3 reasons why UK fintech set to boom

I wanted to share 3 reasons why the future for fintech lenders such as MarketFinance is bright, especially here in the UK.

While we’ve been focused on navigating through the Covid-crisis and marking great progress, there are larger strategic trends in the market that I’m confident will accelerate the adoption of fintech solutions from payments, lending, banking and more.

1. There has been a big increase in the number of companies looking to access lending, and having to do this digitally during lock-down.

According to a March 2021 survey from the British Business Bank, record levels of smaller businesses have sought external debt funding in 2020 with further significant demand expected in 2021.

These businesses have been forced online to find financing partners, and have gravitated towards CBILS accredited fintech lenders. MarketFinance has used the scheme to accelerate brand awareness in the loans market and we now rank as one of the top destinations for businesses to go and get a fast decision and pay-out on their loan requests. In March 2021 we saw a record £750 million of applications submitted for loans (in comparison to £40 million per month pre-pandemic).

When the CBILS scheme ends, we will apply to take part in the successor Recovery Loan Scheme for a portion of our lending activity, but will also offer normal lending products to maximise the range of options we can offer the increased demand from our customers as they emerge out of the crisis. Business owners will demand seamless digital access to working capital and growth loans, and will vote with their clicks.

You can access the British Business Bank summary infographic here and the full report here.

2. There will be an explosion of new start-ups and the self-employed post pandemic.

With a crisis the scale of Covid-19, there have been big changes in the labour market with millions of people placed on furlough and some losing their jobs. The silver lining is that many react in a resourceful way and have used the opportunity to start new projects in their spare time.

Early data in the USA (with the UK sure to follow) is showing a surge in new business formations, with many following passions but not having a good handle on finance or how to navigate their working capital challenges. This creates a huge opportunity for us to deliver our vision of making finance available to the underserved with the least friction.

3. The Government really wants the UK to be the world leader in Fintech.

You may have picked up two important Government reports that recently came out in support of the UK fintech sector.

In 2020 the Chancellor Rishi Sunak asked the former CEO of WorldPay Ron Kalifa to conduct an independent review to identify areas to support the UK fintech sector.

The Kalifa Report’s recommendations include :

• Unlocking institutional capital to create a £1 billion Fintech Growth Fund to act as a catalyst in developing the UK fintech eco-system.
• Improvements to tech visas to attract global talent and boost the fintech workforce
• Creation of a regulatory Fintech ‘scalebox’ to provide additional support to growth stage fintechs

In addition, the Treasury commissioned Lord Hill to review the UK’s position as a leading centre to attract companies for fundraising and public listings. The Hill Review’s key recommendations included:

• Changes to the listing rules and features of listing a company on UK stock markets to make it more attractive for tech businesses to raise money through the UK public stock markets
• Encouraging the new trend of special purpose acquisition vehicles (known as SPACs) to come to the UK to acquire or fund UK technology companies
• Requiring the FCA to take into account the UK’s attractiveness to do business as part of their core scope of work.

Both these reports underscore the Government and the Treasury will do their utmost to nurture the growth of fintechs in the UK over the coming years, and will mean there are more options of how we can access growth and lending capital to power our capacity.

The past 12 Covid months have been draining for all, but many fintech lenders are well poised to take advantage of these trends and contribute meaningfully to the rebuilding of our battered economy. This mission will motivate us all to do the most we can in the coming years.

Anil

Originally published at https://www.linkedin.com.