Last year was yet another blockbuster year for the UK’s booming fintech sector. British fintech companies attracted £37.4bn of investment in 2019. That’s 91% higher than last year, according to data released by KPMG and the UK accounted for 83% of all European fintech funding in 2019.
These are chunky numbers, to be sure. But for consumers or anyone outside the startup ecosystem, these figures can seem abstract. This is the finance sector after all, aren’t big amounts part and parcel of the industry? Well, yes – but this investment matters on two key fronts.
Firstly, there’s the halo effect of a booming fintech sector on our economy. A nucleus of high-performing, innovative businesses operating and hiring in the UK is good for our national prosperity.
At a time where many national and regional economies are struggling to move beyond industries like manufacturing, it’s wonderful that the UK is in the driver seat internationally when it comes to the digital transformation that’s happening across the world.
A subtler revolution
The sci-fi writer William Gibson makes the point that societally transformative events are usually quite hard to notice. Their scale means that we often live through them without really noticing. Things change gradually, there is rarely a big bang or some sort of clapperboard that immediately creates a divide of then and now.
Something similar is happening in finance. To really see how much things are changing, you do need to read the tea leaves a little bit. This enormous cash infusion into the UK’s fintech sector offers a rare, clear look at how our society is changing.
The big theme that emerges, when we take a closer look at all that investment, is diversity. It’s all manner of products and sectors. Fintech has moved far beyond the base pitch ‘banking but better’.
In fact, the partnership approach – where incumbent banks partner with fintechs – is increasingly common. Overall, these numbers show that a digital revolution in financial services is underway, but its impact isn’t well defined or completely understood yet.