UK fintech investment fell a disastrous 57 per cent to £4.6 billion in the first half of 2023, compared to £10.8 billion in the same period in 2022, according to the latest KPMG Impulse from Fintech report.
The number of UK fintech deals also fell from 392 in the first half of 2022 to 212 UK M&A, private equity or VC deals completed in the first half of this year.
The reasons aren’t hard to fathom: Investor jitters over high inflation, rising interest rates and Russia’s crushing invasion of Ukraine, combined with the post-pandemic cooling of tech stocks, have all left investors hanging on their hands to sit.
What does this mean for the future for UK fintech startups?
Despite the withdrawal, Britain remains the center of European fintech investment, with UK fintechs attracting more funding than fintech startups in the rest of Europe and the Middle East combined, second only to the US, and ahead of India, Germany , France, Sweden and Italy.
The UK is home to many of the world’s largest fintech companies, with a thriving ecosystem of around 2,500 fintech companies in Britain, mainly in London, making London the third largest fintech hub in the world, in line with predictions that the number of fintech companies will double by 2030.
Furthermore, Britain has one of the highest fintech adoption rates in the world at 71 percent, compared to a global average of 64 percent. For example, Revolut has reached 35 million customers worldwide and Starling Bank is approaching 4 million users.
Unicorns are also plentiful. A City of London factsheet reports that the city is home to 100 tech unicorns, with fintech companies making up the largest share of the pie. These include Atom and Oaknorth Banks, Rapyd, Checkout.com, SumUp and GoCardless.
As the healthcare industry enters a robust healthcare environment, new opportunities are presenting themselves. Deloitte has identified that the UK fintech ecosystem consists of eight broad categories, including banking, RegTech, InsurTech, lending, payments and WealthTech.
Where are the opportunities for British fintech startups?
Blockchain and crypto appear to be the most active subsector this year, with a 20 percent share of total fintech seed deals. The rise of machine learning and AI is also having an impact, as companies use these technologies for everything from customer service to assessing risk.
The recently released draft Payment Services Directive 3 is likely to help drive interest and investment in fintechs using open banking and embedded finance in the coming quarters.
With so much opportunity, it’s not surprising that a whole new crop of start-up companies are attracting attention. Below you can discover five interesting British fintech startups.
#1 – Carbon Place
Founded in 2020 by a network of global banks including NatWest Group, Carbonplace facilitates the secure, transparent and streamlined transfer of certified carbon credits through a global network of buyers and sellers through their banks.
The global voluntary carbon market is expected to grow nearly sixty-fold, reaching $500 billion annually by 2050.
By opening the voluntary carbon market and enabling secure and efficient transactions, Carbonplace – a fintech likened to the SWIFT of carbon markets – will enable the market to scale and deliver urgently needed large-scale investments in climate action, from reforestation initiatives . to innovation in carbon capture technologies.
#2 – SuperFi
With the aim of helping people get out of debt faster, SuperFi is a timely start-up given the current economic climate. It works by consolidating all of a user’s debts into the app, which then allows it to provide the fastest way to pay back. It also configures notifications and due dates, and you can also pay your credit cards directly in the app.
The pair, co-founded by Tom Barltrop and Nick Spiller, were motivated by the far-reaching problems that debt causes, including mental health issues, high social costs and significant economic impacts.
In July, SuperFi announced it had raised a £1 million pre-seed funding round led by UK seed fund Ascension and its impact fund, Fair By Design, alongside Force Over Mass and a number of other investors.
#3 – Kani
Fintech reporting and reconciliation made simple is the raison d’être of Kani, a B2B SaaS platform founded in 2018. The Newcastle-based company aims to simplify financial processes and provide automation, accuracy and compliance for reconciliation and reporting for finance teams. .
Used by youth banking platform Osper and Railsr (formerly Rails Bank), among others, Kani integrates business intelligence and can dig deep into the numbers to help users make informed decisions about business activities.
#4 – Fidel API
Ranked among the 15 fastest growing UK technology companies on the 2021 Deloitte Technology Fast 50 list, Fidel API’s mission is to help developers avoid complex integrations with payment service providers, which in turn helps get products to market faster and more efficiently to take. Through a single point of integration through the API, developers can build on card transactions and the solution can also be used for rewards, attribution, insights, digital receipts or expense management.
#5 – Tree Map
Treecard started life as a Mastercard payment card made from sustainably sourced wood and recycled plastic bottles. The idea was that Treecard planted trees while you spent. To date, Treecard has financed the planting of five million trees with the aim of achieving one billion new plantings.
However, Treecard discontinued its debit card in September and focused on the app, which you can link to your other cards.
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Kirstie McDermott works for our job board partner Jobbio. Based in Dublin, she has been a writer and editor across print and digital platforms for over 15 years
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