Long reads

How to prioritise regulation, diversity and collaboration to bolster UK fintech

Over the course of 2022, the UK FinTech industry showed its resilience as it battled through heavy headwinds. Despite a global tech downturn as a result of a series of economic, political, and market turbulence, UK FinTech stood strong, securing $12.5billion of VC investment, which placed it well above its peers.

The numbers speak for themselves – the UK boasts 10% of the global FinTech market share; FinTech challengers now deliver more than 55% of the overall SME lending in the UK; and 8 out of every 10 adults in the UK use at least one FinTech tool on a regular basis.

FinTech is already having a huge impact on the UK economy, and on our daily lives, and the industry has continued to drive a more inclusive, more effective, and more democratic financial services sector that works better for everyone.

However, to truly unleash the full potential of financial innovation, we must build on this momentum and push ahead on a number of critical priority areas for the sector.

For example, we must continue to have forward-thinking regulation that both protects the consumer and allows innovation to thrive.

Here in the UK, we have seen good progress on regulatory frameworks that will further enable innovation. We now need proportionate regulation of new products in ways that can deliver better customer outcomes. We also must drive greater diversity within the sector.  Less than 5% of the $12.5bn invested into FinTech last year went to female founders or female-led firms.

And we must foster all types of diversity, not just gender diversity: racial diversity, ethnic diversity, socioeconomic diversity, LBGTQIA+ diversity, and neurodiversity.

In addition, we must ensure that we are accessing the power of FinTech to help individuals and SMEs manage through this cost of living crisis. We must also support our UK FinTechs to become global brands, and unlock greater forms of institutional investment to fill the growth capital gap. And, while driving disruption and competition, we also must seek out the areas where partnership and collaboration across the ecosystem are key for forward progress. That collaboration – between the new entrants, the heritage institutions, and the large tech firms – is critical. 

On this same theme of collaboration, it is worth reflecting on the past few weeks in light of the fall of Silicon Valley Bank UK. The speed at which the Government and the Bank of England responded to the collapse of Silicon Valley Bank was a testament to their continued support of this vibrant and thriving sector of the UK economy. It is also a testament to the appetite and ability within the UK for industry, regulators and government to work together. It is this potential for collaboration which will continue to set the UK apart from our international competitors as the best place in the world to start, build and scale a FinTech.

All of the above and more - the challenges and opportunities facing the continued growth of UK FinTech - is being addressed at the 9th annual edition of our Innovate Finance Global Summit 2023, where we are bringing together the inspiring entrepreneurs and innovators driving real change across the industry.

Be sure to check out Finextra's latest report in partnership with IFGS 2023 here: 'The Future of Fintech in the UK 2023: An Innovate Finance Global Summit and UK Fintech Week special edition'.

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