F E AT U R E S T O R Y THE FINTECH TIMES
H C E T FIN N I R A E AY REVIEW We take a look back at 10 technology trends and key moments from the THE RETURN OF FINTECH WEEK LONDON past 12 months KALIFA REVIEW CALLS FOR FINTECH SHAKEUP
February saw the publication of a government-commissioned review of UK fintech, carried out by former Worldpay chief Ron Kalifa. It identified a £2billion fintech funding gap in the UK, suggested the implementation of dual share structures that are more favourable to entrepreneurs and called for the development and growth of fintech clusters through further investment, such as in R&D. Another recommendation was the setting up of a new retraining programme, which would see further education colleges offering short courses to help workers get to grips with new, essential tech skills. A separate government-backed report, led by former EU commissioner Lord Jonathan Hill, published shortly after the Kalifa Review, also called for widespread reform of the London Stock Exchange to encourage investment in UK businesses and increase the number of companies choosing to float in the UK. 4
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After months of digital-only events, Fintech Week London in July marked a return to ‘normality’ as the first in-person fintech event of the year. The week-long event saw senior decision-makers, industry thought leaders and fintech experts come together in the UK capital to discuss and share insights on all things fintech. Topics under discussion included green finance, financial inclusion, the evolution of blockchain and digital identification. Plus, issues such as coopetition between banks and fintechs, open banking, NFTs, cryptocurrencies and a wider look at the fintech scene worldwide.
IPO SUCCESS FOR FINTECHS
Global IPOs have smashed records in 2021, both in terms of funding raised and the number of companies going public.
In July, cross border payments firm Wise – formerly known as TransferWise – floated on the London Stock Exchange and became its biggest ever tech float, pricing shares at £8 each and valuing the company at £8billion. Marketplace lender SoFi also became a publicly traded company after its merger with Social Capital Hedosophia Holdings, a special purpose acquisition company. The stock closed up more than 12 per cent to $22.65 after making its public debut.
FINTECH INVESTMENTS SKYROCKET
The fintech sector has received a record amount of venture capital investment this year. In the third quarter alone, it secured £3.6billion – more than double the whole of 2020. Forty-two fintech companies became unicorns in the third quarter alone, making up a third of total unicorn births, according to the most recent CB Insights’ State of Venture Report. After raising $800million in a funding round in July, the UK’s Revolut became the biggest 'unicorn' in the country as well as the highest-valued fintech company at $33billion.
The CB report highlights Tiger Global Management and Coinbase Ventures as the leading fintech investors this year, with the US making up 38 per cent of global fintech deals.
BOOM IN BUY NOW, PAY LATER
Buy now, pay later (BNPL) deals have exploded over the past 18 months and it’s predicted that by 2026, shoppers will be spending close to £40billion a year by this method, while nearly two-thirds of people who have taken up BNPL credit have done so five or more times. Shoppers are attracted to BNPL due to the ease of making part-payments for products they bought online or at stores, without additional costs or fees. In February, the UK government announced that buy now, pay later products would be regulated by the Financial Conduct Authority (FCA) and in October it launched a consultation on buy now, pay later services for the first time ever. The BNPL market has become increasingly crowded as more established players including Mastercard and Visa unveiled schemes in the latter half of this year to compete with leading BNPL firms Klarna, Affirm Holdings, Afterpay and PayPal.
