Up 500% in Three Years, Fintech Investments Soar in the UK, Target Banking Shakeup

The UK is outpacing all of Europe and the US in terms of dollars spent on fintech investments, with $48 billion pouring into UK fintechs in 2019. As consumers shift to mobile apps offering seamless financial services and payment solutions, fintechs are aggressively challenging traditional banks, offering the same services, competing for market share and precipitating a huge spike in funding.

Fintech investment is up 500% over the last three years in the UK, compared to an increase of 170% in the US and 133% in Europe, according to global recruiting firm Robert Walters.

Dan Simmonite, business director at Robert Walters, says the lines have blurred between products and services from legacy institutions versus new tech.

“Fintechs were not initially seen as direct ‘competition’ to traditional banks – with their products and services differing vastly. However, over the past 12-18 months we’ve seen fintechs apply for banking licenses so they can expand their offering to include overdrafts, guarantee deposits, and offer the ability to set-up direct debits.

Whilst fintechs creep into traditional banking territory, and financial services continue to embed technology into their processes, the sectors stand to become indistinguishable in the next year.”

The global pandemic is accelerating the use of digital applications and diversifying offerings from online platforms. The transformation will bring long-term changes to business procedures in the UK, according to the London-based firm.

“Lockdown and social distancing measures mean that banks have had no choice but to scale back their retail operations, instead pushing customers towards digital platforms.

The UK has one of the highest adoption rates of digital and online banking – growing by 32% in the last 10 years. Adoption rates of online banking in the UK were at an all-time high of 73% in 2019, with the majority of users accessing platforms via smart phones (64%) rather than over tablets (34%). The adoption rate is predicted to be significantly higher in 2020.”

Analysts at Robert Walters report that lending is the key service that will allow fintechs to demonstrate their value and overall promise as the face of modern banking.

“In addition, as normal restrictions on lending are waived to enable companies to ride out the crisis, artificial intelligence (AI) will play a key part in enabling the financial services sector to provide simultaneous support to thousands of businesses – at a rate far greater than the capacity of their current underwriting team. As a result, AI-driven fintech lenders will be the biggest ‘winners.’

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