The FinTech sector has undergone remarkable growth over the past decade. The UK’s status as a FinTech superpower, set against a conducive regulatory and investment backdrop, has led to a flywheel of talent and adoption.
At Love Ventures, FinTech companies make up a core part of our portfolio, with a number of active investee companies and their founders leading the way in redefining how and where consumers and businesses spend their money across the UK, Europe and the rest of the world.
Reimagining Finance
FinTech, short for financial technology, refers to the use of technology to improve and automate the delivery of financial services. This sector is expansive, comprising everything from digital banking, payments, lending and wealth management, to insurance (InsurTech), regulatory technology (RegTech), and cryptocurrency.
Although the concept of FinTech dates back several decades— with the DotCom boom of the 90s giving rise to PayPal and the origins of online banking—modern FinTech emerged from the rubble of the 2008 Global Financial Crisis.
The crisis exposed significant weaknesses in traditional financial institutions, resulting in widespread distrust of banks and financial service providers. Over the years that followed, consumers began demanding more of their financial services companies, and as access to smartphones and internet literacy (and trust in technology) increased – the conditions were ripe for innovators to offer more transparent, faster, customer-centric financial solutions.
Rise of the neobanks
No country took greater advantage of these conditions than the United Kingdom, and London in particular. As global investment in FinTech began to soar, the culture created over centuries within “the City” began to seep out into entrepreneurship.
In 2014, Anne Boden founded Starling Bank, and in 2015, Tom Blomfield launched Monzo and Nik Storonsky started Revolut—marking the arrival of the neobank era. Those three businesses alone now have a combined estimated value of over £42 billion.
Over the years that followed the rise of the neobanks, consumers became more open to alternatives, leading to the emergence of peer-to-peer lending platforms, trading apps that bypassed traditional intermediaries, and global remittance services that reduced fees and sped up the transfer of capital around the globe.
All of this success is testament to the entrepreneurial spirit of British founders and the hoard of global talent that chose to start businesses and grow their careers within the UK, but it was also underpinned by a highly conducive regulatory environment within the UK.
The UK as a Global FinTech Leader
UK regulators have long been a far more collaborative partner to industry than many of their global counterparts. Much of the UK’s FinTech success can be attributed to a supportive regulatory environment. Initiatives like the FCA’s regulatory sandbox have allowed startups to test and scale their innovations in a controlled environment.
More recently, the UK’s open banking regulations, which began in 2018, allowed third-party providers to access consumer banking data with their consent. These regulatory frameworks continue to foster innovation, making the UK a fertile ground for FinTech entrepreneurs and investors.
The UK has emerged as one of the most dominant players in the global FinTech space, contributing to nearly 10% of global FinTech investment. In 2022 alone, UK FinTech firms raised over £12.5 billion, making it the largest FinTech hub in Europe and second only to the US globally.
Beyond neobanks and payments, the UK is a leading player in RegTech, helping financial institutions navigate increasingly complex regulatory environments while improving compliance efficiency.
In 2022, Love Ventures first invested into Detected, offering frictionless KYB onboarding for all business users. Detected is a critical infrastructure component to support the next generation of international compliance, and a prime example of how the UK’s FinTech sector possesses a global outlook and commands international responsibility.
The global FinTech market is projected to reach £235 billion by 2025, growing at a CAGR of 23.5%, powered by established markets further consolidating and diversifying, as well as emerging markets experiencing rapid FinTech adoption.
Expanding Accessibility Through Digital Nativism
The past few years have seen significant developments in the FinTech space, with the Covid-19 pandemic serving as a major accelerant for digital transformation. The pandemic forced millions of people to embrace digital financial services as in-person banking became less viable.
Digital-only banks are growing in popularity, especially among younger consumers. According to a report by Finder, 1 in 5 UK residents now have a digital-only bank account. These banks are attractive due to their flexibility, ease of use, and low fees.
However banking isn’t the only space which the “digital native” generations are taking advantage of FinTech. Tembo, a Love Ventures portfolio company from Funds II and III, offers a digital broker service for mortgages.
Tembo leverages technology to expand the homeownership market in the UK. According to the company’s own data 83% of its customers had been rejected by a broker or lender before Tembo helped them. Against a backdrop of data from the UK Housing Survey which stated “59% of private renters expected to buy in the future”, Tembo leverages FinTech to open up home ownership to an entire generation.
At its core, FinTech, especially consumer FinTech, is predicated on a vision of providing greater access and control to its users than has ever been possible with legacy institutions.
Many of these legacy institutions are now turning to their upstart FinTech disruptors to unlock growth in a changing world. Within the Love Ventures portfolio, Banked, the B2B global payments network built on banking rails, recently announced its partnership with Visa, the global credit giant, as Visa seeks to provide greater levels of accessibility to its increasingly digital-first customer-base.
“You Come To Me On The Day of My IPO”
The FinTech sector has not only seen rapid growth but is also now beginning to see significant exits that will begin to shape the next generation of the industry. The now infamous 2007 Fortune article first brought the term “PayPal Mafia” into the zeitgeist, and the term has now become shorthand throughout the world of startups for exited employees, operators and founders spinning out companies post-IPO, acquisition or shareshale.
As the UK’s FinTech market continues to mature – in 2024 secondary share sales in Revolut, Moneybox and Monzo have created numerous early-employee millionaires now with the financial freedom to begin taking risks – we are likely to being to see a new wave of FinTech startups begin to spin out.
According to Accel data on what it terms “Founder Factories”, 625 tech-enabled startups have been founded by former fintech unicorn employees in Europe and Israel, of which 35% are also fintechs. Importantly, in the context of the UK maintaining its status as a global leader, 61% of these companies are in the same city as the original unicorn.
For example, Revolut’s former employees have gone on to create products like Deblock, a non-custodial crypto wallet and off-ramping banking service, and Bond, a treasury management platform that helps companies optimise their balance sheets. These spin-offs help to perpetuate FinTech innovation by leveraging the experience of high-growth unicorns, and applying it to niche markets within the broader financial services industry.
It’s Time for FinTech 3.0
The FinTech sector has evolved dramatically since the 2008 financial crisis, emerging as one of the most innovative and transformative industries of the modern era. From digital payments and neobanks to blockchain and RegTech, FinTech companies have reshaped how we manage, access, and think about financial services. As the sector continues to mature, it is clear that FinTech will remain at the forefront of global technological innovation.
For the UK, Europe, and beyond, the next decade will see even greater adoption of financial technologies. This will be driven by trends like open banking, artificial intelligence, and embedded finance. The ability of FinTech firms to tackle challenges in financial inclusion, sustainability, and regulatory compliance will define the future of finance and our relationship to capitalism.
At Love Ventures, we will be at the forefront of this future. Our FinTech portfolio will only continue to grow, and with the advent of AI, we see a future where finance is faster, fairer and more profitable for all, just around the corner.
