The Fintech industry is evolving rapidly today with solutions and software helping keep many businesses afloat throughout the pandemic, from non-contact payment options to online accounting.
But as we come out on the other side of the pandemic the industry continues to grow and it is becoming one of the fastest-growing industries worldwide – expected to grow at least another 25% by the end of 2022 alone. And with the continued advancements we’re seeing in technology it is no wonder that fintech businesses are on the rise. The UK fintech industry is currently valued at £11 billion contributing around 76,000 jobs to the UK economy.
These stats are positive and it has people asking, could the fintech industry be the answer to saving the economy?
The UK economy is in crisis, and with annual inflation rising to 10.1%, consumer goods are rising, people have less disposable income, and businesses are feeling the effects.
The latest roundtable hosted by the Great British Entrepreneur Awards and haysmacintyre brought together a group of founders and experts from the fintech industry to discuss how they could be the industry to keep the economy afloat during this time of uncertainty.
Though the fintech industry is growing, it has not been exempt from the impact of the last few years, so to kick off the conversation we heard from a number of attendees about how they have been affected, and managed to stay resilient.
Cameron Orcutt, Founder of OnLadder started by saying, “Our business is dependent on the state of interest rates. So, with the fiscal events of the last month or so we’ve seen those rates go a little wild. But essentially it turbocharged mortgage rates and we initially saw the calamity it could have potentially caused, and these events can be quite intimidating.
“We had to sit back, take a deep breath, and talk to a few people. It’s one of those situations where there’s a lot of volatility, but ultimately if your product has a place in the market you have to take it head-on and let these things pass. Because ultimately first-time buyers still need our product regardless of how haywire interest rates are um. It’s definitely been a learning experience.”
Mark Fisher, Founder of Finexos added to that saying, “I think the underpinning concern for most people is the access to funding. I work with a number of different companies that are in the early stages and it’s been very difficult for them to raise money, and access to this funding is just getting harder. There are so many more hoops businesses need to jump through to make a more compelling case for funding and these big finance houses are looking for a hundred times more return on their money than before.
“In the space we’re in we should be seeing this as encouragement. We have to be more innovative and more adaptive to our role in the market which is essentially helping people access this funding.”
Lucy Woolfenden, the founder of The Scale Up Collective, which supports SMEs and startups in scaling their business through marketing, said,
“Something that we hear a lot from our clients is that the money’s still there, but you have to have more due diligence to get it. You have to be showing traction, and finding ways to give investors more confidence during uncertain times – so that’s why I started The Scale Up Collective.
“You need to find more ways to prove confidence and you can do that by doing more research and understanding your audience better and really actually prove traction. Our clients are doing that and they’re still raising right now. The uncertainty hasn’t gone but it does feel like there’s slightly more confidence coming back in the market.”
Going on to discuss their own experiences with success, Amrit Kaur Lotay, Founder of the startups hub explains how valuable the fintech industry truly is.
“I previously started a health tech startup and every time we went to pitch to either an angel investor or a VC, or even getting into an incubator, it was a challenge. We were competing against so many people in the industry and with Health tech you have to go through clinical trials, but in order to do that you need the money – so it was a catch-22,” she explained.
“Whereas with the FinTech company I’m launching I’m teamed up with a co-founder who’s done this before in the region we’re working in and he mentioned it to a few friends and it was that simple, they were like ‘here, take our money’. People want to invest in FinTech because it’s such an emerging sector, especially in the Middle East.”
The group spoke a lot about how funding and raising investment is a huge part of the fintech industry, and CJ Tayeh, Founder of Flank the company helping people lend their friends money and saving their relationships says:
“Our entire economy is geared towards wellbeing essentially, and that’s why we need it to grow. So my product disproportionately affects those people with less money and less social capital who are more stressed about money, because it’s those people that have small buffers. So it’s for those people that if they lost £100 to a friend they can’t just be like, oh well, never mind.
“The consequence of it is that it creates these downward spirals and essentially that’s what happens with the economy. I’ve worked with homeless charities and people will tell you they have nowhere to go because they had burnt through all their social capital. So you have this double deficit that we’re talking about and these conversations aren’t had in these ‘money talk’ rooms, but there needs to be more education on how to control that. Investors and VCs need to be teaching stuff through accelerators and incubators about how to communicate and what stories we need to tell. And then we need to actually be taking them on a journey where they can see how a significant part of the market is living and not being served.
“Affordability is only going to get harder as times get tougher, and we need to help. There are policy issues that need to change to understand why people don’t have enough money and why they need it, rather than punishing them” she concluded.
Mark Fisher, Founder of Finexos agreed, saying “To underpin the economy we need a better system that allows people to access money, and that’s what we’re trying to achieve.
“We have the technology now to be able to help people manage money so instead of looking at affordability, we look at something called financial capability, which looks at how well you can manage your money.”
It is noticeable that a lot of the fintech companies of today all have the same mission, to help other individuals or businesses have better control of their finances, find access to funding and ultimately grow their business – and what better way to give back to the economy? Creating more scalable businesses that can create more employment, and grow higher revenue is key to getting the country back on track.
Karen Allen, Director at haysmacintyre said, “Starting a business is challenging, more so now with the economy as it stands. The conversations we had focussed around fundraising and payback – support is vital to these startup businesses. With support from Fintechs funding and access to opportunity will organically grow, leading to economic benefits including but not limited to job opportunities and an overall more positive outlook.”