Over a year ago, Chatsworth predicted that the doldrums of fintech meant it was time to strap in and prepare for take-off.
Turns out we were right. The sector is now staging a remarkable volte face despite months of doom mongering and a wider slowdown in capital markets.
In fact, the UK is now producing more fintech unicorns than any other European country – four times as many to be precise.
The UK is now home to 52 of Europe’s 121 billion-dollar-plus fintech firms with headliners, Monzo, now worth USD 5.4bn, while SumUp has raised a total of USD 662 million in equity funding.
Chatsworth was part of the UK Department of Business and Trade’s delegation to Money2020 in Amsterdam in June and to say the UK Pavillion was busy would be an understatement.
Directors Liz Fleming and Michael Deeny were representing a host of fintech firms, talking to delegates from around the world, investors, analysts, press and partners about what these firms do, the issues they solve and helping them engage to support investment, engagement and adoption.
The UK has fintech firms targeting FX, equities, payments, regulatory reporting, smart data management and on the social good side, a firm providing specifically for dementia patients and their caretakers to manage finances safely.
This is our country’s innovation at its very best. These are firms solving real world problems through technology, improving legacy processes across both wholesale capital markets and the retail experience.
So, what is keeping the UK ahead? Well for one, our fintech funding ecosystem is in very good condition. We have a wealth of venture capital firms and UK-based investors helping a wide variety of both retail and wholesale focused fintech firms.
And there is solid support from the UK Department of Business and Trade, bodies like Innovate Finance and CFITs, Barclays Rise and the UK fintech regional bodies. It’s joined up and it’s working.
The narrative around a lack of IPOs and listings in the UK remains top of mind for many. We’re not playing this down. It’s a problem but it’s a temporary one.
All of the main UK fintechs are private companies and are yet to IPO.
Even if you look at the traditional finance giants, it’s a story of growth. JPMorgan, long a leader in fintech investment has big plans for its digital bank Chase in 2024 and is reported to be looking to double its UK headcount.
JPMorgan has a long record of smart investments and partnerships with fintech, notably the acquisition of investment management fintech, Nutmeg, in 2021.
The FMIs – financial market infrastructures – have a major role to play here.
Organisations like Euroclear, a Europe-wide operation which also runs the UK central security depository have a smart approach.
Euroclear develops its services in close collaboration with clients and has partnerships with pioneering fintech startups. Again it’s all about the goal – better ways of working through technology to increase efficiency and reduce cost and risk, weighing up the advantages of new technology into a highly-regulated landscape whilst maintaining our systemically important role.
The group’s scale also means it can learn from the experience of testing or applying models and technology across markets, to the benefit of the whole. After all, financial services are interconnected and operate across borders.
So, how’s the picture for the future for the sector? Well, it’s looking pretty good. We are witnessing a technological surge, particularly with the practical application of AI in the fintech sector.
The fintech sector overall is projected to reach between USD 11 to USD 17 trillion by 2030 according to McKinsey.
Data is the new currency. Combined with AI and other technologies it will continue to revolutionise business.
The UK is making great progress on open finance, with a taskforce chaired by the excellent CFIT team, exploring methods to securely unlock financial data to improve access to credit for small to medium-sized enterprises (SMEs).
The taskforce will work to identify and prioritise which data sets should be unlocked and the APIs best placed to facilitate improved availability of SME finance, as well as discover and promote additional use cases for open finance.
Strap in. It’s going to be a busy few years.
Just don’t call it a comeback!
Chatsworth
We were the first communications agency to focus on fintech.
We’ve been building fintech reputations for 20 years, steering start-ups through launch, growth, and onto corporate action while protecting and enhancing established infrastructures.
For intelligent, informed and connected fintech PR which delivers results and value, let us help build your reputation and tell your story.
