06 Apr Funding boost for the UK’s fintech sector
British fintech companies are continuing to attract record levels of global investment. In a boost to one of the strongest fintech sectors in the world, investors poured funding into the sector in 2019.
Figures from KPMG’s Pulse of Fintech report show the amount invested in the British fintech sector by global investors doubled between 2018 and 2019.
Double the investment in the UK’s fintech sector
During the same time period, investment in the rest of the world shows a slight downturn, throwing even more positivity onto the strength of UK fintech. KPMG’s report shows that £37.4 billion ($48.5 billion) was invested in British fintech companies in 2019. The number of fintech deals in the UK is also at a six-year high.
This level of investment goes against the global trend where overall fintech funding dropped below 2018’s amount at $135.7 billion. Within Europe, the UK now accounts for half of the best ten deals. The country also garnered more than 80% of Europe’s record-breaking investment total of $58 billion.
Last year saw the biggest funding round in the country’s history, which saw Softbank invest $800 million into fintech company Greensill. Other major fintech deals for UK companies in 2019 include funding rounds from Starling Bank, Monzo and Oaknorth. The country also acquired eight new unicorns fintech, including Sumup, Checkout.com, Babyloon Health and Trainline as their valuations broke through the $1 billion mark.
Despite the plethora of geopolitical pressures ongoing around the world, the report also shows that global cross-border transactions remained high during 2019. The value of cross-border deals exceeded $50 billion last year across a total of 138 deals.
UK fintech sector maturing
The UK fintech sector is crossing over into maturity, which means companies are boosting growth. They’re reaching for profitability and scale, which is increasing their global reach. As once niche fintech companies begin to expand their range of products and services, they will inevitably come to the attention of previously out of reach investors, which begins to build a symbiotic relationship. The more they scale the more they can offer investors and stakeholders. UK fintech companies are increasingly becoming international stalwarts of this new phase of financial services. The sector is moving beyond immediate disruption into its transformative stage, and this is why the UK’s fintech sector continues to expand and stand firm even in the wake of the challenges we all face in 2020. Traditional financial services are increasingly endangered, as they scramble to catch up with the kinds of services fintechs are offering customers.
KPMG’s report is backed up by further data from Dealroom and Tech Nation, which shows the UK’s fintech sector doubled the venture capital funding from 2018. This reached $5.4 billion in 2019, which is more than anywhere else in Europe. And we can expect this funding boom to continue as we move through 2020. The three biggest online retail banks are actively seeking global investment this year. Online banking success story Monzo is looking for £100 million, while Starling has already closed a funding round worth $60 million this year. Revolut is also raising $500 million.
Consolidation and expansion for UK fintech businesses
It looks like consolidation is the watchword for UK fintech firms in 2020, with high-profile deals proving the success of the sector. We can also expect to see the value shifting towards exciting start-ups like Monzo. Consumers have made it clear that they want more choice for financial services, and they want to be able to manage their own finances in the way that suits best. And that means on their smartphones via apps and mobile sites.
The UK remains the leading global fintech hub, due to its combination of tech talent and financial services experience. These, along with progressive and effective regulations, make the country beneficial for innovators, disruptors and those prepared to accelerate the fintech sector.