How to prioritize regulation, diversity and collaboration to strengthen fintech in the UK

During 2022, the UK FinTech industry demonstrated its resilience as it battled through strong headwinds. Despite a global tech slowdown as a result of a series of economic, political and market turbulence, UK FinTech stood strong, securing $12.5 billion in VC investment, placing it well above its peers.

The numbers speak for themselves – the UK has 10% of the global FinTech market share; FinTech challengers now deliver more than 55% of total UK SME lending; and 8 out of 10 UK adults 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 efficient and more democratic financial services sector that works better for everyone.

But to truly unlock the full potential of financial innovation, we need to build on this momentum and push forward on a number of critical priority areas for the sector.

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

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

And we need to promote 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 access the power of FinTech to help individuals and SMEs navigate this cost of living crisis. We also need to support our UK FinTechs to become global brands, unlocking greater forms of institutional investment to fill the growth capital gap. And while we drive disruption and competition, we must also seek out the areas where partnership and collaboration across the ecosystem are key to progress. This collaboration – between the new actors, the cultural heritage institutions and the large technology companies – 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 with which the Government and the Bank of England responded to the collapse of Silicon Valley Bank was testament to their continued support for this vibrant and thriving sector of the UK economy. It is also a testament to the appetite and ability in the UK for industry, regulators and government to work together. It is this potential for collaboration that 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 – will be addressed at the 9th annual edition of our Innovate Finance Global Summit 2023, bringing together the inspiring entrepreneurs and innovators driving real change across of 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’.