With technological advancements, there is an increase in efficiency and transparency. It also has the power to decrease costs and provide easy access to financial services. The financial sector is the last one to be impacted by technological advancement; however, it is catching up quickly.

Fintech is a global trend that is gaining popularity rapidly. In simple words, it can be defined as the trend of combining the latest technology with the financial market. It is changing the way we do transactions in all types of businesses.

There is no doubt, the UK is a leading global fintech hub because of its abundance talent pool and thriving ecosystem. Fintech is expanding rapidly and has emerged as a global industry. It is striving to change the future of finance. In the UK, the fintech industry is worth 7 billion pounds. In 2017, this sector employed nearly 60,000 people. Fintech industry is also developing in the North of England. It was reported that almost 70 new fintech companies were established and they were capable of raising 700 million pounds in funding.

Want to know more about the advancements of fintech in the UK? Continue reading.

Fintech Hub in the UK

Without a doubt, traditional financial institutions have been struggling to adapt and moving quite slowly. Since consumer demand is changing, the working of financial institutions should also change. This is where fintech comes in handy; it provides an opportunity for companies to introduce fintech solutions.

London is the fintech hub in the UK, not only this, it has the largest financial sector in the world. The city has 350 different banks with 40,000 employees.  Since 2010, the financial companies raised approximately, 7.4 billion pounds in financing. From the period 2009-2014, the UK has the highest percentage of growth when it comes to fintech investment.

In 2015, 4 fintech unicorns operating were in the UK: Powa Technologies, Transferwise, Markit, Oscar Health. Since then, many other global fintech unicorns have established their presence in the country. More than 50% of the startups in Europe are following the regulatory system of the UK. It mostly consists of the European Banking Authority, Financial Conduct Authority, Prudential Regulation Authority.

Tax

For promoting fintech in the UK, the government has introduced an R&D tax scheme. The main purpose is to encourage and reward innovation in technology. Thanks to this policy, businesses can decrease their taxes and even reclaim the amount they spend on R&D.

Additionally, when the businesses become taxable, the tax rate is set at 19%. This is comparatively lower than in other European countries.

Regulation

Thanks to the regulations, the fintech community gets the support it requires for making the public and financial institutions feel comfortable operating in the country. The regulators make it easy for fintech companies to set up their shop.

One of the best regulations of the FCA is the sandbox. It allows the companies to test their services and products in a friendly and controlled environment. The FCA can learn from the projects and use it for advancement in regulation.

Finance

Another advancement in the UK was is finance. The investment in fintech companies was recorded at $2.9 billion within the first six months of 2019. In addition, the (S)EIS tax policy offers an excellent incentive for investors to put their money in business at an early stage.

Excellent Support

There is a lot of support offered to fintech companies. There are local council-funded incubators, FinTech Alliance, and Open Banking Implementation Entity (OBIE), offering support for starting up a fintech company.

Changing the Financial Landscape

However, there is still a need to fill in the gaps when it comes to financial services like including pensions or improving the functionality of payments. It is believed that the positive investment climate and inventiveness will help overcome the problems.

Thanks to fintech, consumers and businesses can expand their financial options and streamline operations. The technological advancements in the financial industry offer a wide range of benefits like making financial services easily accessible to everyone, decreasing transaction costs, better control over budgeting and spending, reaches underserved consumers, and offers greater efficiency. Through fintech, customer experience can be enhanced, and consumer confidence will also be improved.

Fintech is not only a subsector in the UK anymore. It has emerged as an industry helping in providing better and client-centric financial services and products. With the help of technology and innovation, the sector has improved the efficiency of the companies. It is also good for strengthening the connections between the financial centers.

Moreover, a bridging project is being worked on that will improve the regional approach toward fintech. Fintech bridges are set up with Singapore, South Korea, Australia, Hong Kong, and China.

The executive, Eyal Nachum Bruc Bond, believes that fintech bridges with different countries can prove to be beneficial for all the countries involved. It will increase direct investment, license passporting, deep regulatory alignment, and leniency in regulations.

Top Fintech Startups in the UK

There are many startups located in the UK. Here are some of the most popular ones.

  • OakNorth Bank- was established in 2013 with the headquarters in London. The company offers a wide range of services like property finance, loans, and savings accounts to companies and entrepreneurs.
  • PaymentSense- this was founded in 2010 and is located in London. It offers virtual and face-to-face payment solutions to small businesses in Ireland and the UK.
  • TransferWise- founded in 2010, the company allows SMEs and individuals to easily transfer money through exchange rates.

A Final Word

Hence, London is the undisputed tech capital in Europe and aims to become the leading tech hub of the world. It was anticipated by 2026 London might become home to 45,000 fintech firms, generating over 12 billion pounds. The UK supports the role of fintech in promoting economic growth and decreasing inequality throughout the world. In order to remain the leading fintech hub in the world, companies must be encouraged and supported for focusing on innovation. Additionally, fintech services and products must support everyone.