Each week The Fintech Times takes a look at some of the top stories in UK fintech. This week, 8.7 million UK adults are ‘financially stretched’, the UK North-South divide is exacerbated by Covid-19 and the FCA loses 323 electronic devices
UK Fintech has record-breaking H1 2021
Innovate Finance has released new analysis revealing a record H1 2021 for UK fintech. In total, $5.7billion was raised across 317 deals in UK firms in H1 2021 – eclipsing the total secured across 12 months in 2020. It also highlighted that UK FinTech funding was now higher than pre-pandemic levels, with investment up 34% from 2020.
Tom Henriksson, General Partner at OpenOcean, said: “The report highlights that UK financial services weathered the COVID storm well. Investors have clearly taken note, with the UK securing its position as the prime destination for fintech investment in Europe, providing an attractive mixture of centuries-old expertise, disruptive industry insurgents, and a strong pipeline of talent.”
“The success of UK fintech is part of a wider shift across the economy, with technological innovation enabling more agility, flexibility and convenience in how services are delivered to customers. At the heart of this new era is data. Fintech is one of many industries turning to data-driven technologies like advanced analytics and artificial intelligence to radically enhance their operations and deliver new, exciting applications at scale.”
8.7 million UK adults are ‘financially stretched’
New research from Yolt, the smart money app, reveals that 8.7 million UK adults (17%) are ‘financially stretched’. A further one in ten (10%) expect to financially struggle in the next 12 months, despite signs of economic recovery, as many households continue to feel the financial impact of the pandemic.
There are many experiences that contribute to someone being considered financially stretched. This can include a fall in income (21% of UK adults experienced this in the past year), experiencing periods without access to disposable income for non-essential spending (15%) or having financial worries that impact their mental health (15%). 28% of people who experienced periods with no disposable income attribute inconsistent pay as a key factor, such as shift workers or those on zero-hour contracts.
Pauline van Brakel, Chief Product Officer at Yolt, said: “It’s vital that people who see themselves in this position, and those at risk of becoming financially stretched, continue to engage with their finances, in order to avoid a situation where they lose track of essential bills or see their monthly commitments spiral beyond their control. It can be easier said than done, but beyond reviewing expenses and budgeting, where possible consumers should look to reduce debt, as this not only means alleviating financial pressure but can mean more money in your pocket in the long run.”
85% of finance departments struggle to innovate
New research has shown the majority of UK Finance decision-makers (85%) have admitted to having an accounts payable process that sometimes requires supplier invoices to still be printed out, even though they have been sent via email.
Speaking of the results and the challenges businesses have faced, Ian Smith, GM and Finance Director at Invu, said: “These results show that a significant proportion of businesses are failing to innovate and struggle with hybrid working. The continuing dependency of many UK Finance departments of paper-based processes raises questions as to whether they are able to fully embrace new ways of working and attract the best staff.”
UK Government launches £375m fund for investment in tech startups
The UK Government has launched the Future Fund Breakthrough – a £375 million fund for government-VC co-investment in R&D intensive high-growth start-ups. Alongside The Future Fund Breakthrough, the government is also set to introduce a broader set of measures to increase competition in UK digital economy.
The new measures include new tech visas to attract talent to the UK and a ‘digital markets unit’ to curtail the dominance of large US tech companies like Google and Apple and open up the market for smaller UK businesses.
Patrik Backman, General Partner at OpenOcean commented: “The launch of the Future Fund Breakthrough comes at a crucial time for tech start-ups in the UK. The industry is bouncing back from the unprecedented economic downturn at the start of the pandemic, and this £375m support fund will help to restore confidence and increase start-ups’ chances of capturing investor attention.
UK North-South divide exacerbated by Covid-19
Following Boris Johnson’s plans to level up the country, new research from Nucleus Commercial Finance reveals the scale of the challenge the government faces, with more than half (56%) of SME leaders believing the regions of the UK are unequal in terms of both economic growth and prosperity. This compares to just 17% who believe that the regions are very equal.
Business leaders in the North are most concerned about this inequality, with 72% saying the regions are unequal, compared to just 49% for those in the South. More specifically, those in the East Midlands feel this the most with 78% saying the UK is unequal, this is closely followed by North West (77%) and Yorkshire & Humberside (69%). Older business leaders believe in this inequality the most. 83% of those aged 55 and over believe there is regional inequality in the UK, compared to 56% for those aged 35-54 and 35% for those aged 18-34.
Chirag Shah, CEO, Nucleus Commercial Finance comments: “Despite years of promise from the government to address the North-South divide, it’s clear SMEs are still feeling its impact and many don’t ever see it being resolved. It’s particularly worrying that business owners have felt the force of this when it comes to accessing finance. No business should feel they have less of a chance of receiving government funds due to their geographic location, but this is a harsh reality.”
FCA loses 323 electronic devices worth over £300,000
The Financial Conduct Authority (FCA), the regulatory watchdog for financial services firms in the UK, has misplaced a total of 323 electronic devices estimated to be worth £310,600 over the last three years, according to official figures. The FCA, which operates independently from the UK government, is financed by charging fees to its members, and last November issued a warning to businesses to ‘be responsible when handling client data’.
Cyber expert Edward Blake, Area Vice President EMEA, Absolute Software comments: “Managing a large, distributed workforce is no easy task, particularly in the midst of a pandemic, and keeping tabs on valuable devices like laptops is growing increasingly difficult.
“If one of these lost devices ends up in the wrong hands, the FCA could be facing consequences far more severe than the cost to replace them. For example, sophisticated cybercriminals can steal the data contained on these devices, access more businesses files, or intercept emails between colleagues, for the purpose of data theft, monetary gain, high-profile scams, or ransomware.
“Therefore, it is more critical than ever to have a permanent digital connection to every endpoint, as well as the ability to lock, freeze or wipe the device if it is at risk of being compromised.”
Two-thirds of British shoppers say this year’s Christmas will be more emotional than pre-pandemic
More than two thirds (66.84%) of the British public say this year’s Christmas will be more emotional or important than it was before the pandemic, with almost half (49.4%) planning to spend more on gifts and celebrating as a result. That’s according to a new survey on 2021 holiday shopping behaviours from Quantum Metric. The survey has found that shoppers plan to spend an average of £489 each on gifts, an increase of 64% on 2019, and leading to a potential national economic boost of up to £31.9billion.
“The surge in e-commerce sales for the 2020 holiday season was not just a reaction to the pandemic, it represented a major shift in how UK consumers browse and purchase products,” said Alex Thomson, RVP, EMEA for Quantum Metric. “It’s not going to be enough to just support online shopping transactions; consumers today want a curated digital experience as personal as the gift being purchased.”
Wombat Invest offers UK investors access to new Space ETF
Micro-investing platform Wombat Invest is offering UK investors access to the burgeoning space economy through a new space ETF.
The fund provides the first – and only – opportunity for UK and European investors to gain pure-play exposure to more than 30 space-related companies, including those specialising in satellite technologies, hardware, telecommunications and tourism. They include Virgin Galactic Holdings, Garmin and leading global satellite communications company EchoStar.
Kane Harrison, CEO and co-founder of Wombat Invest, comments: “We are delighted to offer investors access to the space economy through Europe’s first space-themed ETF.
“We are always looking for new and exciting additions to our range of theme-based funds and The Space Age’ will perfectly complement our growing selection.
“Our mission is to make investing more accessible for new investors and we believe it is important to capture their imagination. What better way to do that than by offering the opportunity to invest in the space economy 52 years to the day that Buzz Aldrin and Neil Armstrong became the first men to walk on the moon.”