Soaring consumer demand sees UK fintech companies prove their worth

As UK consumers increase their trust in fintech apps, fintech companies need to ensure they can provide them the best service and security.
21 October 2021

(Photo by Niklas HALLE’N / AFP)

  • UK fintech firms attracted US$5.7 billion worth of venture capital investments through 317 deals in the first half of 2021
  • Fintech users want apps and services that make managing money easier, indicating more trust in technology

Fintech companies in the UK continue to be growing their influence on consumers with better products and services. Compared to the rest of the world, the growth of fintech in the UK continues to gain momentum as well with fintech companies making huge investments and profits.

According to a report by Deloitte, there are about 2500 fintech companies in the UK making up 23 different specialisms, which can be aggregated into 8 broad categories. They include banking, RegTech, InsurTech, lending payments, WealthTech, quote aggregators and accounting, auditing, and cashflow management.

Interestingly, WealthTech accounts for more than half of all fintech companies in the UK. Earlier this year, The Guardian reported that banking app Revolut had raised another US$ 800 million from investors, ballooning their value to over US$33 billion. More recently, 20-month-old London payments tech startup Primer closed a Series B funding of US$50 million to raise the payments infrastructure startup’s value to US$425 million.

Reports show that UK fintech firms attracted US$5.7 billion worth of venture capital investments through 317 deals in the first half of the year. That easily outstripped the US$4.3bn secured across the whole of 2020, but also broke the US$4.6bn record set in full-year 2019 by about 26%.

From a consumer’s perspective, the 2021 Fintech Report by Plaid and The Harris Poll showed that 76% of UK consumers feel confident using technology to manage their finances. When consumers have more access to their own data, it will only increase confidence in financial decisions further.

The survey was conducted on some 4000 adults in both the US and the UK. Both countries showed a significant jump in fintech adoption among consumers in recent times with the US, in particular, showing a 52% increase in the past year. Eight in 10 fintech users in the US say fintech seamlessly integrates into their everyday lives (77%). Nearly half of Americans say they use fintech every day (48%). Looking at demographics, Gen Z users trust fintech (66%) with their financial data more than traditional financial institutions (63%).

Why UK consumers prefer fintech

Across the Atlantic, usage of fintech tools jumped to over two-thirds (67%) in the UK, with the usage also being spread out among users in different age groups.  Payment services remain the most popular fintech use case among UK consumers with 79% using fintech apps for banking, and to pay for goods and services. The rising number of fintech companies has also given UK consumers more choices on which option or method they prefer, when making payments.

For UK fintech companies, this mass adoption only means better opportunities for them as well. The change in consumer behavior, especially in how they choose to deal with their financial information and money, clearly indicates their shifting expectations as well.

The outcome of the Plaid survey highlighted how users want apps and services that make managing money easier, and that users want them to work when, and how, they want. They are also using multiple apps and services to manage their financial lives, and they expect those apps and services to provide connected experiences, regardless of whether they come from different service providers.

Consumers also expect more value with more options and lower barriers to adoption — especially for services that not only save time and money, but also achieve better financial outcomes through data insights and automation. The increased adoption also clearly indicates that consumers are having more trust in using technology to manage their money.

At the end of the day, with growing fintech adoption in the UK, the competition among fintech players will be increasing as well. Despite the various categories and consumers, each fintech may serve, ensuring they can meet consumer demand while adhering to regulations is key. As consumers only get more comfortable with using fintech services, keeping them satisfied with the service and protecting them will be the prerogative all fintech companies will want to look at.