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An introduction to fintech investment

04/11/2020

The UK fintech sector is booming. Over the last five years, investment in UK fintechs has risen by 500%. In Q1 of this year, London-based fintechs attracted $114m in investment – a figure that is just $34m less than the investment attracted during the whole of 2017. 

What’s more, Accenture research reveals a 3.8% uptick in fintech investments in the first half of 2020 – with a spokesperson revealing a surge in investment in “start-ups who offer technologies that support long-term societal shifts driven by COVID”. 

Fintech is a sector that is continuing to grow and evolve – and to attract more and more investment. Here’s what it involves – and why investors are focusing more and more on this sector. 

 

What is the fintech sector?

Investopedia defines fintech as a term “used to describe new tech that seeks to improve and automate the delivery and use of financial services”. It’s a broad definition, but it needs to be. Over the years, the term “fintech” has shifted from describing the back-end tech used at established financial institutions to more of a consumer-focused idea. 

It’s a sector packed with an ever-growing number of start-ups who use software innovation to improve both processes and the consumer experience, in areas like artificial intelligence, digital assets, mobile payments, data analytics, automation, digital ledger technology and cryptocurrencies. 

 

Why invest in fintech?

Many are citing the growth of fintech during COVID-19 as a reason why investors may now be paying greater attention to the sector. As MoneyWeek says, “In lockdown, people were forced to change their habits and turn to online shopping, payments and e-commerce to get by. Many won’t go back. All these areas of fintech were already growing; what the virus has done is accelerate the take-up”. 

AXA Investment Managers reveal that worldwide non-cash transactions are soaring, while mobile consumer-bank interactions rose from 895m in 2015 to 2.34bn in 2020. Finextra talks of the number of industries that have been “taking active advantage of the synergy potential with fintech, and have seen great improvements across the board” as a result. 

As AltFi says, “fintech’s secular long term growth story may well continue to boost returns, even as the downturn in the real economy begins to bite”. Could now be a good time to invest?

 

“Stable Rise Limited is not authorised or registered by the Financial Conduct Authority. The marketing materials are not intended to provide financial advice nor promote any individual financial products.”

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