The UK is a global fintech hub, with extensive financial services experience, technological talent and progressive regulation.
The UK fintech sector is the top-ranking investment destination in Europe with £3 billion venture capital attracted in 2020. It accounts for more deals and capital invested than Germany, Sweden, France, Switzerland and the Netherlands combined and ranks second globally only behind the US.
The UK also has access to world-class talent and a progressive approach to regulation to encourage fintech innovation.
Payment technology (Paytech)
The changing landscape of payments has helped create a thriving environment for UK paytech. The UK is at the forefront of the payment technology revolution with investment opportunities in digital commerce, cross-border payments, mobile POS payments and more.
Wealthtech is transforming the investment and asset management industry. There are significant opportunities for robo-advisors, portfolio management tools, micro-investment and social trading platforms, as well as B2B software solutions.
Credit and lendingtech
Lendingtech offers solutions that allow lenders to power and improve their payment processing time. It offers personalised experiences for loan and mortgage customers and is expected to be an area of high growth.
Digital banking provides online or mobile banking services such as deposits, transfers, account management and loan management. Almost 25% of British adults have an account with a digital-only bank and 66% of banking customers saying they plan to convert fully to a digital bank in the future.
Distributed Ledger Tech (DLT) and digital currencies
The application of blockchain technology in the financial sector is expected to reach a global market size of a £16.7 billion in 2026. Cryptocurrencies and trading platforms, non-fungible tokens (NFTs), alternative asset trading and support structures are expected to dominate the market in the near future.
UK financial technology accounts for 11% of the global industry and it is home to an estimated 2,500 firms. Six of the top 10 fintech companies, as ranked by Fintech50, have their headquarters in London.
The UK government has identified the fintech industry as an important area for future economic growth. It has committed to act on a number of key recommendations made in The Kalifa Review of UK Fintech to make sure that we are at the forefront of the financial technology revolution.
Key UK assets
The UK is a global financial centre and London alone is home to over 90,000 diverse financial and professional services companies. There is also a range of rapidly growing regional clusters, including Manchester, Edinburgh, Newcastle, Leeds, Bristol, Belfast and Cardiff. All of which offer a deep talent pool, well-established industry specialisations and supportive local policy initiatives.
The UK’s finance and tech sectors and a world-class university system provide a large pool of talent for fintech. Around 76,500 people across the UK work in the industry with this set to grow to 105,500 by 2030. The Global Talent Visa in digital technology is set to attract and fast-track digital tech talent from around the world.
The UK fintech sector benefits from a supportive regulatory system. The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) work to build a competitive and innovation-friendly business environment. This can help companies to grow and develop their fintech business in the UK.
The UK has entered 5 fintech bridge agreements with other fintech hubs including Singapore, South Korea, China, Hong Kong and Australia. These bespoke agreements create valuable opportunities for expansion and collaboration by reducing barriers to international markets.
The UK technology ecosystem enables a successful digital transformation of financial operations and helps businesses remain competitive in the market. Centres of excellence are found across the UK, specialising in fintech, financial services, big data, computer science, cybersecurity, data analytics and AI. The UK tech sector currently employs almost 3 million people, around 9% of the UK workforce.
Fintech accelerators and incubators such as Level39 or Fintech Innovation Lab London create opportunities for start-ups to develop their fintech solutions. They can give companies advice, support and guidance. A number of corporate accelerators have also joined the landscape, including the Barclays Accelerator, NatWest Entrepreneur Accelerator, JP Morgan and Goldman Sachs.
Business and government support
The UK has set the global benchmark for policy-led innovation, with key initiatives such as the creation of the FCA’s Regulatory Sandbox, Global Financial Innovation Network (GFIN), Open Banking framework and AI Sector Deal.
The FCA has also taken measures to reduce the regulatory burden for fintech companies through its Innovation Hub scheme.
The Fintech Pledge shows government and industry commitment to the growth of the UK’s fintech sector, by establishing efficient and transparent commercial partnerships between banks and fintech firms.
OakNorth is a UK fintech business focussed on redefining lending to small and medium-sized businesses globally, using its next-generation credit platform. In 2019, OakNorth was Europe’s most valuable fintech with a £2.1 billion valuation. It secured a £327 million investment the same year – the largest investment in a round of any fintech business in European history.
Onfido verifies a user’s real identity with AI technology by comparing their photo ID to their facial biometrics. Onfido was ranked first in the Fintech50 2020 list from over 2,000 firms in Europe. It was honoured at the 2021 CyberSecurity Breakthrough Awards for its work in fraud prevention and remote identity verification.
Starling Bank is a digital challenger bank offering personal, business, joint, euro and US dollar current accounts alongside a debit card for children. Starling Bank is now valued at £1.4 billion and has over 2 million customer accounts and over £5.4 billion in deposits. In 2021, it was named ‘Best British Bank’ for the fourth year in a row.