To put the gap in context, the U.S. has seen a 170% expansion in that period while the rest of Europe has grown 133% in that same metric. Further, compared to the rest of the continent, the U.K. demands fully 80% of all VC fintech investment. No other sector has attracted more VC attention than fintech, according to the report. To that end, in 2019, U.K. fintechs pulled in $48 billion in funding. This put it at the top of the European list and second in the world.
The report also suggests the U.K.’s fintech gravitas is enticing to many companies that are considering new locations. More than 1,400 European Union-based companies have applied to operate in the U.K.—1,000 of them planning their first office there— since the U.K. decided to “Brexit” from the continental confederation.
Evidence of the U.K.’s rapid acceptance of fintech can also be gleaned from data provided by Statista, which shows consumer adoption of fintech has seen a significant rise in recent years. And, although fintech use is up across the board, the U.K. has outpaced the average. As of last year, the U.K. had a rate better than both the European and global averages at 64%. “One reason for the excelled adoption of fintech products, especially between 2017 and 2019 is that globally, more incumbent banks and financial service companies have begun to offer fintech products,” reads the analysis.
"They said #Brexit would kill the City. They said #Brexit would kill our tech scene. In fact, the UK attracted 80% of all #Fintech investment in Europe last year. 80%!! The UK dominating in the industries of the future yet again."
The increased meshing of fintech and traditional financial services is also noted by Dan Simmonite, business director at Robert Walters. He points out, though, the sectors’ encroachment upon one another is a two-way street.
“Fintechs were not initially seen as direct ‘competition’ to traditional banks–with their products and services differing vastly. However, over the past 12 to 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,” he said. “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.”
Tom Chambers, senior manager of technology for the London branch of Robert Walters, added new realities created by the global coronavirus outbreak will assuredly also impact the fintech and banking industries, particularly with respect to the elderly.
“With the most at risk to Covid-19 also being the ones who traditionally were the most reliant on counter services, the societal challenge will be to help the elderly use banking services online–where their motivation will be that they simply don’t have a choice,” said Chambers. “Assuming they successfully make this switch, retail banking as we know it will be changed–or in some instances disappear– forever. As this happens, increasingly there will be little to separate banking and fintech.”