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5 Aspects of UK’s Fintech dominance: No. 1 – Demand

The UK is still the No.1 Fintech ecosystem in the world.

This is according to a recent report published by GOV.UK’s Department for International Trade. The Fintech industry adds around £7 billion to the UK economy and employs more than 60,000 people across the country.

More than a third of the top 50 international Fintech companies are based in the UK across various technologies, including mobile payments, peer-to-peer lending, cybersecurity, and digital currencies, to name a few.

The report suggests there are a number of core reasons why entrepreneurs choose the UK to set up and scale their Fintech startups:

  • Existing and thriving ecosystem.
  • Forward-looking regulatory landscape.
  • Access to a diverse talent pool.
  • High demand for Fintech services.
  • Strong capital investment support.
  • Healthy regional Fintech hubs and ecosystems across the UK.

In the next few articles, we’ll look at some of these aspects in a bit more detail to give you a better understanding of how the UK has become a global leader in Fintech and Finance, starting with the demand for Fintech innovation.

High demand for Fintech services

The most important requirement for any Fintech hub or ecosystem to flourish is a strong and established financial sector. The UK has, for centuries, held a reputation as a leading financial hub.

According to a report by The City UK, the country has a financial services trade surplus of $77 billion, more than the combined surpluses of the US ($41 billion) and Switzerland ($22 billion), and employs around 2.2 million people in the sector.

The UK is also a leader in conventional areas like Banking as well as a global leader in some of the newer, fast-growing areas such as Fintech and green finance.

This gives Fintech startups a unique opportunity to either connect with traditional financial institutions to improve their existing products, or cater directly to the expansive customer base that these FI’s service and improve upon the products and services available to them by providing innovative and disruptive alternatives.

There are a growing number of incubator and accelerator programs that support Fintech startups in the development of their products, making sure it is highly targeted towards the needs of the tech-savvy British population.

Level 39 is an incubator based in London, made up of a community of 1,250 leaders in Fintech, Cybersecurity and Retail Tech.

Fintech Innovation Lab is a London Accelerator Lab, where startups can build connections with relevant decision makers, gain valuable insights to take their business to the next level, and increase their visibility with the people that matter.

Startupbootcamp is a global accelerator with programs offered in key Fintech areas, including London, Amsterdam, New York, etc., while the Barclays Accelerator is an intensive 13 week program that focusses on startups in machine learning, lending, digital banking solutions, trading, cybersecurity, data analytics, payments, cryptocurrency, insurance and wealth management.

The GOV UK report highlights that 9 out of 10 British consumers choose to do transactions digitally, and at 42%, the Fintech adoption rate is significantly faster than in other markets.

Most consumers prefer online banking than traditional in-branch banking, with at least 70 challenger banks launched since 2008.

Atom Bank is the UK’s first bank developed specifically for mobile devices.  Launched in 2016, it is one of the fastest growing banking startups in Europe. Monzo is also a digital bank designed for smartphones with over 600,000customers, and Starling Bank is a 100% mobile-only bank that enables customers to apply for a current account in less than 3 minutes.

Mobile payments are another growing trend, with 32% of Britons using their smartphone to pay for their goods and services each month.

Popular mobile payment providers in the UK include SumUp, Skrill, Shopwave and Yoyo Wallet.

Other in-demand Fintech services in the UK include digital money transfer and peer-to-peer lending.

TorFX is one of the biggest digital money transfer platforms in the UK and winner of the International Money transfer Provider of the Year for three years running (2016, 2017 & 2018), while RateSetter is a prominent P2P lending company in the UK with over £2 billion invested through its online platform.

The demand and uptake of Fintech enabled services and products in the UK are higher than comparative regions in the US and Europe (including France, Germany, Sweden etc.). Demand and consumer adoption are very powerful growth determinants and one of the main reasons why the UK has grown into the leading Fintech ecosystem in the world

In the next article, we’ll discuss capital investment in UK Fintech startups and the role it plays in supporting the UK as the no.1 global Fintech hub.

You can download the full GOV.UK Fintech report here.