frameworks.
In 2020, the United Kingdom’s fintech industry secured its position as the leading investment hub in Europe, drawing in an impressive £3 billion in venture capital. This amount surpassed the combined figures of Germany, Sweden, France, Switzerland, and the Netherlands, and globally, the UK is second only to the United States in terms of the number of deals and capital invested.
Moreover, the UK benefits from access to a pool of exceptional talent and a progressive regulatory environment designed to foster innovation within the fintech sector.
Payment Technology (Paytech)
The evolving payments landscape has paved the way for a thriving UK paytech sector. The United Kingdom stands as a pioneer in the payment technology revolution, offering investment prospects in digital commerce, cross-border payments, mobile point-of-sale (POS) payments, and more.
Wealthtech is reshaping the investment and asset management sector. There are substantial opportunities in robo-advisors, portfolio management tools, micro-investment and social trading platforms, as well as business-to-business (B2B) software solutions.
Credit and Lending Technology (Lendingtech)
Lendingtech provides solutions that empower lenders to enhance their payment processing efficiency. It delivers personalised experiences for loan and mortgage customers and is anticipated to experience significant growth.
Digital banking delivers online or mobile banking services encompassing deposits, transfers, account management, and loan management. Nearly a quarter of the adult population in the UK holds accounts with digital-only banks, with 66% of banking customers expressing their intention to fully transition to digital banking in the future.
Distributed Ledger Technology (DLT) and Digital Currencies
The utilization of blockchain technology within the financial sector is projected to reach a global market value of £16.7 billion by 2026. Cryptocurrencies, trading platforms, non-fungible tokens (NFTs), alternative asset trading, and supporting infrastructure are expected to dominate the market in the immediate future.
The United Kingdom’s financial technology sector commands an impressive 11% share of the global industry and is host to an estimated 2,500 firms. Remarkably, six out of the top 10 fintech companies, as assessed by Fintech50, are headquartered in London.
Recognizing the pivotal role of the fintech industry in future economic expansion, the UK government has designated it as a strategic priority. Committing to action on numerous vital recommendations outlined in The Kalifa Review of UK Fintech, the government aims to ensure that the nation remains at the forefront of the financial technology revolution.
The United Kingdom stands as a global financial powerhouse, with London alone housing more than 90,000 diverse financial and professional services companies. Additionally, there are rapidly emerging regional clusters in cities such as Manchester, Edinburgh, Newcastle, Leeds, Bristol, Belfast, and Cardiff. These regions offer abundant talent pools, well-established industry specializations, and supportive local policies.
The intersection of the UK’s finance and tech sectors, complemented by its world-class university system, furnishes a substantial talent pool for the fintech industry. Approximately 76,500 individuals are currently employed in this sector across the UK, a number set to increase to 105,500 by 2030. The Global Talent Visa in digital technology is poised to attract and expedite digital tech expertise from across the globe.
The UK’s fintech sector reaps the benefits of a supportive regulatory framework. The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) collaborate to cultivate a competitive and innovation-friendly business environment, enabling companies to foster and advance their fintech ventures within the UK.
Furthermore, the UK has established five fintech bridge agreements with other fintech hubs, encompassing Singapore, South Korea, China, Hong Kong, and Australia. These tailored agreements create valuable opportunities for expansion and collaboration by minimizing obstacles to international market access.
The technology ecosystem in the UK plays a pivotal role in facilitating the successful digital transformation of financial operations, ensuring that businesses maintain their competitiveness in the market. Throughout the UK, there are recognized centers of excellence specializing in fintech, financial services, big data, computer science, cybersecurity, data analytics, and artificial intelligence. Notably, the UK’s technology sector presently employs nearly 3 million individuals, constituting approximately 9% of the national workforce.
Fintech accelerators and incubators, such as Level39 and Fintech Innovation Lab London, present valuable opportunities for startups to nurture and refine their fintech solutions. These hubs offer companies advice, support, and guidance, fostering their growth. Furthermore, several corporate accelerators have also entered the landscape, with notable names including the Barclays Accelerator, NatWest Entrepreneur Accelerator, JP Morgan, and Goldman Sachs.
Business and government support
The United Kingdom has established itself as a global model for innovation driven by policy, with pivotal initiatives like the inception of the FCA’s Regulatory Sandbox, the Global Financial Innovation Network (GFIN), the Open Banking framework, and the AI Sector Deal.
To further support fintech companies, the FCA has implemented measures aimed at reducing regulatory complexities through its Innovation Hub scheme.
Demonstrating a joint commitment between the government and industry, the Fintech Pledge strives to nurture the growth of the UK’s fintech sector by fostering streamlined and transparent business partnerships between banks and fintech firms.