With significant growth anticipated for the finance industry, the Financial Times spoke with the head of EY’s UK FinTech Lab to explore how the business plans to support fintech startups progress to the next stage.
The fintech industry is continuing to transform the financial services industry, to simplify transactions, reduce costs, empower customers, and increase security. As London continues progressing as a vital fintech hub, there is an expanding ecosystem of about 2,500 fintech businesses, predominantly in London, several figures projected to increase to over 3,000 by 2030. According to the Department for International Trade, the fintech industry contributed about £11 billion and over 76,000 jobs to the UK economy and considering the importance of London as a financial hub, it’s an industry that will likely continue to grow.
The combination of a rapidly growing industry and willingness from consumers, policymakers, and traditional businesses to embrace digital tech has resulted in the UK creating one of the highest fintech adoption rates worldwide.
There is a growing interest in capitalising on the fintech industry. Earlier this year, EY highlighted its enthusiasm for fintech by launching the FinTech Lab in London and plans another hub in Edinburgh for this year. The Lab will support fintech startups and scale-ups as they explore profitable solutions to financial-based challenges, supported with significant investment over the next year.
Mark Janetta of EY explains that the Lab will focus on gaining a better understanding of whole they are, what they do and how they can best support fintech in their journey. Janetta highlights they intend to gain more insights into their business and the challenges they face in the industry and gain further traction. When it comes to innovation, there’s abundant talent in the fintech community with good ideas, but these ideas require support and momentum. The EY FinTech Lab provides a specific environment and team with technical abilities to transform ideas into concepts. Jannetta explains that they’re developing a dedicated space to work with fintech, to share ideas and progress them forward.
Considering EY’s client base of traditional financial businesses, the company also intends to deliver new ideas that evolve from the FinTechLab. Jannetta explains that they’re focused on discovering good business and solutions for banks and financial institutions to collaborate with and increase their overall proposition.
The initial focus will be on technologies that tackle financial crime, specifically areas such as payment fraud. The Lab will explore the involvement and participation of businesses on their innovation journey. Regardless of the path fintech decides to take, EY explains that success depends on the ability to clearly define the proposition by determining the proof of concept and how to execute it. Jannetta highlights that they need to consider the future roadmap and the next steps, ensuring they have a clear business case and value proposition.
One of the biggest challenges for fintech companies is working with big, established financial institutions. Fintechs require resilience, and must be flexible with their normal working structures to satisfy compliance and control banking requirements. Preparation and due diligence are critical. Many banks, for example, have public online content displaying their standards and proof-of-concept agreements. Fintechs should ensure they recognise these requirements as much as possible to deliver the most appealing proposition for collaboration.
