​At launch event CFIT will announce new coalitions of experts from across finance, technology, academia and policy-making. They will focus on helping fintechs achieve truly global scale, building on the UK’s recent success which saw the UK grow from two ‘unicorn’ firms (over $1 billion valuation) in 2020, to today where we have more than 20 – almost half of all the fintech unicorns in Europe.

CFIT will announce the establishment of financial innovation hubs with comprehensive reach across the UK’s nations and regions – including in key growth centres such as Leeds. The city has seen enormous fintech growth since 2020, with its number of fintech firms more than doubling to 107, and valuation of firms doubling to reach £710 million – supporting over 7,500 jobs.

CFIT’s Chair Charlotte Crosswell will also announce a range of new partnerships she and her team have agreed to support CFIT’s growth ambitions. Further details on these new partnerships, and which areas will be established as innovation hubs will be set out at the event.

Ahead of the launch, the Economic Secretary, Andrew Griffith MP, will be visiting the UK Infrastructure Bank’s (UKIB) site in Leeds, where he will officially open expanded office space for UKIB staff, as they gear up to take on around 280 staff. The Bank currently has around 180 staff, with an increasing number of permanent employees.

Since its introduction 20 months ago, the bank has announced ten significant investments in sectors ranging from solar energy to fibre broadband, and has crowded in £4.6 billion of private finance in the process.

The City of London Corporation Policy Chairman, Chris Hayward, said:

• The UK’s fintech sector is a true British success story. The launch of the Centre for Finance, Innovation and Technology (CFIT) today will help to maintain our dominant position globally. I look forward to continuing to work in partnership with CFIT to further unleash the potential of this sector.

UK Infrastructure Bank CEO, John Flint said:

• The fact we are anchored in Leeds is a key part of our identity. It aligns with our mission to drive up regional and local economic growth. It also makes us part of a growing movement, with many other significant organisations – for example, Channel 4, the Financial Conduct Authority, and the National Infrastructure Commission – establishing or expanding bases here. I am grateful to the Minister for helping us to mark this milestone, as we expand our presence in the city.

Today’s announcements deliver on the Chancellor’s ambition for the UK to become a technology superpower, as set out recently in his Bloomberg speech. And they deliver on the Prime Minister’s five priorities, helping to grow the economy.

Further information:

• Chancellor’s Bloomberg speech
• The Kalifa Review of UK fintech
• Whitecap consulting report on Leeds fintech
• Innovative Finance report on fintech investment

Yes, believe it or not today (26th February 2023) marks the 2nd anniversary of the Kalifa Review of UK Fintech. 

​The Kalifa Review made fice (5) Recommendations in he following areas:

1. Policy and Regulation
2. Skills
3. Investment
4. International
5. National connectivity

 

• Policy and Regulation - 

The Review proposed the implementation of a ‘Scalebox,’ which would support firms focused on scaling innovative technology by enhancing the existing regulatory sandbox. Kalifa also discussed the founding of a Digital Economy Taskforce (DET) to collate various functions of regulators related to fintech into a policy roadmap for a single view.

• Skills

The Review recommends upskilling and retraining by ensuring access to education from high-quality institutions at lowered costs. A new visa stream was suggested with the aim of opening up access to international talent which currently represents around 42% of UK fintech employees.

• International

The Review proposed delivery of an international action plan for fintech, driving international collaboration through the Centre for Finance, Innovation and Technology (CFIT), and by launching an international ‘Fintech Credential Portfolio’ (FCP) - akin to a quality stamp - to bolster credibility perceptions in international markets.

• Investment

The Review sought to establish a £1 billion ‘Fintech Growth Fund’ pulled from institutional capital to address a £2 billion fintech growth capital funding gap. The intention for this was that it would be a market-led fund, funded by holders of domestic institutional capital and would utilise existing regulatory concessions applicable only to the fund itself.

• National connectivity

The Review proposed the delivery of a three-year strategy to nurture the nation’s top 10 fintech clusters, improved national coordination strategy led by the CFIT, and the growth of fintech clusters via accelerated development and investment in R&D.


Read the Kalifa Review

• Executover Summary
• Full Report

Read Fnextra Article here
​

Layoffs cloud UK fintech prospects

​While London-based Revolut is set to hire at least 1700 staff over the next year, many of its peers have been less fortuitous, with the likes of Railsbank, Zilch, Zego and TrueLayer all shedding at least 10% of staff.
While London-based Revolut is set to hire at least 1700 staff over the next year, many of its peers have been less fortuitous, with the likes of Railsbank, Zilch Zego and TrueLayer all shedding at least 10% of staff.
The figures come amid further questions about the challenges facing London’s financial services post-Brexit.

​Read more here

UK-based fintech firm Monzo has been approached by several investment banks about a potential initial public offering (IPO), reported Business Insider. 

People aware of the matter told the publication that the fintech has received offers from banks eager to handle a prospective IPO. 

The neo-banking app is not likely to go public until late 2024 or early 2025 at the earliest, according to the sources, who stated that the pitches are still in the exploratory stage.
Typically, an IPO can take six months to a year, and given the weak market conditions, no formal talks between the parties have started yet. 

Monzo declined to comment on the development. 

Citing an investor update, the publication said Monzo claimed a 250% increase in annualised revenues to £440m in the twelve months up to December 2022. 
​
In addition to smaller rival Atom Bank, other European challenger fintechs Starling Bank and Zopa Bank have hinted that they may consider going public. 

​Read more here

Ingka Group, the owner and operator of most IKEA stores, said Wednesday it has invested 9 million euros ($9.6 million) in DirectID, a U.K.-based fintech specializing in credit risk, risk analytics and predictive modeling based on bank transaction data.

The company said the deal forms part of its strategy to strengthen the core retail business by investing in companies in areas such as digitalization, customer fulfillment, fintech and sustainability, that support its ambition to become more affordable, accessible, and sustainable.

DirectID provides advanced data to optimize credit and risk decisions, allowing better assessment of risk regardless of age, location, and past credit performance, it said.

Ingka has made the acquisition through its Ingka Investments arm, with the funding expected to help accelerate the market launch of advanced predictive models, expand the credit risk offering into new markets and accelerate development of models, it added.

See James Varga's LinkedIN post for more

The UK’s fintech sector saw investment drop $22 billion to $17 billion in 2022, as higher interest rates, inflation, and declines in valuations hit investor appetite. 

A total of 593 UK fintech deals were completed in the UK in 2022, down from 724 in 2021, according to KPMG’s Pulse of Fintech report published Wednesday. The dataset includes mergers and acquisitions, private equity, and venture capital. 

Funding for the sector in 2022 was a tale of two halves according to Karim Haji, a partner at accountancy firm KPMG. The first half of the year saw significantly more investment and deals than the second half.
​
“The variance highlights the shift in investor sentiment in the face of increasing geopolitical challenges leading to the lack of IPO exits, the downward pressure on valuations, and market turbulence,” he said.

Global investment in crypto and blockchain firms fell from $30 billion in 2021 to $23.1 billion in 2022. Scrutiny in the space picked up as the price of digital assets slumped and the bankruptcy of FTX upended the market.

While British fintechs attracted more funding than their counterparts in the rest of EMEA combined, other fintech hubs are starting to catch up. The value of French fintech deals rose 28% to $3.7 billion last year, according to the KPMG analysis. Deals in Sweden, the home of Klarna, hit $3.7 billion, up from $2.6 billion. 

UK startups and investors are increasingly expressing concern over recent government policies that appear to run counter to the country’s ambition of remaining a global fintech leader. They point to examples including the recent pulling of crucial funding to the government-backed industry body Tech Nation, the lack of visas to attract startup talent, and the removal of tax relief for research and development. 

Worldwide, the fintech market attracted $164.1 billion across 6,006 deals in 2022. This was down from $238.9 billion across 7,321 deals a year earlier.


Source - ​https://www.bloomberg.com/news/articles/2023-02-15/uk-fintech-investment-plummeted-by-almost-60-in-2022-kpmg-says