After a pandemic-fuelled high, 2022 saw a dip in fintech investment in the UK. According to the most recent Pulse of Fintech report from KPMG, there was less money to go around, with a decreasing number of large deals in the second half of 2022, compared to the previous period. This was as a result of investors waiting for valuations to stabilise, according to the report.
Taken out of context, this might seem worrying, but the UK remains a top destination for financial technology investment, second only to the U.S., and ahead of India, Germany, France, Sweden and Italy.
It was also reported at the end of last year that London had surpassed San Francisco and New York and is now the world’s biggest centre for fintech investment, according to Dealroom.
The UK is home to many of the world’s largest fintech companies, with the government’s 2019 Fintech State of Nation report revealing that there were 1,600 fintech companies that year. The number grew to 2,500 by 2022, in line with predictions that the number of fintech firms will double by 2030.
Additionally, the UK has one of the highest fintech adoption rates in the world, at 42 per cent, compared to the global average of 33 per cent. For example, Revolut has reached 20m customers, and Starling Bank is approaching 3m users.
Unicorns abound, too. A fact sheet from the City of London reports that the city is home to 100 tech unicorns, with fintech businesses making up the largest slice of the pie. These include Atom and Oaknorth Banks, Rapyd, Checkout.com, SumUp and GoCardless.
With the sector in robust health, new opportunities are presenting themselves. Deloitte has identified that the UK fintech ecosystem is made up of eight broad categories, which include banking, RegTech, InsurTech, lending, payments and WealthTech.
Blockchain and crypto represent opportunity and look set to be the most active sub-sector this year, with a 20 per cent share of total fintech seed deals. The rise of machine learning and AI is impacting too, as companies utilise these technologies for everything from customer service to assessing risk.
Embedded finance, such as ‘buy now, pay later’ services offered by companies like Klarna, plus open banking and the internet of things (IoT), are all helping to shape the future of fintech.
With so much scope, it isn’t surprising that a whole new slew of start-up companies are drawing attention. You can discover five interesting UK-based fintech start-ups below.
Founded in 2020 by a network of global banks which include NatWest Group, Carbonplace’s mission is to support urgent, large-scale climate action, with the aim of transitioning to a net-zero economy. By opening the voluntary carbon market and enabling secure and efficient transactions, Carbonplace will allow the market to scale and deliver urgently needed large-scale investment in climate action, from reforestation initiatives to innovation in carbon capture technologies.
Aiming to help people get out of debt faster, SuperFi is a timely start-up given the current economic climate. It works by consolidating all of a users’ debt in-app, which allows it to then offer the fastest way to repay. It will also configure notifications and due dates, and you can pay off your credit cards directly in-app too. Co-founded by Tom Barltrop and Nick Spiller, the pair were motivated by the far-reaching problems debt causes, including mental health issues, high social costs, and significant economic impact.
Fintech reporting and reconciliation made simple is the raison d’être of Kani, a B2B SaaS platform founded in 2018. Newcastle-based, the company is all about making finance processes easier, offering automation, accuracy and compliance to reconciliation and reporting for finance teams. Used by youth banking platform Osper, and Railsr (formerly Rails Bank), among others, Kani incorporates business intelligence and can dig deep into the numbers to help users make informed decisions about business activities.
4. Fidel API
Ranked among the 15 fastest-growing UK technology companies on the 2021 Deloitte Technology Fast 50 list, Fidel API’s mission is to help developers avoid complex integrations with payment service providers, which in turn helps to bring products to market faster and more efficiently. Via a single point of integration through its API, this allows developers to build on top of card transactions and the solution can be used across rewards, attributions, insights, digital receipts, or expense management too.
The clue is in the name: Treecard offers its users Mastercard debit cards made from sustainably sourced wood and recycled plastic bottles, which enables them to plant trees as they spend. The London-based company is an impact-first business and intends to plant 1bn trees. It offers a variety of ways for users to do this – they can use their steps via payments or by having money on deposit.
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Kirstie McDermott works for our job board partner, Jobbio. Based in Dublin, she has been a writer and editor across print and digital platforms for over 15 years.