Can UK FinTech seize the crown from the USA?

By Puja Sharma

Following a turbulent 2023, the UK FinTech industry has beaten the odds as investment continues to flow healthily into the market. With H1 of 2024 seeing £5.7 billion flow towards UK FinTechs, compared to £2bn for the same period in 2023, the UK stands ahead as a great example against competitor country markets.

“The UK has demonstrated that its FinTech sector can flourish in times of prosperity but also hold its own when the going gets tough as well,” remarks Jeremy Baber, CEO of Lanistar. “An almost threefold increase this year is a testament to the innovations on offer from UK FinTech right now.”

A sense of freshness was expected ahead of the election, and the macroeconomic situation is now also showing signs of green shoots. These signs rebuffed bet makers and paved the way for vital investment to be poured into the sector.

Despite the cost of borrowing remains high, geopolitical turmoil and a disastrous 2023, UK FinTech has held strong in the face of economic adversity – seeing investment numbers almost triple during the first half of 2024. H1 of 2024 saw £5.7 billion flow towards UK FinTechs, compared to £2 billion for the same period in 2023.

The UK is currently bucking the trend across global FinTech markets. The global FinTech investment tailed off from $62 billion to $51 billion in H1 2024. Industry heavyweights Monzo, Revolut and NuBank have led the way in recent months in terms of positive results and sentiment for UK FinTech – forcing investors to sit up and take note. With key hubs across Europe and Asia also posting weaker-than-expected results, confidence in the UK market continues to beat expectations.

Jeremy Baber, CEO of Lanistar, noted, “The UK has demonstrated that its FinTech sector can flourish in times of prosperity but also hold its own when the going gets tough as well. An almost threefold increase this year, given powerful external factors – such as 2024 being a general election year – is a testament to the innovations on offer from UK FinTech right now.

“A change of government, coupled with falling inflation and interest rates expected to be cut, would have also been considered by the investors made earlier in 2024. A sense of freshness was expected ahead of the election, and the macroeconomic situation is now also showing signs of green shoots. These signs rebuffed bet makers and paved the way for vital investment to be poured into the sector.

“FinTech is a cornerstone of the UK economy, and it is expected that the hotbed of innovation and development will continue to thrive. Be that AI, RegTech (specifically targeting digital assets) or app-based services – UK FinTech is leading the way when it comes to evolving the financial tools we access.”

It is expected that the worst of the economic headwinds expected to have passed – according to various predictions UK economic output to continue its growth year-on-year and into 2026. An opportunity for innovators and industry experts to continue improving the services coming out of the sector.

Baber added, “UK FinTech has proven itself to withstand the toughest and most unpredictable periods – in the case of the Covid-19 pandemic – now is the time for the industry to continue its trajectory during more stable economic conditions and exceed its potential.

“The resilience demonstrated by UK FinTech should make the government sit up and take note of the important role FinTech can play as the UK’s wider economy looks to recover. Ensuring practical regulation – which doesn’t stifle progress – as well as seamless licensing processes are in place will assist the industry in its bid to become the global FinTech leader.”

Baber concluded: “The vote in confidence being invested into UK FinTech is a testament to the work being produced by its industry professionals. For investment numbers to have tripled in H1 2024 – on the back of a torrid 2023– UK FinTech has navigated the toughest conditions and can now look ahead.

“UK FinTech is now in an ideal position to capitalise on the prosperous times which lay ahead and continue to chase down the USA for the global FinTech crown.”