The fintech industry has seen tremendous growth in last decade. The sector now supports over 61,000 jobs and turns over billions in revenue for the British economy. The UK has grown in stature to be a global hub on the fintech stage, in terms of investment, employment and the number of fintechs in the market. A report by the UK government estimates that the UK fintech sector represented £6.6bn in revenue in 2015 and attracted £524m in investment. Therefore, consumer adoption of fintech is becoming increasingly mainstream.
And there’s a good reason why. London still leads the fintech industry for both start-up and regular corporate fintech companies. The British capital is holding its dominance for being the hub of the fintech industry, which may be due to the UK always benefitting from a strong FS industry and it’s well functioning ecosystem. The industry has evolved beyond simply accommodating financial services and banks and now holds an array of services aimed at all generations who can benefit from the fintech space.
“The UK is the home of fintech- the powerbase of the City of London fused with the entrepreneurial energy of the capital, is proving a potent combination”, states Raconteur.
Here are the top ten UK fintech companies to look out for in 2017:
Total equity funding: $58.6m
Based in the heart of the UK capital, LendInvest is the UK’s leading online property lending and investing businesses. The rise of digital transactions for consumers in the fintech space allowed LendInvest to excel quickly. With millennials preferring to transact online rather than face-to-face, fintech companies have taken note of this disruption and taken full advantage of it.
LendInvest’s investment in loans to date is impressive, with £32m in revenue for 12 months (to March 2016) and a £3.4m profit in the same time frame. Furthermore, its portfolio of properties funded are over 2,700, with an average of £310,135 lent per property funded. The total value of properties funded are a staggering £1,522,509,679.
Total equity funding: $89.8m
Nutmeg is an investment portfolio company that help clients create intelligent investments and see their portfolio funds grow over time. The fintech company requires no paperwork to sign up, and users can choose a portfolio based on their financial needs. Nutmeg changes the way people manage their money; it specialises in ISA’s pensions and offer straightforward service for online investment management.
Martin Stead, Nutmeg CEO, said: "If we had to drill down to three main strengths, I'd say Nutmeg is intuitive, high-quality and low cost.
"Our platform is industry-leading and award-winning – it's designed from top to bottom around the user. It draws on extensive user testing and feedback, and gives customers a straightforward investing journey with access to complex information if they want it.
"Behind the platform is real sophistication: a high-quality investing service that until recently was only available to customers with tens of thousands of pounds. We offer an expert investment team, globally-diversified portfolios, control over risk exposure, and fractional share trading so we can provide the smallest client with the same service as the largest.
"And all this comes at a low cost, in a simple fee structure. We don't charge exit fees or starter fees.
“Nutmeg manages over £600m for more than 25,000 customers, and has four-year performance track record, benchmarked against its competitors, open for all to see on our website. Over £71m of equity has been raised from investors including Schroders, Balderton Capital, Fubon and Convoy. It offers a real alternative to expensive IFAs, doing it yourself, or leaving cash in a lower-risk but low-interest savings account.
"Our mission is to democratise wealth management. The way we do that is simple: We take the best elements of a high-end investing service, strip out the complexity and cost, and provide it to our customers online.
"We're on this mission because the UK has a problem: people aren't confident about the income they'll have in retirement. Our aim is to put people – anybody with £500 to put away – back in control of their financial future. Like a car or an iPhone, investing can be sophisticated and complicated but outwardly simple and intuitive – that's our goal."
Total equity funding: $35m
Launched in 2012, Currency Cloud has more than 500,000 end users in over 150 countries. The company was started as means to re-imagine the way money flows through the global digital economy.
Currency Cloud operates as a foreign exchange broker and international payments company. It provides customers with an API which gives access to foreign exchange. The company has processed $15bn worth of transfers per year.
Funds raised to date: $18.69m
Crowdcube is an investment crowdfunding platform that lets customers hand pick the businesses they want to back and invest in. The company is backed by more than 570 private investors, who have invested over £3m across multiple verticals of investments. The leading equity crowdfunding platform has become the first in the industry to hit the £200 million mark in capital raised.
“We predicted that investment rounds would get bigger in 2016, with the average amount raised going up. In our experience, this prediction definitely rang true with the largest crowdfunding rounds to date having been completed on Crowdcube this year. By the end of 2016 116 raises would have been done on Crowdcube, raising a total of £69m for ambitious businesses in the last 12 months alone,” comments Luke Lang, co-founder of Crowdcube.
Total equity funding: $147.6m
WorldRemit is a digital money transfer service that allows users to send money internationally with low cost fees and rates.
It was founded by Ismail Ahmed, who launched the business as designed to help migrants send money abroad. It was originally created as AfricaRemit and launched to cut out the middleman and agents who took a fee for sending the money.
The reason why WorldRemit is a company to look out for in 2017 is because instant payments, especially internationally, have quickly become a necessity in the fintech sector. According to The Guardian, in the past seven years the company has grown to allowing users to send money to 130 countries. In December 2016, 588,000 transactions were completed on the platform, and the company now employs 328 people worldwide.
Total equity funding: $373.2m
Funding Circle made headlines at the end of last year for raising $100 million in capital funding. The peer-to-peer lending marketplace allows investors to lend money directly to small and medium businesses. In 2016, the company saw a total of £85 million raised. This grew its investment portfolio to over £300m.
Samir Desai, Chief Executive of Funding Circle said he expected that lending through the site would “create a further 50,000 new jobs, supporting economic growth in the UK, US and continental Europe”.
Funding Circle is expected to create more buzz in 2017, with greater funding projects to be seen in the upcoming year.
Total equity funding: $17.7m
The millennial-focused way of banking has achieved great success over the past two years. Users of Monzo can manage their finances from their mobiles. The ‘new’ form of banking allows users to get instant spending notifications, add receipts to purchases and manage budgets. A great advantage of the app is that users don’t have any international charges when using the card abroad.
Monzo is focused on building the best current account in the world and working with a range of providers to be an intelligent hub for your entire financial life. Only founded two years ago, the company is expected to change the way millennials manage their banking and shift consumers to a greater digital and mobile banking sphere.
“We’ve been delighted to see the growth of Monzo. We rolled out the prepaid cards about 14 months ago, and we only antipicated 5000 or 6000 being handed out and we just hit 100,000 last month so we really exceeded our expectations, which has been brilliant. Fundamentally, we’ve been really open and transparent about what we’re building, what’s our mission and why”, says Tom Blomfield, CEO and co-founder of Monzo.
“We think banking is broken and doesn’t work in the interest of customers and we wanted to build something better. To go with that transparency, we’ve also released a product that customers can use. By releasing this app into the market quite early, we gave the early users to engage with it and give their feedback and actually genuinely see the product change over time. The feedback they gave is what we incorporated into the app and as a result got a lot of better over the last year or so. Listening to our customers and being really transparent has really helped us in the market.”
Total equity funding: $116.3m
Founded by former Skype employees Kristo Kaarmaan and Taavet Hinrikus, Transferwise allows users to swap currencies to find a counterparty making a similar deal on the other end of an exchange transaction, which means there are no fees attached. The concept of sending money internationally at real exchange rates is the thinking behind Transferwise.
The fintech start-up has recently been valued at $1.1bn, with backers such as Sir Richard Branson and Silicon Valley VC Andreessen Horowitz. Transferwise now employs over 600 members of staff.
Total equity funding: $58.5m
Iwoca was created to help make credit and loans of up to £100,000 available to small businesses. Christoph Rieche, CEO of Iwoca, started the company in 2011 when the economy was recovering from the recession and banks hadn’t picked up the confidence to invest in small businesses. The technology behind Iwoca allows the company to access the risk of investing in small businesses which can open doors to the funding needed for lower costs.
This fintech company is supported by the EU and the European Investment Fund, helping small businesses thrive in the community.
Total equity funding: $7.38m
Trussle, the online mortgage trading company, is a rising star in the fintech industry. The start-up company provides solutions and answers to those looking to invest with a hassle-free process. Searching over 11,000 deals from 90 lenders, Ishaan Malhi, CEO and Founder of online mortgage broker Trussle says: "Getting the right mortgage through traditional routes is complicated, stressful, and time-consuming. We launched Trussle in December 2015 to address these issues, and in doing so became the UK’s first online mortgage broker.
“The difference between ourselves and traditional brokers is that we solve the challenges we face using technology. For example, when you come to the end of your initial mortgage period you’ll be switched to your lender’s Standard Variable Rate which results in an average increase in payments of £3,500 per year. Traditionally, your broker might have a note in their calendar to contact you at this time, but we’ve developed a proprietary algorithm that continuously monitors the market from the day you secure your new mortgage, allowing us to notify you when it’s time to switch. Sometimes it makes sense to switch before your initial period ends despite paying an exit fee, so our algorithm takes this into account too – something an adviser working at a traditional broker just isn’t physically able to do with such regularity.
“The service has proved popular. We’re now managing over £1 billion worth of mortgages on behalf of thousands of homeowners across the UK who want to ensure they’re on the most suitable deal. However, there are still more than three million homeowners across the country paying their lender’s higher Standard Variable Rate. We’ve made it our mission to put mortgage switching at the top of the public agenda in 2017, helping those people collectively save billions a year."