UK fintech sector attracts record investment

Investment into the UK’s financial technology, or fintech, sector is booming, having surged by almost a fifth last year, a new study reveals.

The UKs fintech sector kept its position as a world leader, ranking third globally in terms of levels of investment, behind China and the US. Picture: Contributed

Venture capital and private equity investment rose to a record $3.3 billion (£2.6bn) in 2018, an increase of 18 per cent year-on-year, according to a report from industry body Innovate Finance.

While growth capital from private equity players leapt 57 per cent to some $1.6bn, venture capital investment dipped to $1.7bn as the UK fintech sector enters “a new stage of its growth journey”, ahead of its peers in Europe.

The UK’s fintech sector kept its position as a world leader, ranking third globally in terms of levels of investment, behind China and the US. Within Europe, the UK continues to dominate followed by Germany ($716 million and 48 deals) and Switzerland ($328m and 40 deals).

Revolut’s $250m fundraise ranked among the top ten largest global venture capital deals of the year. Monzo, EToro, Liberis and BitFury were also among the UK’s top five deals, each raising more than $80m.

However, the report’s findings showed that just 6 per cent of deals involved a female company founder, representing just 3 per cent of the total capital invested in 2018.

London continued to be the preeminent centre for fintech in the UK, with some 80 per cent of fintech start-ups receiving venture capital headquartered in the UK capital, claiming in excess of 90 per cent of capital invested.

Charlotte Crosswell, chief executive of Innovate Finance, said: “It is very encouraging to see that investment continues to grow in the UK fintech sector, reaffirming its position as a leading global financial and technology centre.

“The UK has a unique position across financial services, technological innovation, regulators and government which all play a crucial role in this impressive growth journey. However, we should not be complacent as new challenges lie ahead; we must focus on growing our talent and capital pipeline across the UK, to ensure sustainable and inclusive growth in the future.”

Global venture capital investment in fintech in 2018 reached a record $36.6bn, a jump of 148 per cent from 2017 and up 329 per cent over five years.

Last month, a report showed that Scotland’s financial technology sector was in rude health with the number of businesses focused on fintech growing threefold in the last year.

There are now more than 80 fintech-focused small and medium-sized enterprises (SMEs) based in Scotland, according to FinTech Scotland.

The news came on the first anniversary since the formation of the organisation, which is a joint initiative by a number of financial services firms, the University of Edinburgh and the Scottish Government.

The sector has attracted tens of millions of pounds in investment in recent years.