Inside the rapid rise of UK fintech
There’s a rocket strapped to UK fintech, and it’s only speeding up.
On 28 April, UK fintech week kicks off, with industry body Innovate Finance hosting its 11th global summit.
This follows another record year for the industry, where businesses saw profits balloon and customer bases swell.
Allica Bank – a London-based fintech – was dubbed the UK’s fastest growing private company by the Times Hundred and Europe’s fastest growing start-up by Sifted.
The firm nearly doubled its profits in 2024, pocketing £29.9m.
Meanwhile, neobank giant Revolut topped £1bn profit in 2024 and surpassed Europe’s biggest lender, HSBC, in consumer base after recording 52.5m, compared to the lender’s 41m.
With young firms on the rise and established challengers posing a threat to traditional lenders, London has emerged as a global leader in fintech, but what’s behind the City’s momentum?
A world class appeal
Janine Hirt, chief executive of Innovate Finance, told CityAM: “Success stories like Allica Bank, Revolut and Zilch are great examples of UK fintech’s strengths – and they are far from the exception.”
As the wider economy has been stung both on the homefront and through geopolitical tensions, the fintech eco-system has thrived.
“With over 82,000 people employed, and projected growth that will see the workforce pass 100,000 in the next two years, the fintech sector is creating high-value jobs across the country and creating fast-growing hubs across the UK’s nations and regions,” Hirt added.
Innovate Finance launched a unicorn council in 2024 aiming to steer the government with policy recommendations to help the industry thrive.
The UK is the top unicorn breeder in Europe, having created over 185 startups valued over £1bn, according to research from HSBC Innovation Banking.
The unicorn council includes bosses from Monzo, Zilch, Zopa and Clearbank.
“[Fintech] is an area where the UK is genuinely world class and respected globally – fuelled by innovation, smart regulation and investment appeal,” Hirt said.
Meeting consumer and business needs
As fintech first joined the City firms took a focus on consumer lending.
Monzo’s prime focus in its early days was becoming a digital-based, mobile-only bank born out of demand from customers.
Simon Merchant, founder and chief executive of Flagstone, said: “What we think of as the modern fintech movement is over 12 years old already.”
But, he added it had not lost any momentum for one reason: “fintech-driven alternatives continue to think harder about what consumers and businesses want and move faster to provide better products and services, versus what these customers can get from more ‘traditional’ financial services.”
The laser-focus and constant innovation of fintech has extended to the needs of businesses.
Revolut launched its business arm in 2020 with a versatile offering geared towards cross-border businesses, freelancers, and tech-savy companies.
And now young fintechs are entering a scene with a focus on catering to businesses.
James Baston-Pitt, Alloy’s head of growth for UK, told CityAM: “In the recent past, a UK fintech’s priorities were clear: win customers, grow at all costs and invest hugely in delightful customer experiences.”
But, Baston-Pitt said as the times changed, so did the industry,
“We’re seeing a lot of product diversification among fintechs, all in the direction of higher value products.
“Where they previously catered to consumers, they now launch a B2B offering; where they only served current accounts, they now expand into lending or buy now pay later.”
UK banks on fintech
In 2024, while fintech investment fell, the UK maintained its spot as a leader in Europe.
Total investment in the UK’s fintech communities topped France, Germany, China, India, Brazil and Canada combined, according to KPMG data.
Merchant said: “UK fintech has a great culture of mutual support and it’s not common to see fintech founders and alumni offering not only financial investment but knowledge transfer, angel investment and ‘sweat equity’ to new fintech entrants in the market.
“This culture of fostering and bolstering is a huge part of what makes UK fintech so strong and confident on the world stage.”
Meanwhile, London is hot on the heels of New York to become the world’s leading fintech hub – and the current economic climate could tip the scales.
Can momentum be maintained?
After global markets were sent into a tailspin following President Donald Trump’s erratic tariff agenda, many firms put their plans for public listings on ice.
Jaidev Janardana, chief executive at Zopa, told CityAM that although an IPO was not a priority for the bank, the “business was ready”.
Hirt said to maintain its lead, the UK must “place digital finance at the heart of our economic strategy”.
Adam Turmakhan, chief executive of Turma Fintech, said: “There’s no denying that fintech momentum is with the UK right now.
“Economic pessimism has cast a shadow on the US market, and investors seem to be reducing their Stateside bias”
But, the fintech boss cautioned the success of “innovations will always depend on the appetite and pick-up of its institutions and customers.”
He warned “conservative attitudes” could restrict development and as the US regroups and bounces back, the UK’s accelerating momentum “could be short-lived.”
The industry’s eyes now look to the government’s upcoming financial services and growth competitiveness strategy, where hopes remain high fintech will feature prominently.
Chancellor Rachel Reeves met with leading executives last month as a part of her series of summits to prepare the Treasury’s financial game plan.
Should the industry receive the government’s backing in its upcoming strategy, the fintech rocket could be set for new highs.