It was good to be back at the Innovate Finance Global Summit, UK Fintech’s Week flagship event, this week.
Throughout the panel sessions and conversations with audience members – including founders, investors and policymakers – ran a distinct buzz of excitement about the current state of UK fintech.
There’s no doubt that fintech is enjoying a moment in the sun. When investment in the sector dropped by 34% in 2023, there were concerns among some commentators that the “jewel in the crown” of UK tech had lost a little of its sparkle.
But recent numbers make clear nothing of the sort has happened, as last year fintech companies reported record-breaking growth.
Allica Bank is now the UK’s fastest-growing private company having doubled its profits to nearly £30 million, while Revolut expanded its customer base to more than 52 million, surpassing several incumbent competitors.
The sector now employs over 82,000 individuals in the UK and is on course to exceed 100,000 within two years.
Moreover, the UK leads Europe in producing fintech ‘unicorns’, with more than 50 UK fintech companies valued at over £1 billion.
A hub for rapid growth and innovation, it’s clear that the UK has achieved world-leading status in fintech in the first half of this decade.
The question now is how it can maintain this standing for the next five years and beyond.
UK fintech: the next five years
Answering this question will require more than just adopting new technologies – the UK will need to lead in shaping how they’re integrated, governed, and scaled.
This is where initiatives like the Centre for Finance, Innovation and Technology (CFIT), under the leadership of Charlotte Crosswell, are setting an important precedent.
Launched in 2023, CFIT’s approach – which brings together finance, tech, and policy stakeholders – is already starting to yield results.
Its Digital ID programme, for example, is helping define the standards for identity verification in financial services, building on the Digital Identity and Attributes Trust Framework to enable safe and seamless data sharing across the ecosystem.
Another challenge will be the evolution in the fintech sector from Open Banking to Open Finance, and ultimately to a Smart Data economy. In the UK, the infrastructure is already partially in place.
According to the OBIE, more than 8.5 million UK users – both consumers and small businesses – now benefit from Open Banking services.
Expanding this model to sectors like pensions, insurance, and investments would unlock huge opportunities for personalised, data-driven innovation.
But it’s not just about scaling what works. The UK has a chance to set global benchmarks.
Private sector bodies like the Financial Data Exchange (FDX) are harmonising API standards across tens of millions of users, and the FCA’s Digital Sandbox continues to offer a safe, structured environment for experimentation, with more than 30 firms participating in its latest cohort.
With these platforms in place, there is real potential for the UK to kick on and become the go-to international authority on financial data standards.
Fixing regulatory fractures
For all the momentum, significant structural barriers remain. Regulatory fragmentation means that fintech firms have a maze of oversight to navigate from the FCA, PRA, PSR, and ICO, each with differing timelines, compliance obligations, and strategic priorities.
This not only slows innovation but also deters smaller firms that lack the resources to manage such complexity.
The UK need not look far for inspiration on how this might be improved. The UK-Singapore Fintech Bridge has facilitated over £150m in cross-border investment since 2022 by creating unified regulatory pathways.
Domestically, the FCA’s Regulatory Sandbox has supported over 130 firms to test innovations in a live environment. But to truly unlock financial data for innovation, the regulatory process in the UK must be streamlined.
Another sticking point is procurement. In 2023/24, only 16.7% of Crown Commercial Service spending went to SMEs, far short of the 33% government target.
Making procurement processes more straightforward and accessible to innovative fintechs would be a simple yet powerful step toward better collaboration.
Innovation to implementation
In September 2024, the UK government officially designated data centres and cloud infrastructure as Critical National Infrastructure (CNI), recognising that the future of finance will be built on secure, scalable data services. These AI-integrated data hubs will no doubt be the backbone of financial innovation, from fraud detection to hyper-personalised financial advice.
Equally crucial is blockchain. Despite its promise, blockchain’s impact so far has been limited by a lack of interoperability adoption.
Making blockchains work together – and alongside legacy systems – will be essential if digital assets are to reach their full potential in mainstream finance.
Encouragingly, industry-led consortia are beginning to tackle this head-on, building integrated systems that can support real-world applications.
There’s no doubt that the UK has the tools, talent, and track record to remain a global fintech leader.
But doing so will depend on strategic coordination – across regulators, private industry, and government – and on ensuring the infrastructure of innovation is built with intent.
If the past half-decade was about building capabilities, the next one has to be about connecting them.
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