Its been a while since I’ve looked at investment levels in the Fintech sector, having been busy helping some new entrants get their propositions, brands and take to market plans into shape. More on that later.
Latest numbers courtesy of KPMG, showed the UK Fintech sector continued to grow in 2019 despite a downturn in Fintech funding globally. The numbers are impressive – up 91% from $25.4bn in 2018 to $48.5bn in 2019. And that’s despite the Brexit effect! What makes it even more impressive is this was a six-year high.
Highlights:
- The UK bagged half of the top 10 deals in Europe
- Over 80% of Europe’s investment went to the UK
- 2019 saw the largest funding round ever – Greenshill raised $800bn from Softbank
Growth drivers
The demand for more cash was inevitable as some key UK Fintechs came out of their start up phases against a backdrop of high growth and broadening scale. This phase was characterised by a widening product and service range, as well as for some, expansion into international markets.
Playing catch up
Its also arguable, that the Financial Services sector is still largely playing catch up to the sectors where digitisation has been the expected norm by consumers for ages – buying insurance, holidays, clothes and cars are all good examples. New entrants to FS such as the challenger banks are forcing big incumbents to shake up their cost bases and provide better digital services. Recent announcements of job losses by some of the big banks is evidence that they are starting to take the challenge seriously.
New opportunities
So far, the mass market of online banking has had the focus – witness the take up by millennials of Monzo and Resolut. However, I believe the over 55s is an attractive segment which has only been tactically addressed by the Fintechs so far – for example some very focused wealth management propositions and pension consolidation services. Here could be the next big opportunity for Fintech investment, into brands which earn the trust of the segment by providing purpose built products and services for the over 55s market. With a market size of 10.2m people between 55 and 70, the potential to build a modern, relevant and go to brand shouldn’t be overlooked.