The start-up view: a year in FinTech
13 March 2017
2016 proved an uncertain year for many and FinTech was no exception. Total venture capitalist (VC) investment fell in the UK by 33.7% over the course of the year compared to a positive increase of 10.9% globally, however there is still a positive picture to reflect on here in the UK.
Working on the ground, day in day out, at the heart of the FinTech ecosystem through our partnership with Startupbootcamp FinTech has allowed us to gain deep insights and understanding of where early stage entrepreneurs see opportunities. Our latest report “The Start-Up View: A year in FinTech” explores the perspectives of both entrepreneurs and incumbent financial services firms on where they see a maturing sector moving. The report discusses; the current FinTech landscape, the implications of Brexit, the top trends in FinTech from 2016, the progress made in corporate collaboration and predictions for 2017.
The findings of the report are based on the qualitative intelligence and experience gleaned from working with Startupbootcamp FinTech over the past 12 months, as well as quantitative insights from the programmes’ application data and UK funding data. I have outlined below some of the important takeaways.
- Despite Brexit, the UK should remain a global FinTech leader.
Economic and political uncertainty poses a threat, but the European FinTech sector is in a healthy position, led by the UK. Regulators across Europe are following the UK’s example as they seek to foster an agile environment conductive to innovation; the UK, meanwhile, has built FinTech bridges with a growing number of international markets and continues to attract investors from territories such as Canada and Japan.
- More start-ups want to work with existing financial services businesses.
Growing understanding of each other’s cultures and working practices has seen FinTech companies and incumbents work together much more frequently. Start-ups offering a business-to-business proposition accounted for 56% of applications to Startupbootcamp last year and for 71% of UK funding; their focus is very often on improving incumbent’s internal operating processes.
- The most successful artificial intelligence and machine learning advances put the customer at the centre.
FinTech companies pioneering these technologies have moved towards a design-led approach. The increasing volume of open source material available to start-ups has enabled them to focus on technological advances from the perspective of specific customer problems.
- Serving the unserved has become a key priority for start-ups globally.
FinTech companies are concerned about the unfairness arising from the large number of people currently unserved by the financial services sector. They are also aware of the opportunities to help. More than one in ten applications to Startupbootcamp FinTech 2016 (12%) came from start-ups aiming to tackle issues of financial inclusion and wellbeing. Traditionally a focus in developing countries, UK and European FinTech companies are increasingly engaged with these issues too.
- Great change has taken place in the collaboration between start-ups and incumbents,
but more work needs to be done. Much progress has been made as FinTech companies and incumbents have begun to understand each other better, but the search for the perfect collaboration model continues. Until now most projects ended on proof-of-concept or pilot studies. The next phase of growth is to turn more of these into real businesses. Too many corporates are struggling to measure success in FinTech.
To read the full report, please click here and feel free to get in touch if you have any questions.