UK fintechs have increased their average total investment by one third since 2017, despite the uncertainty surrounding Brexit.
Fintechs have raised more than £20m each so far in 2019 compared with £15m in 2017, although many see challenges ahead in finding technology talent and levels of consumer adoption.
In their next funding round, UK fintechs are expected to raise a total of £2.6bn, with Series A funding – the first significant round of venture capital financing – accounting for over a quarter (26pc) of investment, with one-third of respondents anticipating an IPO in the next five years.
As well as a capital injection though, fintechs are looking for additional benefits from their VC investors: more than half (54pc) value access to new customers as the most important benefit; 14pc cite partnership opportunities, and 12pc list international expansion and growth.
UK fintechs plan to expand internationally, with continental Europe and Asia seen as the two most important target markets; Asia overtaking North America since the last census in 2017.
Over half (53pc) of firms this year reported finding the right digital skills as a major challenge. Software engineering, system architecture and development was cited as the most in-demand skillset (ranked first by 52pc of firms), but also the hardest to find. The second most valuable, and equally difficult to source, were data analytics and data science skills (ranked top by 19pc of firms).
Customer adoption (48pc) and building partnerships with established players (37pc) are seen as other challenges. Additional concerns for fintechs are ensuring sufficient capital and liquidity (44pc) and navigating Brexit uncertainty (42pc).
The report additionally found that a significant gender imbalance is persisting among the fintech workforce. According to the research, the sector’s split is 70.5pc male and 29.5pc female – virtually unchanged since 2017.
EY and Innovate Finance surveyed over 224 fintech companies for their biannual UK FinTech Census.