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The Strengths of the UK’s Growing Fintech Market

The Strengths of the UK’s Growing Fintech Market

The UK’s economy has experienced a number of shocks since the beginning of the coronavirus pandemic in 2020. The shuttering of retail storefronts saw travel, hospitality, and high street retail on their knees. All while a post-pandemic energy crisis and rampant inflation threaten consumer spending figures. But there are some industries that have conversely thrived, and continue to thrive. One of which is the UK’s fintech sector.

What is Fintech?

Fintech, or ‘financial technology’, is a sector of the industry that comprises businesses innovating with regard to tech-centered finance solutions. Financial technology is part of our day-to-day lives. Both with regard to back-end banking processes and commercial products we use regularly. In fact, every direct debit, digital banking transaction, online financing agreement, and alternative banking solution is an example of fintech in action.

Fintech as we know it was born in the tech boom of the 1990s, as new computational capabilities met the rapid expansion of the internet. It had earlier beginnings with the invention of the ATM and the first digitally managed financial transactions. But, as technology became more ubiquitous, the market for tech-based financial solutions grew ever-larger.

The UK Fintech Landscape

As of 2021, the UK’s fintech sector had seen a multi-billion-pound peak in investor interest as new digital banking and forex services found significant funding from private investors and public offerings alike. Growing consumer interest in the trading of stocks and currencies has seen an explosion of growth in retail trading apps. Especially with the 2020 boom in ‘meme stocks’ – an American anti-short fund movement that has found significant support in younger retail traders on this side of the Atlantic.

While much of the fintech industry has surrounded new B2C banking or lending solutions, a new pocket in the market has emerged. Cryptocurrencies have been steadily gaining traction since the introduction of Bitcoin in 2008. Further development of the blockchain on which Bitcoin was built has enabled the design of decentralized marketplaces. These are used for the trading of cryptocurrencies and NFTs. While the market is small for these solutions, the investment opportunities are large. In part due to the high value of currencies and assets attributed to them.

Adaptation in Law

The fast-paced development of technology, and new ways of holding, transacting, and lending value, have had knock-on effects in other industries. Fintech law firms are now in greatly higher demand. They forge new pathways for new fintech businesses to safely and legally grow their product. However, they also enable established businesses to implement fintech solutions in their model or processes.

The field of law is struggling to keep up with the breakneck growth in tech, on a number of fronts. Elements of financial legislation do not match up to the contemporary reality of financial transactions and assets. Whereas, firms non-acquainted with fintech or wider legal tech solutions are some years behind infrastructurally.

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