UK Startups Revolutionising Finance
FinTech UK is holding its own in this harsh economic climate. According to Innovate Finance, the industry body representing the global FinTech community In the UK, the UK received $12.5 billion of FinTech VC investment in 2022. While this number represents a drop of 8% from the record-high 2021 figures, it must be viewed positively in light of the fact that the global FinTech market shrank by 30% during the same period. With 545 Fintech deals closed in 2022, the UK is #1 across European Fintech with more VC investment than the following 13 European countries combined and second only to the US worldwide.
UK FinTech Specialties
According to Deloitte, the UK’s FinTech companies can be divided into eight broad categories: Banking, Lending, RegTech, InsurTech, Accounting, Payments, WealthTech, and Quote Aggregators. Let’s take a deeper look at these financial categories and highlight some superstar startups operating within them.
This category includes personal accounts, savings, mortgages, banking platforms and operations. Fintech startups are challenging the traditional banking model. For example, Atom is the UK’s first app-based bank that is accessible solely through an app on a smartphone or tablet. Atom was founded in 2014 with a mission to make the experience of borrowing and saving faster, simpler, and a better value than the high street banks. The company has consistently provided an exceptional app-based experience with award-winning customer support via phone, chat, email, and social channels. Atom also has the distinction of being the largest company in the UK to offer employees a four-day working week, with no reduction in salary.
Fintech companies in the lending category focus on using technology for innovation in the consumer, commercial, or P2P lending spheres. For example, RateSetter is a P2P lending platform that enables users to lend and borrow money directly from each other according to their own interest rates. Borrowers can apply for a quote in less than minutes and receive a response immediately or within 24 hours. If approved, borrowers have access to the money the next working day. RateSetter mainly originates unsecured personal loans but also arranges secured auto dealer and property financing. Founded in 2010 and acquired by Metro Bank in 2020, RateSetter connects investors directly with borrowers and therefore does not hold deposits or loans on its balance sheet.
Regtech focuses on managing financial regulatory processes through the use of technology. This category includes areas such as regulatory monitoring and compliance, and streamlining risk. For example, Detected, a UK-based KYB compliance platform, was founded in 2020 to transform onboarding activities from an operational hurdle to an asset. Through its Compliance API, Detected can find and verify any registered company in the world, including data on business credit, corporate and director information, and other company documentation, significantly reducing the friction involved in onboarding clients, partners, or suppliers. Detected’s frictionless onboarding enables business customers to find their company, complete ID verification, and upload the necessary documents in minutes.
This Fintech category includes companies using technology innovations to make the traditional insurance model more efficient, such as digital-based insurance companies or those selling insurance-specific software. Tractable is an AI-based software company that uses deep learning algorithms to analyse photos of car accidents and other damage for accurate repair cost estimates. Founded in 2014, Tractable aims to help settle claims quickly and efficiently.
This category is primarily focused on supporting SME businesses with their financial needs, including accounting, payroll, invoice, and expense management. For example, Mayday launched in 2022 as an add-on app for the popular Xero accounting software. Mayday offers automated real-time accounting for startups and SMEs, addressing the pain points of organisations that struggle with tedious month-end manual activities related to organisations with multi-group entities. The Fintech startup has been gratefully received by its target audience and has been selected as a finalist for Xero’s Emerging App Partner of the Year award.
The payments Category in Fintech targets businesses that focus on money transfer, remittance, foreign exchange services, and ePOS systems. For example, UNIPaaS offers an end-to-end PaaS integrated payment solution that provides digital marketplaces and B2B platforms with the ability to create comprehensive customer journeys that are frictionless, streamlined, and unified. Founded in 2020, UNIPaaS enables these platforms to own their payment experience by deploying intuitive and innovative payment solutions within their platforms. This includes an advanced onboarding process that simplifies KYC, KYB, and AML checks, customised payment acceptance terms, automatic reconciliation and cross-referencing, and instant and automated payouts.
This category covers a wide range of Fintech technologies for personal finance management, trading and investment platforms, crypto exchanges, robo-advisors, and sales and trading analysis tools. OpenGamma is an analytics company dedicated to reducing the costs of trading derivatives, by providing actionable recommendations to empower hedge funds, asset managers, and commodity trading firms. Founded in 2009 to revolutionise cash and collateral management, OpenGamma helps financial firms increase returns, lower risks, and drive operational efficiencies.
A Fintech category that has emerged to serve companies providing online comparison engines for consumer quotes on financial services, from insurance to mortgages. For example, Compare the Market was launched in 2006 to provide UK consumers with an easy way to compare a wide range of financial products including, motor, home, life, travel, and pet insurance, as well as utilities, credit cards, and loans. Compare the Market offers rewards for customers who purchase products through their company, including free movies and meals.
UK Fintech Outlook
With London as a main global financial centre, the UK is a natural location for the emergence of a wide range of tech companies seeking to serve the financial industry. Whether in the areas of banking, lending, RegTech, InsurTech, accounting, payments, WeathTech, or quote aggregators, the UK Fintech sector is well placed as the global economy looks forward to better days in the future.