How can UK support the fintech startups space in a better way?

Written by Mr. Kunal Sawhney, CEO, Kalkine Media

The year 2021 was a record one in terms of new investments after the world saw a massive slump in investments in 2020. The UK also saw a massive jump in tech startups investments recently, especially in fintech firms in 2021.

The UK ranked in second place globally in terms of fintech investment. The first position was held by the US, which received an investment of about US$ 46 billion in 2021, while India, Germany, and Brazil were some of the other top countries to receive investment in the fintech sector.
According to data from Innovate Finance, a UK-based fintech industry body, fintech investments rose about 217 per cent to over US$ 11.6 billion in 2021, compared to the year before.

Current challenges

While the UK is considered to be the best place to invest in Europe, fintech investment is more focused on firms in the early or late stage. Therefore, growth stage capital is lagging early and late-stage fintech startups.

Some other risks in the UK fintech space, especially in the post-Brexit world, include attracting high-quality talent to the sector, helping fintech firms scale up to the IPO stage, among other areas
Recommendations for the UK government

Some measures which the government can take to better support the sector are:

  • New visa rules: Introducing a tech-related visa, to ease visa rules in the UK can help attract and retain international talent and improve collaboration in the sector
  • Focus on regional funding: Currently funding is majorly concentrated in London and surrounding areas, but developing and nurturing fintech clusters in other regions can improve national connectivity
  • Growth capital: By focusing more on growth-stage companies, the sector can help distribute capital in a better way to this under-represented stage of fintech firms.
  • Scaling: The number of fintech IPOs in the UK is far less than in the US. Thus, one area which the Boris Johnson government can focus on is in boosting a firms’ scaling opportunities to the IPO stage.
  • Long-term strategy: In addition to the above recommendations, developing a longer-term roadmap, in conjunction with business leaders within the sector, can better support the industry and help mitigate future risks.

Overall, while the fintech space in the UK is in a good position, it is also at risk of falling behind its competitors. However, undertaking some of the above recommendations can help the UK retain its position as a leading destination for fintech globally.

About Lisa Baker, Editor 2315 Articles
Lisa Baker is the Editor of Always Finance, and writes about Business, Finance Technology and Healthcare. Lisa is also the owner of Need to See IT Publishing.