The digital banking industry is thriving in the UK


The UK has become a global leader in the digital banking sector, London has led the way for innovation, leading the way for the next generation of fintech powerhouses. 

This has largely been a result of increased investment in technology across financial organisations, not only to ‘keep up’ with competition but operate more efficiently as a whole. With the shift we have seen in recent times towards a more remote working world, this has become more important than ever. 

The changes seen in the sector were dominant even before the lockdown, however. Whilst the sector was traditionally controlled by a handful or large organisation in the UK, the changes seen to the regulatory landscape has opened the market to challengers, with nearly 90,000 finance firms now active in the UK. 

The UK’s success is not simply down to size either, there have been several key factors that led to the UK being strong in the fintech sector. 

A change of regulation

As touched on prior, the UK made amendments to regulations to support challenger banks and other financial companies. Introduced in 2015, the approach was innovative in the way that it was operated as its own regulatory fintech sandbox that enables innovation in both products and services. 

Other countries have begun to adopt a similar approach as the UK off the back of its success. The creation of the progressive, open minded approach has become international renowned. 

A craving for innovation

The attraction by almost all bodies towards innovation is another reason for the implementation of cutting-edge financial services. The appetite of consumers has seen the rise of challengers make some significant headway in the market. 

Around 12 million people in Britain are now part of a digital-only bank, with two thirds of the population in the UK utilising contactless technology. For perspective, only 3 percent of the US use this technology. 

It is not just consumers however, the demand from businesses for digital banking is also significant. In the current environment, there has been a spike in small to medium sized enterprises (SMEs) seeking innovation when it comes to finance. 

This is confirmed by the Bank of England that report 83% of SMEs in the UK utilise mobile banking, with over 99 percent using online banking. With nearly 6 million businesses being an SME, there is a huge market for targeting. 

Banks and other financial services understand the need to adopt better technological based financial services and have even begun offering fintech products directly to their own customers. With the UK boasting a 71 percent adoption rate for fintech’s, the country is set to hold its world-leading status. 

Technological advancements

Employment in tech has increased year on year over the past decade. With more the 2.1 million people now working in tech, not just production but also innovation in the sector is accelerating. 

British firms attracted a record £10bn in investments, exceeding other tech hubs in France and Germany combined. With new businesses entering the market introducing cutting edge technology, established institutions are making dramatic changes to keep up with the pace of the market and to retain their clients. 

Many of the large players have formed partnerships with fintech’s to deliver this service, helping efficiency within the financial institutions by automating time consuming tasks. 

The result of this is that tailored services can be delivered to the clients with the time freed up, improving corporate social responsibility by cutting down on paper usage also. 

Success is likely to continue

With the UK likely to keep seeing investment in the future of tech as a vital cog in the economy, combined with a strong appetite by both consumers and businesses for fintech and further technological advances, fintech is thriving and will continue to do so for the coming years, with the UK in the heart of it. 

Jamie Johnson is the CEO of FJP Investment, an introducer of UK and overseas property-based investments to a global audience of high net-worth and sophisticated investors. Founded in 2013, the business also partners with developers in order to provide them with a readily accessible source of funding for their development projects.