Over the past few years, the fintech scene has really exploded in the UK, with big players in the payment and alternative funding sectors taking centre stage, to the extent that London is now regarded as one of the world’s most high-profile fintech hubs.
Firstly, what is fintech?
Well, according to the site Hot Topics, “as a definition, fintech is usually applied to the segment of the technology startup scene that is disrupting sectors such as mobile payments, money transfers, loans, fundraising and even asset management.”
Secondly, why is it so huge in the UK?
The UK and Ireland is now the fastest growing region for fintech investment (Accenture) with deal volumes growing at a rate of 74% per year since 2008, compared to 27% globally and 13% in Silicon Valley (UK Govt stats). There are several reasons for this growth in investment, but mainly because:
1. The UK Financial Services sector accounts for 9.4% of the UK GDP, with London now being known as the global financial centre.
2. A great pool of talent! The UK has more than 1.1 million people working in the financial services industry, with London having a huge pool of other skills such as designers, marketeers and business developers all working within the tech industry.
3. Great accelerators - Level 39 in Canary Wharf, Startupbootcamp Fintech and Barclays are amongst the three biggest incubators accelerators specialising in fintech and all are located in the UK.
4. Fintech is now worth £20 billion in revenue for the UK economy, according to Silicon Valley Bank’s 2015 report.
5. 60% of all European fintechs are based in the UK.
6. The CBI predicts that fintech is one of three sectors that will be worth £300 billion to the UK economy by 2020.
7. UK fintech firms secured $5.4 billion of the $49.7 billion of global investment in financial tech between 2010 and 2015, compared to the total $4.4 billion raised across the rest of Europe (London Fintech Week news).
The most significant and well known of the UK’s fintech startups include Transferwise and Funding Circle, with half of all fintech startups now being in the payments space. But which UK companies should we be watching out for in 2016?
Invoicable - understanding the need to make simple solutions for businesses, Invoicable is becoming an important player in the ‘software and business administration’ sector. Although the idea behind Invoicable is simple, providing fast and easy-to-use software that allows businesses to speed up their invoicing process is invaluable, with the company recording a growth of 26,000 registered users in two months:
LendInvest - LendInvest's mortgage marketplace matches people looking for quick, short-term mortgage funding with people hoping to get a better return on the money they lend. Founded in 2013, they recently landed the biggest Series A round in UK fintech so far, at £22 million from Chinese technology company Beijing Kunlun.
Investly - One of the new kids on the block when it comes to invoice financing, Investly allows companies to release cash for their business from owed invoices, giving access to working capital. An Estonian company, they have just launched in the UK providing the same service for SMEs over here.
Currency Cloud - Another software provider which allows businesses to send money internationally in a far simpler way than banks can. So far they’ve received more than £22million in funding and processed £6.32 billion in payments in 2014 alone.
So keep your eyes peeled for all of these companies and products making a significant impact on the fintech scene in the next 12 months - 2016 is sure to be another big year for the UK market.
By Jane Hewitt, Marketing Manager, Ormsby Street.