Fintech in the UK has grown at breakneck speed.
In 2010 it accounted for just four per cent of venture capital investment in the UK. A decade later, this figure has risen to 28 per cent, with a record $4.9bn of capital investment landing in the UK in 2019 — a year-on-year increase of more than a third.
There’s no doubt that the UK is a global fintech leader — a fact not lost on virtually all of our international partners when I engage with them. But for it to be the source of future growth that we know it can be, we must ensure that entrepreneurs can scale up, expand internationally, and deliver on fintech’s promise to bring prosperity to all parts of the country.
That’s why I warmly welcome the Treasury’s launch of an independent review into the UK fintech sector, for which the City of London and Innovate Finance will act as joint secretariat.
Fintech was born out of a desire for innovation in the financial services sector after the global financial crash of 2008. It came from a need to change the dynamics of the industry and provide increased choice for businesses and consumers alike.
Brits have taken fintech innovation to the heart of their everyday lives, with the UK fintech adoption rate now at 71 per cent — well above the global average of 64 per cent. By means of comparison, this far outstrips the rate of other key markets such as the US (46 per cent) and Japan (34 per cent). Lockdown and our increasing adoption of remote technologies has served to sharpen that trend even further.
There are two key conclusions that I draw from all this.
The first, perhaps obviously, is that the motor of fintech will be a vital one for the UK financial services sector — the second-biggest exporter of financial services globally in the world — in supporting the revitalisation of the global economy. It will be a major area of growth in the years to come.
The second key takeaway is that fintech in the UK has reached maturity. It has become a mainstream part of the UK financial services industry and is here to stay. We have done a great job of supporting startups as they emerge, but we are now seeing more traditional institutions and broader stakeholders place a greater emphasis on fintech too.
As we cross that threshold, now is the time to think about how we have developed and what change we want for the future. It’s important to start framing that debate, and in that respect I encourage readers to look up our new joint report with Innovate Finance and EY. It presents some considerations for the sector’s future within an international context, like removing remaining obstacles for startups, prioritising access to talent, and continuing to innovate in the regulatory space.
It is my belief that these discussions and the government’s independent review will help sow the seeds for the next stage of fintech success. I call on everyone across the UK’s financial services ecosystem to have their say and play their part.
Main image credit: Getty