2022: What’s on the cards for London’s fintech scene?
As 2021 enters its final quarter, it’s clear that it’s been an absolute roller coaster year for London’s fintech scene.
As the new year dawned ten months ago, confidence had already started to build about the year ahead.
World Bank’s Christmas 2020 report showed that growth had been unprecedented across the board, particularly for companies that focused on digital asset exchanges, payments, savings or wealth management.
Lockdown, it appeared, was the earthquake that sent a tsunami through global fintech.
Here in London, as the year progressed, we saw an absolute bonanza of tech exits.
A roster of big beast IPOs filled the capital’s spring schedule with Moonpig, Trustpilot, Deliveroo, Darktrace, Pensionbee and Oxford Nanopore Technologies going public one after the other.
It was around this point that industry-watchers started predicting an enduring boom in London’s tech fortunes.
The city is already recognised as the ‘digital tech centre of Europe’, attracting more VC wealth than any other European capital, but are we entering an era of supercharged growth?
Crystal balls at the ready…
In short, everything points towards an enduring boom.
A recent Tech Nation survey demonstrated enormous confidence across the tech sector, regardless of Brexit or ongoing disruption from the pandemic.
Two thirds of people anticipate that UK tech is going to continue to grow over the next five years with fintech and cybersecurity poised to attract the most investment. Half also predict that we’ll see more year-on-year exits, leading to a record high.
But what do the experts think? I’ve asked the founders and leaders of some of the UK’s best-known fintech companies for their predictions.
With their ears to the ground, their words of wisdom could provide real insight into what’s ahead.
John Salter, Chief Customer Officer, ClearBank
“My top prediction is that foreign currency services – payments and FX – will come back into focus as Brexit and COVID start to unwind faster. As the dust of Brexit settles, and COVID travel restrictions ease, we’re likely to see a focus on foreign currency services – such as multi-currency offerings.
“Embedded finance will also gather momentum and Banking-as-a-Service (BaaS) solutions will become more clearly defined. As the Open Banking ecosystem evolves, it will allow the growth of BaaS and embedded finance, with each being clearly defined and differentiated.
“As a result, we’re likely to see an increase in embedded payments within apps, as businesses such as Uber, Lyft and Starbucks are already popularising.
“Finally, crypto/digital currencies will dominate our front pages and will become more mainstream.”
Teodor Blidarus, co-founder and CEO, FintechOS
“2022 will be the year financial institutions in the UK truly leverage emerging technologies to better serve and meet the specific needs of their customers.
“Banks and insurers know that their products and services should be data-driven and customer-centric, but there are often other priorities competing for technology resources.
“This is where fintechs with low-code platforms have a key part to play and why expensive, laborious, ‘rip and replace’ digitisation projects are set to be shelved in favour of more easily customisable API-based solutions.
“It’s predicted that by 2024, low-code application development will be responsible for more than 65% of application development activity and 2022 will mark the beginning of mainstream adoption across wider financial services.”
Ifty Nasir, founder and CEO, Vestd
“2022 is going to be the year for fintech for social good.
“Companies driven by social purpose have been bubbling towards prominence for a number of years and Ipsos Mori has long been charting the growing distaste that the public has for businesses that fail to meet their social, ethical and environmental obligations.
“In 2022, companies that really do live and breathe their CSR will be the ones to win.
“I also predict that ShareTech (technology that supports the sharing of equity) is going to come into its own as an area of British expertise. There’s huge growth in that sector and that won’t abate any time soon.”
Tejas Parikh, Director, Akshar
“London’s fintech scene will continue to flourish with new challengers continuing to flow in.
“However, in Q4 and more so through 2023 there should be some amount of consolidation with clear winners in a tiered system emerging, based on the customer segments they cater to.”
Josh Guthrie, UK Country Manager, Mollie
“Nearly 4 in 10 Brits say they have used BNPL (buy now, pay later) to pay for goods to some degree. As BNPL companies continue to gain market traction and valuation, usage will only increase.
“Merchants will continue to provide flexible payment methods for online purchases to grow revenues and we’ll also see high double-digit growth for faster payments volumes in 2022.
“Small and medium merchants will start to offer personalised experiences to their customers to compete against impersonal retail behemoths like Amazon.
“Finally, the UK fintech sector raised more in the first half of 2021 than the whole of 2020. In 2022 that trend will continue and we can expect someone to coin a term to describe the category of fintechs that exceed unicorn status.”
Looking to the future
So there you have it, the experts have spoken.
And whatever the case, you can expect to see more of a philosophical change in the workplace too.
With far less traffic running through London’s Square Mile, it’s a certainty that we’ll continue to see a continued migration of companies to cheaper locations, or to fully remote operations.
Whichever way you look at it, we are unequivocally in the midst of revolution. Just five years ago, nobody could’ve predicted the intense upswing in exits via London, or that we’d see top talent working full time from beach huts or kitchen counters.
The world has changed, and there’s more to come.
Here’s to 2022!