Shared Insight: Fintech Trends & Thriving Subsectors
posted 28th September 2023
2023 has been a big year for Fintech, although it might not be immediately obvious. While the overall funding trend illustrates a decline in the Fintech sector, on closer inspection you'll see that some subsectors are thriving and displaying exciting trends. In fact, there have been 108 announced equity rounds this year alone in the sector, totalling £675m.
GS Verde will be diving into the most popular subsectors within Fintech and highlighting some interesting trends.
Alternative Fintech Is a Rapidly Growing Subsector
Alternative finance is a rather broad subsector of Fintech (as it refers to any financial service outside the traditional financial system), and this is reflected in just how many alternative Fintech companies are operating in the UK. Currently, the UK is home to 185 active alternative Fintech companies, and the number of activities in this fast-growing sector has increased by 360% in the last decade.
One such example is Delio, one of the fastest-growing Fintech companies in the UK, and that GS Verde helped to raise $8.3m in 2022. Backed by Octopus Ventures and Maven Capital Partners, the capital raised enabled Delio to create greater investor access to alternative assets such as private debt, private equity, and real estate.
GS Verde is also dipping their toes into the world of alternative Fintech with the GS Verde Investment Platform. The aim of the platform is to connect ambitious business founders with investors looking for business opportunities with scale-up potential.
AI and Fintech Go Hand in Hand
AI is on everyone's lips at the moment, and with 159 active AI companies operating in the UK Fintech sector, it's undoubtedly a big deal in the world of finance. AI is supporting Fintech in several significant ways:
- Preventing fraud: AI systems can detect patterns across huge datasets in real time, and so are able to prevent financial crime from taking place.
- Powering customer service: Chatbots are becoming an ever more popular customer service channel and are enabling customers to make queries about their finances in the comfort of their homes.
- Organizing customer data: AI technologies can scan historical data to determine creditworthiness, as well as monitor consumer's spending habits to better help them save. A good example of this in action is Monzo, a Fintech bank that uses AI to scan millions of outlets to help neatly categorise areas of customer spending.
Challenger Banks Continue to Grow
In the aftermath of the 2008 financial crisis, challenger banks (or neo-banks) were seen as a way of personalising the banking experience with competitive pricing and real-time payments. The UK also made changes in banking regulation to prevent another crash, and this involved encouraging more competition in the sector.
This gave challenger banks a chance to enter the market, and their USP of being online-based and giving customers the opportunity to bank on their mobile devices spoke to consumers. There are now 21 active challenger banks in the UK, but this doesn't include companies that provide limited bank-like services such as currency exchange, P2P loans, or pre-paid cards.
As the world becomes increasingly more digital, growth in the Fintech sector is set to continue, with rapidly developing technologies like AI enabling innovative, tech-savvy entrepreneurs to bring their Fintech visions to life.
Innovation is at the heart of what GS Verde do, and we are looking forward to seeing a greater influx of deals and investments in Fintech, encouraging further growth in the sector through our multidiscipline dealmaking, and supporting FinTech business leaders in their growth plans.
We were honoured to be shortlisted for the Fintech Awards Wales this year, being nominated in the categories Fintech Scale-Up of the Year, New Product of the Year, and Best Advisory of the Year.
You can compare how much FinTech has developed in two years by reading our Shared Insight on the sector from 2021.
You can find out more about seeking investment for your Fintech business and how we can assist you in raising funding here. Or to learn more about how we can support you through the M&A process, visit our Buy A Business or Sell A Business pages.
Sources: Beauhurst