How fintech is transforming the UK

Goldex Team

Editorial content

Thought that financial sector disruption had reached a peak? Think again. The UK’s fintech scene is bigger than it’s ever been.

And whether it’s enabling world-changing ideas through crowdfunding, or helping small businesses manage their payments better, it’s only going to get bigger.

British fintech startups are driving forward new tech to disrupt traditional financial services – and changing the landscape for customers and businesses alike as a result.

Big deals

And they’re succeeding -the figures speak for themselves. KPMG’s most recent Pulse of Fintech report found that in 2018, total investment activity in the UK was $5.6bn – nearly four times higher than in 2017. That’s despite the total number of deals dropping, and the uncertainty surrounding Brexit.

“Despite activity tailing off in the second half of the year, the UK fintech sector reached record highs with an exceptionally strong 2018,” says Anton Ruddenklau, Global Co-Lead, KPMG Fintech.

Controlling money

Fintech encompasses all aspects of money management, with verticals across the sector. It’s huge, and it encompasses all aspects of how we manage our money. Investment apps like Goldex, for example, are making it easy for anyone to buy and sell gold at the touch of a button – as well as providing all the information they need to make those decisions.

Digital challenger banks such as Monzo, which live entirely on your mobile, are aiming to make banks simpler, with budgeting help and instant spending notifications.

As Monzo CEO Tom Blomfield wrote in a blog post back in 2017: “We’re tired of hidden fees and charges, endless paper forms, and nothing quite working in the way we’d expect. So we’re trying to build a bank that we’d want for ourselves, our friends, and our families.” The bank is now a ‘unicorn’, valued at £1bn.

While TransferWise has taken the pain out of the money transfer market and now moves around £3bn every month across the world, saving customers an estimated £80m every month.

Future Trends

So what’s next for British fintech? Experts predict increased ‘bundling’ of banking services will be big business, as fintechs which previously just disrupted a piece of the action will look to replicate the offerings of the big banks.

Open banking is on the rise, as well, where a consumer allows a regulated app or website access to their current information. This could revolutionise price comparisons, for example where consumers could be given information about a product according to what they actually spend.

And blockchain technology could mean we see even bigger disruption around payments and transfers, allowing them to happen in seconds – and for free.

Business boom

UK innovations in the financial sector are making it easier for small businesses, in particular, to speed up a host of processes: cloud-based software that will send out invoices, apps that track expenses, and automated payment systems that allow the business to make the process of taking regular payments far easier and quicker.

Coconut, for example, is a current account designed for freelancers and small businesses, which shows you how much tax you owe and when payments are made and allows you to track your expenses.

Change for good

Fintech can also be a force for social change. The PwC Global Fintech Report 2017 points out that mobile money services have become a ‘gateway for financial inclusion’ among those who previously didn’t use banks. That’s an estimated payments volume opportunity of an astonishing $3 trillion – but it also means that those people’s money is safer and more manageable when it wasn’t before.

Alternative lending and financing verticals are changing the way small businesses and startups are funded. They enable entrepreneurs to bypass the sometimes-murky world of raising investment from venture capitalists. Now, they can take their big ideas to the people and access funding directly.

In 2018, business crowdfunding platform raised £21.2m for businesses. Their biggest amount raised? £3.69m, by 1,472 people investing in Recycling Technologies, which is helping solve one of the world’s biggest problems by recycling end-of-life plastic.

Wherever it goes next, fintech is likely to have a huge impact. To say it could change the world isn’t an exaggeration: it’s already changing it. And UK fintech companies are at the heart of changing the way the UK manages money for the better.