Fintech & the UK Investment Outlook

Interested in the growth prospects of the fintech sector in the UK? The year ahead looks rocky for VC funding but some promise remains as the UK continues to attract its fair share of global financial services investment. 

According to the latest UK Attractiveness Survey for Financial Services from EY, the UK remains the most attractive location for international investment into financial services in Europe. The country attracted 63 projects in 2021, an increase of seven from the previous year.

France also saw an increase in investment, recording a total of 60 projects (11 more than in 2020), narrowing the gap with the UK to just three projects. Despite this, financial services foreign direct investment (FDI) across Europe as a whole fell by 2.8% in 2021, the third annual decline in succession.

The US remains the main source of FS FDI in Europe, but France saw the lion’s share of US investment for the first time, with 19 projects compared to the UK’s 17. In a survey of global investors, the UK was seen as the most attractive European country for future FS FDI, with Germany second and France third. According to the survey, 69% of global investors said they plan to establish or extend operations in the UK over the next year, while almost half (47%) said they plan to increase their investment in the UK following the pandemic.

Despite the ongoing impact of last year’s geopolitical events and slowing global growth in the face of higher inflation, this should mean it is likely that the fintech sector in the UK will continue to be attractive to whatever investment remains available and this is probably down to the UK already being home to a thriving fintech ecosystem, with a range of innovative companies operating in the domain.

But why is it so attractive here? The UK’s deep history in financial services, access to a skilled workforce, and supportive regulatory environment are all key factors that contribute to its attractiveness as a location for fintech companies.

And as to where in the UK? Well… Scotland is a cracking location for fintech companies due to its long-established financial services sector, supportive regulatory environment (also take a look at what Fintech Scotland are up to), thriving start-up ecosystem, and growing community of fintech firms. These factors provide a strong foundation for fintech companies, access to skilled talent, resources and support for start-ups, and opportunities for collaboration and networking.

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