fintech business using a big computer screen to present

10th March 2022

How And Why Has The Fintech Industry Grown So Quickly?

Stan Milanovich

Fintech is one of the largest and fastest-growing sectors in the global and UK economy. It is an industry that had been seeing increased investment for some time, yet has also experienced a recent rapid surge, with economists predicting that the favourable investments in Fintech will continue over the next few years.

For those in the computer hardware supply sector, like Devices for Teams by HardSoft, this is crucial information to be appraised of since Fintech has some of the steepest requirements when it comes to IT hardware.D4T daas by HardSoft

With the number of Fintech startups and scaleups booming over the last year and the trend shaping up to continue, Devices for Teams has a vital role to play in helping these firms access the right equipment. For Fintechs that isn’t only powerful devices, but the most cyber secure powerful devices on the market.

The UK Fintech Landscape

Experts believe that the Fintech sector will triple in size over the next decade. A lot of studies and research go into supporting this rosy assessment in an era when other industries are struggling to attract investment after the turbulent time of the pandemic.

Back in 2019, pre-pandemic, the Fintech market was worth about £110bn in revenue. That global market has now been forecast to grow to £380bn by 2030.

While other sectors fought to stay afloat over the last two years, with investors becoming more cautious in the unprecedented circumstances of the pandemic, Fintech saw its investment reach $11.6bn in 2021. That was a 217% increase from the previous year.

The Current State of Fintech & Predictions For The Future:

  • Analysts predict Fintech could see a further 25% growth in 2022 alone.fintech workers in office

Some of the recent growth has taken place because of the environment in the UK. London already has a huge financial services sector and is renowned for finance the world over, second only to New York. This UK finance sector surrounds large sources of capital, nurtures skilled talent in finance, and has plenty of finance technology entrepreneurs.

This culture is continually encouraged to bloom in the UK with regulations and an established legal system that support this growth. Even the UK time zone makes international finance deals with every country easy.

This environment, which has been cultivated over many years, allowed the UK to be at the forefront of Fintech advancements. It’s not particularly surprising that Fintech was already growing considering the increasingly digital lives that we lead. Everything is becoming more digital, more immediate anfintech bankingd centred around convenience. Fintech is the backbone that supports many other services and so it makes sense that as demand for more digital avenues of service grows, so too does demand for Fintech solutions.

The UK has a lush market for advancements like peer-to-peer lending, challenger banks, insurtech, AI and blockchain.

Following the hurdles of Brexit, the UK is keen to retain business and look attractive to financial investors. This in turn influences policy to look good to those potential investors.

However, what is really impressive is how Fintech demand and investment has surged in response to the global pandemic.

The Role Of The Pandemic In Accelerating Fintech Demand

We now know that Fintech companies started reporting surprisingly strong growth in the first half of 2020 compared to 2019.

We also know that growth and demand were already on the rise, albeit more steadily pre-pandemic.

It appears that COVID-19 and the pressures it put on business and society merely accelerated trends in Fintech rather than changed them. It created greater urgency around service demand that was already emerging and increasing.online banking illustration

In the example of banking, there was already a trend moving towards online banking, with the closing of many branches, but COVID certainly sped up this process. It made many of those who were resistant to using online banking ultimately embrace it more quickly due to fear of COVID.

But why was Fintech so vital in the pandemic?

Investors were happy to support and put their capital in Fintech during the pandemic because it was an obvious necessity. It was already a growing sector, so a safe-ish bet even if the pandemic had been shorter-lived. However, many luxury services became necessities during COVID lockdowns.

People needed to use contactless payment, they needed online payment portals, companies needed better insurance and digital financial services. These were no longer just preferences.

Post COVID-19 outbreak almost 70% of UK people use less cash, a third now use digital applications as a payment choice and around half expect to use more contactless payments moving forward.

Another explanation for the successful growth of Fintech in the pandemic is their ability to be agile and responsive. It’s all well and good being in high demand if one cannot rise to meet said demand. Many Fintechs tend to be young, highly innovative tech-driven startups and scaleups. They often have fast growth and flexible strategies. Sometimes they are high-risk ventures, but often they are very good at leveraging a nimble approach to operations and business. This way of approaching business in the pandemic was essential to survival. It allowed Fintechs to rise to the challenges of the pandemic and give other companies and end-users solutions to very sudden problems.

Two third of Fintech firms reported making changes to their existing products, services, and policies in the pandemic in direct response to COVID. An additional 30% are in the process of doing so. 92% of Fintechs have launched or are in the process of launching new products or services.

One helpful change that many Fintechs have made is to reduce the cost of their services and innovations to give more rapid access to more people during the pandemic. This was crucial for reducing the necessity of face-to-face interactions in the pandemic and saved lives. It also allowed for the upkeep of essential economic activity during the pandemic.

Challenges For Fintechs

With the above context, it quickly becomes apparent as to how and why Fintechs have been able to attract such big investments and grow so quickly.

cybersecurity logo with lock for fintechYet, this doesn’t mean that the sector does not face challenges.

Fintech has had to grow and evolve so quickly that it leaves itself exposed to another, far more unpleasant, growth area: cybercrime.

The pandemic has opened up new avenues for data breaches and exploitation. Fintech utilises new technologies and handles delicate financial information. It is, therefore, one of the most vulnerable industries to this problem.

This is where Devices for Teams can provide much-needed support to Fintech companies.

Solutions To Improving Fintech Cybersecurity

With cybersecurity at Fintech level, it is a matter for both hardware and software. Having the most secure machines is the start of the solution, but Fintech will require additional protections and precautions in their software as well.

Devices for Teams has a number of solutions to provide two-pronged protection against cybercrime for Fintech. Working in collaborations with hardware and software cyber security leaders like Apple and Sophos, we can help Fintech firms troubleshoot their cybersecurity problems.

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