UK FinTech SMEs drive innovation after government initiative

By Vriti Gothi

A majority of UK financial services small and medium-sized enterprises are accelerating innovation adoption, following participation in a government-backed leadership programme aimed at tackling long-standing productivity and digitalisation challenges across the sector.

According to results from the Future Finance Innovation Leadership Programme, 95% of participating firms adopted at least one innovation during or after the seven-month pilot. The programme worked with 20 UK-based financial services organisations, including FinTechs and credit unions, and was led by the University of Bristol with support from Innovate UK and the Economic and Social Research Council (ESRC).

The initiative was designed to address structural barriers that have historically constrained innovation among financial services SMEs, such as risk-averse cultures, fragmented leadership, and limited capacity for digital transformation. These constraints have taken place against a backdrop of weak sector-wide productivity growth. Since 2015, UK financial services productivity growth has ranked among the slowest in the G7, while small businesses — accounting for 99% of UK firms — have experienced a significant slowdown in growth over the past decade.

Programme data suggests measurable shifts in organisational readiness and capability. Participating firms reported a 27% increase in preparedness to respond to future market trends, alongside a 20% improvement in innovation culture and leadership. Technology and skills implementation capabilities rose by 14%, indicating progress beyond experimentation toward execution.

Jack Stanbury, Senior Project Manager at Future Finance, said the outcomes demonstrated how targeted leadership and innovation support can translate into tangible business impact. “It’s been inspiring to see businesses across the UK grow in confidence, embrace innovation, and deliver tangible outcomes — from launching new products to securing funding for AI prototypes,” he said. Stanbury added that work is underway to scale the programme to reach a broader segment of the financial services ecosystem, with a focus on productivity gains and improved access for underserved consumer groups.

One participant, Dungannon Credit Union, illustrates how innovation programmes are being applied beyond core FinTech use cases to modernise community-based financial institutions. The Northern Ireland-based credit union used the programme to advance digital, environmental, and social initiatives, including the planned rollout of digital signature pads to reduce paper use and improve operational efficiency. The organisation estimates the initiative could deliver a 50% cost reduction and cut CO₂ emissions by up to 90% once fully implemented.

Alongside operational changes, Dungannon Credit Union adjusted its long-term member engagement strategy by increasing the savings cap for children’s accounts from £3,000 to £5,000, with further increases planned. It is also developing a school engagement programme centred on financial education, aimed at building early savings habits and strengthening relationships with younger members and their families.

James McCabe, Operations Supervisor at Dungannon Credit Union, highlighted, “It’s all about having those small wins. Once we get this up and running and show it’s a success, then anything else I propose to the board, they will be open to listening and hopefully backing.”

McCabe’s nomination for the Northern Ireland Social Enterprise Emerging Leader Award reflects a broader theme emerging from the pilot: the link between leadership confidence and sustained innovation execution.

As UK policymakers and industry stakeholders continue to assess how to reinvigorate financial services productivity, the programme’s results point to the growing role of structured innovation leadership initiatives in enabling SMEs to translate strategic intent into operational change.