The UK Fintech Landscape

Lead FinTech partner at Deloitte Louise Brett discusses the evolving FinTech sector.

September 2021

This year’s FinTech Strategic Review (Kalifa Review) gave the FinTech sector its well-deserved, big bang moment. With its core objectives and clearly positioned ability to support the UK’s economic recovery, people are seeing FinTech’s incredible power of not only levelling up but also equalling out. There needs to be more jobs and better trade alongside sustainable and inclusive ways to recover. To do this, we need to be better connected. A certain way to drive equal growth and opportunity across all pockets of society is to identify and nurture FinTech across the UK.

Connectivity ignites revolution and rapid co-creation. With a potential GVA contribution estimated at £13.7bn by 2030 and 70% as job creation, FinTech’s superpower is high-income tech-based employment. It also plays a key role in upskilling and retraining the existing workforce, meaning a fairer society for all.

In the UK, an annualised growth rate of 16% versus 1.3% for small to medium-sized enterprises over the past 10 years shows FinTech is unquestionably an engine for growth. The UK continues to create global category-defining FinTechs and is strong across the board, particularly in wealthtech and payments. Over the past 20 years, the number of FinTech companies grew to more than 2,500 with a third of all FinTech firms now outside London. Across the UK we’ve identified 25 clusters of FinTech activity, all at different stages of growth and development.

Core characteristics of high growth clusters

Analysis of the 10 highest growth clusters reveals a combination of core characteristics that serve as foundational building blocks for FinTech success. It is clear financial services and technology domain expertise is strongly evident in the UK’s most established clusters. At the same time, in almost every area with high levels of financial services and tech professionals, a FinTech cluster is present. There’s also a strong positive correlation between at least three colleges or universities providing science, technology, engineering and maths (STEM) talent and the number of high-growth FinTech firms. While this underscores the importance of encouraging uptake in STEM subjects, we should not lose sight of those crucial skills of creativity and empathy. From start-up to global scaling, the most important aspects for growth are commercial partnerships alongside access to talent and investment.

FinTech for good

There is no doubt FinTech has revolutionised financial services for good. It has brought new products and services to consumers and businesses. But as consumers and business change, so does its impact. As people deepen their care for the planet and how to create fairer, better futures, we see new FinTech products emerging to service their needs. From ethical investments to sustainable savings, the next wave of FinTech will strengthen our moral wellbeing as well as our wallets. It will span all industries, accelerating deeper collabo-ration and prosperity for all. We’ll see a reorganisation of the value chain, paving the way for companies from all industries to incorporate financial services into their customer journeys and offerings at the moments that matter most.

When organisations get this right, you get an invisible and frictionless financial experience; meaning you’ve completely transformed how customers and business engage with money. Embedded finance is not limited to financial services though, you can reimagine entire industries and create new types of products and services from personalisation to solving energy poverty.

Five key topics to focus on

FinTech wants to be part of the solution and drive better outcomes for all. Thanks to the Kalifa Review, FinTech is having its well-deserved moment in the spotlight. Focused around five key topics, it makes recommendations and shows how the sector can move forward on skills and talent, investment, national connectivity, policy and regulation and international attractiveness. Bringing together government, industry and FinTech, the UK can unleash the huge potential of the sector and provide the support needed for effective post-pandemic recovery.

The UK must continue to nurture a start-up culture, but also give high growth firms the opportunity to become global giants and category leaders. The Kalifa Review lays out a strategy and model for its delivery, providing a unique opportunity to realise the potential of a decade of growth, innovation and talent.