Revolut is exploring plans to monetise customer data through sharing it with advertising partners, as the fintech seeks new sources of revenue while its application for a UK banking licence remains in limbo.

“We could become a media [business] . . . a place where you have an audience and data about the audience and you monetise this,” Revolut’s head of growth.

Revolut’s push to generate a bigger slice of earnings from advertising comes as investor hype surrounding the fintech sector has waned and its application for a UK banking licence appears to have stalled. Revolut secured a $33bn valuation in a funding round led by SoftBank in 2021. However, investors Molten Ventures and Schroders have since adjusted their implied internal valuations for the start-up, with Schroders putting it as low as $18bn at the end of 2022, before revising it up to $26bn as of the end of December 2023.

It has been more than three years since the London-based fintech applied for a UK banking licence. They are typically granted within a year, UK regulatory guidance says. Securing a licence is crucial to Revolut’s ambitions to roll out lending on a wider scale in its home market and boost its profitability.

https://www.ft.com/content/21c34ad2-c267-4810-a4bf-8908a3599d72

One often-cited study* shows 40 per cent of CEO transitions end in failure within 18 months. Tenure in the post is also declining**.

Boards must then deal appropriately with the losers — either find incentives to prevent them from leaving or ensure they exit without animosity. Last year, Morgan Stanley chose to award the same bonus to three candidates even though only one took the top job. The bank also gave senior roles to the two that lost out, creating a more distributed leadership model.

* https://www.researchgate.net/publication/8008180_Ending_the_CEO_Succession_Crisis
** https://corpgov.law.harvard.edu/2023/08/04/ceo-tenure-rates-2/

Source: https://www.ft.com/content/3ec199e7-fc04-45c4-987b-2b2ac9e0ed6e

• The revenue of the fintech industry in the UK grew sharply between 2018 and 2023, despite a notable decrease in 2022. In 2023, the estimated revenue of the industry was 3.37 billion U.S. dollars, most of it generated by the digital assets segment. According to Statista Market Insights, fintech revenue is forecast to grow gradually in the coming years, reaching 6.7 billion U.S. dollars in 2028.

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• According to Statista Market Insights, fintech revenue is forecast to grow gradually in the coming years, reaching 6.7 billion U.S. dollars in 2028.​

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Source: https://www.statista.com/forecasts/1443821/revenue-fintech-market-for-different-segments-united-kingdom

• "Across the spectrum of listed fintech businesses globally, there’s been an impressive bounce over the past 12 months. The KBW Nasdaq Fintech index is up 31 per cent over the past year, compared with a return of 25 per cent for the broader S&P 500. This index is tracked by a UK-listed ETF from Invesco with the ticker FTEK LON, though there are other index trackers in the fintech space including one from Global X — ticker FING — and another from Xtrackers which is based on the MSCI Fintech innovation index — ticker XFSN."

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• "One repercussion is that we may see more fintechs list on stock markets over the next year. UK-listed venture capital fund Chrysalis — one of my favourite investments at the moment — has a stake of about 1.1 per cent in Klarna, on a net asset value of $11bn, whereas the rumoured IPO price is closer to $20bn. Another key holding for the investment trust is insuretech business WeFox, which is showing signs of rapid growth."

Source: FT - read article here.  It is a very interesting article by David Stevenson, an active private investor. 

UK Fintech Sector Rebounds in Q1 2024, Attracting $1.4B in Investments

According to the latest report published by Dealroom and HSBC Innovation Banking, British startups garnered a total of $3.9 billion in funding during the first three months of 2024, with $1.4 billion directed towards the fintech sector.

"Among emerging frontier technology segments, semiconductors and quantum computing have been gaining momentum, for startups often based in science hubs like Cambridge and Oxford,” the report revealed. Challenger banks took the top spot, raising nearly $450 million in funding.
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Among the major deals, several late-stage funding rounds have been secured for prominent companies. Monzo, a digital challenger bank, garnered £340 million in a late-stage venture capital round, while Flagstone, a cash deposit platform, raised £108 million in a growth equity round.

These substantial funding rounds demonstrate investors' continued confidence in the UK's fintech ecosystem, despite the global economic challenges.

“With companies like Monzo leading the charge, Britain’s leadership in fintech has long been key to drawing in investment from around the world,” commented Saqib Bhatti, the UK's Technology Minister.

The results of this report stand in contrast to findings from other studies covered by Finance Magnates earlier this year. For instance, a report by Tracxn in January indicated that in 2023, UK fintech startups witnessed a decline of 63%, gathering only $4.2 billion compared to $11.2 billion in 2022. This downturn was confirmed by a report in February from KPMG, which noted that global fintech funding had reached a five-year low, falling to $113.7 billion.
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Market experts further forecast that AI will play an increasingly significant role in fintech. This was the topic of one of the recent panels during the Finance Magnates London Summit.

Most venture capital funding came from foreign investors (64%), with about one-third from domestic investors, marking a significant shift from a decade ago when local funds predominantly handled investments.

“This data reflects a busy start to the year for the UK innovation ecosystem,” commented Simon Bumfrey, the Head of Technology and Life Sciences at HSBC Innovation Banking UK. “From growth in investment in established and emerging areas like fintech and quantum computing to expansion of regional tech hubs across the length and breadth the country, there is much to celebrate.”

While London continues to lead in VC investments in the UK, gathering $2.4 billion in capital, the dynamics have shifted with a year-on-year decrease of 18%. However, substantial improvement in accumulated capital were noted in Cambridgeshire and Edinburgh, with increases of 59% and 406%, respectively.

Moreover, last month, Revolut, one of the largest British fintechs, warned that London's status as a financial technology hub is increasingly threatened due to rising external competition. Despite this, the company is still considering an IPO in London.
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Globally, the UK ranks third in startup investment, only behind the United States and China, while outpacing India.

Leaders of the UK's financial technology industry are urging the British government to increase tax relief and help them raise more investment, as some executives warn a shortage of domestic investors is holding back the sector.

Trade body Innovate Finance's "Unicorn Council", which includes the CEOs of Monzo, Revolut's UK arm and ClearBank, set out policy recommendations on Monday that it said would help the UK maintain its position as a fintech hub.

Global venture capital investments fell to a near five-year low in the first three months of 2024, according to data from PitchBook, as high interest rates dampened risk appetite.
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Fintech companies in the UK say there is not enough investment coming from UK-based investors in particular.

"There is a well-documented problem with capital supply in both the UK listed markets and private Growth Capital," the group's statement said.

“All of the investment across our biggest fintechs (is) all overseas. Where are the UK pension funds? Why isn’t that growth actually going into the pockets of the UK?" added ClearBank CEO Charles McManus, speaking at the Innovate Finance Global Summit (IFGS) conference held in London on Monday.

Innovate Finance CEO Janine Hirt told Reuters that there needs to be more domestic investment in fintech.

Source: https://www.reuters.com/world/uk/uk-fintechs-ask-government-help-ease-capital-shortages-2024-04-15/

​An arm of Standard Chartered, the FTSE-100 bank, is taking a stake in a British company set up with the objective of providing ethical financial products to customers.

City sources said that SCV, which is based in Singapore, was investing at least $10m (£8.02m) into Algbra, although neither the exact sum nor the resulting valuation could be ascertained.
As part of their collaboration, Algbra is understood to have agreed to use its core banking platform to build Shoal, a new digital venture announced in 2021 by Standard Chartered Bank to "give UK savers the power to help fund the fight against climate change".
Shoal was originally contracted to be built by Starling Bank, but will now see Algbra's technology deployed instead, according to one fintech insider.

Source: https://news.sky.com/story/standard-chartered-arm-takes-stake-in-british-fintech-algbra-13115431​

Did you know that the UK digital tech ecosystem is now valued at US$ 1 trillion; only the third country to pass this milestone after the US and China, offering a great environment for businesses to grow within the industry.

My personal thought is that what is good for fintech in the UK is good for Ireland's fintech industry too. You cannot conquer the continent of Europe if with regulated financial services unless you are authorised in the UK and a EU Member State. So, why not Ireland? With the UK, we share the common travel area, we both have a common law legal system, we both have highly educated workforces and we both have a pragmatic business ethos. Between the UK and Ireland, you have the continent of Europe in your palm! Something I will talk about on Tuesday next week at the Financial Crime Forum - "Why Ireland has proved so popular as a base for FinTech companies and how passporting helps expansion onto mainland Europe".

How's that for finding commonality between, at first, three very different topics in one post to save your feed being cluttered by three posts?​

Source: https://www.linkedin.com/posts/peteroakes_fintech-activity-7184221078116827136-IkfY