Key insights for FinTech companies looking at Entering the UK and European Markets

Speaker: John Hallsworth and Olivia Minnock
Event: Unlocking the UK opportunity for Tech (London Tech Week 2022)
Organiser: The UK Launchpad

Summarised by: Haoyue Xue

This blog follows on from The UK Launchpad event at London Tech Week 2022,
John Hallsworth from KPMG and Olivia Minnock from FinTech Alliance gave their
key insights into opportunities and trends in the UK FinTech industry.

Overview

The UK is a leader in FinTech and is one of the world’s largest centres for the FinTech
industry. Valued at approximately $11 billion in the UK market, FinTech represents a
relatively small but impactful presence in UK financial services. In the second half of
2021, there were 600 deals in the UK alone. Within the FinTech sector in the UK,
there are 80,000 employees working with a deep base of staff and skills.
Supports and the Ecosystem in the UK
In terms of engagement in the environment in the UK, there are a lot of welcoming
arms for FinTech. And it is quite easy to get connected to the network.

Government Supports

In addition, the Royal Mint has even been commissioned to produce its own NFT. It stood for kind of a sign that the government is trying to actually understand the technology, which takes to build them and engage with the industry on that subject.

First of all, the UK government has been very supportive of bringing FinTechs to the
UK as it aims to make the UK the best place for FinTech business, and what it plans
to do to maintain this position. Such as the Kalifa Review, an independent review
requested by the chancellor of the Exchequer, aims to support the development and
broad penetration of FinTech in the UK and to maintain the global reputation of the UK
FinTech. In addition, the Royal Mint has even been commissioned to produce its own
NFT. It stood for kind of a sign that the government is trying to actually understand
the technology, which takes to build them and engage with the industry on that
subject. At the same time, other interesting developments from the government, such
as the recent data announcements around the Data Reform Bill, will have an extended
impact, broadening the open banking leading proposition to open finance. FinTech
Alliance, also backed by the UK Government, is a multifaceted digital engagement
platform that brings the global FinTech ecosystem together to explore, engage and do
business.

Investors and Accelerators

In terms of more about the ecosystem, it is very well developed in the UK with VC
and PE firms who understand the market, such as Mountside Ventures, as a previous
part of PwC Raise, and then they have started their own platform, helps bring together
VCs and FinTechs.

Meanwhile, advisors and accelerators are well versed in working with FinTech
companies of all shapes and sizes. Accelerators like Level39 consist of tech
companies that are shaping the landscape of the future of financial services, and the
members work extensively in the areas of FinTech, machine learning, artificial
intelligence, cybersecurity, big data, blockchain, and digital banking. Tech Nation also
has some great accelerator programmes to bring FinTech businesses to the next level
through mentoring and similar activities. FinTech Connect is good for niche panels
both on and offline so that FinTechs can learn more about different sectors. And
FinTech talents are good for broader forward-looking statements.

Regulators

Furthermore, regulator like FCA is keen to engage and has led the way in the framework
like the regulatory sandbox, so the regulated business that knows how to operate
safely within the UK is growing to be a scale box.

The UK Market

From a market perspective, there is a domestic retail customer base who are up there
in terms of the adoption of digital solutions. And London, as the global banking
insurance wealth centre is a large substantial market with great trade bodies,
particularly innovative finance who champion the way for anything FinTech in the
The UK and internationally.

Regional Advantage

The Midlands is growing rapidly with established specialist financial services institutions, so there is a maturity in terms of collaboration and innovation.

Different regions have their own different areas of growth and opportunities. For
example, the East of England and Scotland have the top universities, so there is a lot
of research in science and technology in these regions. The Midlands is growing
rapidly with established specialist financial services institutions, so there is a maturity
in terms of collaboration and innovation. The main strength in the north of England is
the large banks in the region. In Wales, wealth management, side-registration
technology, aggregation, and data are accessible, and the region is also one of the
more diverse regions in terms of female leadership. Last but not least, Northern
Ireland offers great cyber security hubs and has some big financial institutions looking
to collaborate.

Challenges and Opportunities

A lot of the big institutions are now making more and more use of demand equity. For example, they can take a small stake in a FinTech but route their business in the particular space through that FinTech and help it to scale and grow, which becomes an increasing trend.

Nonetheless, there are also many obstacles in the market for FinTech companies as it
is more challenging to see how the big institutions take note and take the startups
seriously, as well as the subsequent collaboration. At the same time, valuations have
come down and some FinTechs may struggle through the current economic
environment.
In this economic environment, there is a big collaboration opportunity, many
FinTechs are niche-focused, but some of the problems are much bigger than those
niches and a key theme through the next period is going to be the collaboration
between FinTech and other ecosystems by solving much bigger end-to-end problems.

Thinking creatively is an important point in the current environment. A lot of the big
institutions are now making more and more use of demand equity. For example, they
can take a small stake in a FinTech, but route their business in the particular space
through that FinTech and help it to scale and grow, which becomes an increasing
trend.

Want to know more?

The UK Launchpad is an innovation ecosystem specialising in supporting tech
companies looking to enter or raise money in the UK and European markets
If you would like to see if we can help your company:

Email us at contact@uklaunchpad.com
Visit our website at www.uklaunchpad.com