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By miguel-ingles
- In Uncategorized
The sector of financial services is booming since some years from now. In addition, the British country stands out in Europe as a corporation hub that performs that business activity. For this reason, in this article I will explain the growth of the Fintech industry in the UK.
What is the Fintech Industry?
The Fintech sector, also known as financial technology, is an industry that emerged 15 years ago more or less, so it is relatively new. However, since its creation, it has gone through a quick growth all around the world. In this field, companies offer financial services to other enterprises or consumers in several subfields: payment technology, wealthtech, credit and lending technology, digital currency and online banking, among other aspects.
For the appropriate progress of the Fintech industry in a country, certain conditions must be met. Firstly, and as the most important aspect, there must be laws and authorities that contribute to the growth of the business ecosystem. It is also essential to have within a specific region prestigious research centres and universities. From them, you could hire qualified employees. And, at finally, there must exist companies (its size or business activity does not matter) or personal clients that want to contract the services of a Fintech corporation.
To stand out of the competence, one of these enterprises should offer some services that are more innovative, efficient and accessible than their rival’s counterparts. To do so, they will need to invest large money quantities in research and development. Venture capital funds usually grant these investments.
How the Growth of the Fintech Industry in the UK Has Happened
This sector appears in the country basically because of the historical position of the UK, and especially London, as a financial and business hub. Nevertheless, the foundations of the industry were established recently, after the 2008 economic crash. On one side, companies and personal clients lost the confidence they put into traditional banks and financial institutions. This was because they did not always act ethically nor never look for the good of their consumers. On the other, authorities published new regulations that eased the formation of competitors in the financial sector.
From the 2010 decade, some new alternatives appeared. Some examples were the exclusively online banks or peer to peer lending platforms, like Funding Circle. The latter ones allowed almost everyone to invest in small or medium-sized companies. I must also mention the case on Monzo, that gathered more than a million pounds in less than two minutes.
In the present day, estimations show that the industry’s tendency will continue to go upwards in the next few years.
Some Data about the Growth of the Fintech Industry in the UK
The British Fintech industry is the leading one in Europe and one of the most important in the world. The next pieces of data confirm this:
- Experts rate the sector’s value in the UK at 1.1 trillion dollars, being the most valuable in Europe. Moreover, it receives a 40% of the venture capital investments that get completed in the continent within this sector.
- According to 2022 data, the UK holds more than 3200 Fintech companies. From these, more than 50 go into the group of “unicorns”. These are those enterprises that were created less than 10 years ago and, without being listed in the stock market nor having been purchased by a third party, they managed to get a valuation over a billion dollars. In this article, you can find more information about these types of companies.
- It is true that most of the businesses and operations take place in the City of London, although investment in other British zones has risen in the last few years. For example, the investment in Fintech companies in Wales increased by a 300% during 2022.
- The UK has signed bridge agreements with other Fintech hubs, such as Singapore, South Korea, Australia, China or Hong Kong.
For everything mentioned in this article, setting up a Fintech company can be one of the less risky business decisions you can make. Nonetheless, it is essential to have good ideas, highly qualified employees and funds to invest.
In ukstartcompany, you will find information about how to establish, register and operate companies with different legal structures and business activities in the UK.