A new month marks a new editorial theme here at TechSPARK. Throughout March, we’ll be shifting our focus to the flurry of fintech activity happening across the South West. In our content and events, we’ll be highlighting some of the tech that seeks to improve the use and delivery of our financial services, whilst speaking to the companies making this a reality. To deliver this, we’re so pleased to have the support of Dojo – the smart payments experts and Fintech Month’s sponsor.
Fintech marks the convergence of finance and tech; as a sector, things have evolved exponentially. Fintech is more than just online banking (albeit an innovation that in itself has proved to be at once pretty impressive and now essential to daily life) – businesses and entrepreneurs across the world are developing softwares, tools & systems to improve the efficiency of our financial services in all directions. From technologically complex advancements such as blockchain and cryptocurrency to innovations that streamline payment systems and everyday consumer use budgeting apps, fintech has transformed our relationship and access to finance.
Although many people may feel disconnected from fintech, it’s deeply integrated into everyone’s lives. It’s easy to forget there was a time when you couldn’t send money to family and friends with a few clicks, or when accepting card payments was largely inaccessible for small businesses – capabilities that meant coping with a pandemic was slightly more manageable. Without the consumer even being conscious of it, the fintech sector has made steps to make everyday processes easier – and there are a plethora of organisations out there that put emphasis on the fintech for good movement in their work to make finance more ethical, transparent, and accessible.
A fintech revolution
Last year an independent review of the fintech sector was led by Ron Kalifa OBE, non-executive director of the Court of Directors at the Bank of England and the vice-chairman of WorldPay, the findings of which were launched by the Government. In the Kalifa Review of UK fintech, the importance of the sector was heavily underscored: “Fintech is not a niche within financial services. Nor is it a sub-sector. It is a permanent, technological revolution that is changing the way we do finance.”
The research into how fintech has expanded nationally uncovered the sheer expanse of fast-growing companies around the UK working in the field, and the eyebrow-raising figure of investments made into the sector – Beauhurst reports an astonishing £2.4b of funding deployed over 210 rounds in 2019 alone. And the pandemic didn’t hold things back, as the Kalifa report states investment into UK fintech stood at $4.1bn in 2020 – more than the next 5 European countries combined.
“Fintech is not a niche within financial services. Nor is it a sub-sector. It is a permanent, technological revolution that is changing the way we do finance.”
– Ron Kalifa OBE
Beauhurst also reports that there are currently 1,005 active, ambitious fintech companies in the UK. That’s around 3% of all high-growth UK businesses – Bristol comes in as the biggest hub for these high-growth companies outside of London (2020). Fintech is a young sector, with 35% of companies at seed stage, and 27% at venture stage. This compares with just 30% and 15%, respectively, in the high-growth sector as a whole.
This progress was noted in the Kalifa report, which makes reference to the ‘previously unknown technology’ being invented in the UK, as well as improving the ways in which we deliver better financial outcomes for customers, consumers and SMEs.
The report outlines that, “over the past decade, the UK has been quietly undergoing a fintech revolution – in jobs, innovation, improvements to people’s lives and in increased opportunities in global trade.” This fintech revolution has, in turn, intersected across a multitude of disciplines we see in our tech and digital community. From catalysing the digital transformation of banks to “highlighting the value of data-led solutions in financial services,” fintech has monopolised the technological advancements of AI, quantum computing and VR to become an increasingly dynamic field.
What about the South West?
Sticking with the theme of reports, Whitecap conducted a deep dive into the South West’s fintech scene, which produced some promising and inspiring findings for the future of fintech in our region, a key conclusion being: “FinTech provides a material economic growth opportunity for the UK and for the Bristol & Bath region. On a national level, the sector is expected to create approximately 30,000 more jobs and over 1,600 new businesses by 2030.”
The South West has a higher density of fintech startups and scaleups than any other region researched outside London, including being home to Hargreaves Lansdown, a FTSE 100 listed fintech with £102bn assets under management. Other exciting companies based here include Moneyhub, Tumelo, Payaca, Flexys and LOQBOX, but the list certainly doesn’t stop there – stay tuned for our breakdown of fintechs to watch in the South West.
With so many topics of fintech conversation discuss, we’re super excited to get stuck in. If you just can’t wait for more, be sure to take a look at the Fintech News section on the TechSPARK website, or cast your memory back to our lockdown chats with this Coffee Morning – Fintech with an impact.
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