A Census of UK fintech firms by EY and Innovate Finance has found that the sector has continued to attract rising levels of investment despite global economic uncertainty, although major challenges lie ahead in talent recruitment and gender diversity.
Based on a study of over 224 fintech companies, the Census reveals that the average total investment raised by firms grew from £15m in 2017 to more than £20m in 2019 - an increase of a third (33%), despite the uncertainty surrounding Brexit.
In their next funding round, UK fintech firms are expected to raise a total of £2.6bn, with Series A funding accounting for over a quarter (26%) Fully one-third of respondents anticipate an IPO in the next five years.
Finding the right digital skills, however, remains a key challenge for the industry and one that hasn’t changed much in the two years since the last Census - over half (53%) of firms this year reported recruiting suitable talent as a major challenge. Software engineering, system architecture and development are cited as the most in-demand skillset (ranked first by 52% of firms), but also the hardest to find. The second most valuable, and equally difficult to source, is data analytics and data science skills (ranked top by 19% of firms).
At the same time, gender diversity continues to be a problem for the sector. The gender split of the UK fintech sector’s employee base is 70.5% male and 29.5% female (consistent with the 2017 Census results). The 2019 Census also showed that only 25% of fintechs have at least one female co-founder.
Tom Bull, UK head of fintech at EY, comments: “Persistent issues over talent are a real cause of concern and the UK Government’s talent and skills agenda is welcomed as the sector looks to secure the necessary resources to flourish. Equally, the Census makes it very clear that more needs to be done to try and redress the gender imbalance, which remains a challenge despite the efforts of Government and industry to make fintech more diverse.”
A separate study conducted by the Mayor of London's promotional agency London & Partners and Innovate Finance, reaffirms the UK capital's reputation as a global magnet for venture capital investment in fintech. The results shows the US leadin the way the U.S. leading with San Francisco at $3.02bn, London second at $2.1bn, New York in third at $1.93bn, followed by Berlin at $881m, and Stockholm in fifth at $735m.