A fork in the road: The future of UK fintech
Artificial Intelligence may be leading the agenda when it comes to the future of technology, but fintech remains the sector with the most compelling success story for the here and now. A sector in flux
Businesses in the sector contribute more than £10 billion to the UK economy every year – supporting 76,000 jobs 1 . Added to this, its recent growth has been spectacular; in 2020 the UK had just two fintech unicorns (startups worth more than $1 billion), while today there are more than 20. Fintechs tend to outperform firms in other sectors too, with an annualised growth rate of 16% over the past decade, against 1.3% for the average SME 2 . While there are geographical hot spots for fintechs to thrive, from Edinburgh to Birmingham, the sector remains relatively location-agnostic, with a third of all fintechs headquartered outside of London. As such, it’s a sector with huge potential to drive prosperity across the UK. Indeed, Leeds was this year chosen to host the £5.5 million Centre for Finance, Innovation and Technology – a new national hub for fintech excellence. The UK has a natural advantage in this sector, having long been a dominant force in international financial services, and with a wealth of technical talent – both homegrown and imported. This has made it a magnet for investment; with only the US attracting more fintech capital.
But it hasn’t all been smooth sailing. The collapse of the Silicon Valley Bank caused concern for many, while the wider economic environment appears to have cooled investor appetite, limiting the availability of funding at a time when interest rates are impacting valuations. Against this backdrop, we commissioned this report to uncover the ambitions and anxieties driving decision making in fintech firms across the country. We surveyed more than 250 senior decision makers within the industry, and the current economic uncertainty is clearly reflected in their responses. We’re happy to share our findings with the aim of supporting the sector through this uncertainty and to boost those leading from the front. Dan Conway Partner Restructuring Advisory
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The UK has a natural advantage in this sector, having long been a dominant force in international financial services, and with a wealth of technical talent – both homegrown and imported. That has made it a magnet for investment; only the US attracts more fintech capital.
1 https://www.ftadviser.com/investments/2023/01/30/why-is-the-uk-so-successful-in-fintech/#:~:text=Talent%20and%20community&text=The%20government%2C%20 through%20the%20global,76%2C000%20jobs%20to%20the%20economy. 2 https://www2.deloitte.com/uk/en/pages/financial-services/articles/uk-fintech-landscape.html
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