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Shaping a Brighter Future: The Transformative Role of UK Fintech

UK fintechs are gradually changing the face of finance. They have helped to boost the economy, are drastically improving financial inclusion and doing their part in increasing financial security. But with much still to improve, they cannot afford to slow their approach. 

Graham Cressey is the director of Accenture‘s FinTech Innovation Lab’ in London. Here, he explains how UK fintech firms can act as a force for good, by improving the economy and tackling financial crime.

Graham Cressey, director of Accenture’s FinTech Innovation Lab
Graham Cressey, director of Accenture’s FinTech Innovation Lab

In an era of rapid technological advancement and shifting macroeconomic conditions, the UK fintech sector continues to deliver innovation and progress.

A recent FinTech Impact report from Accenture, Innovate Finance, and Vested Impact paints a picture of an industry that is also capable of driving significant social and economic change.

With its roots in finance and technology, the fintech industry is well-positioned to tackle some of the most pressing issues facing society, from boosting financial inclusion to combating financial crimes.

UK fintech has carved out a place as a force for good

One of the most striking aspects of the UK fintech sector is its considerable contribution to economic growth. Nearly all (98 per cent) of the UK fintech businesses assessed in the report are actively fuelling productivity. And this is not just valuations and numbers on a spreadsheet; the sector’s impact extends to people – through jobs and livelihoods; to place – through regional communities; and to planet – by creating a sustainable future in an increasingly digital world.

However, most importantly given productivity growth should not come at any cost, the sector’s impact goes far beyond just its economic impact. A quarter of fintechs are actively tackling social inequality and improving financial inclusion. By providing innovative lending products and youth banking services, fintech firms are opening doors that have long been closed to some parts of modern society, specifically small businesses and young people.

Added to this, over a third of UK fintechs are tangibly contributing to peace, justice, and accountability, focusing on crucial areas like data security and compliance. In an age where data breaches and financial crime are increasingly sophisticated, these efforts are not just commendable – they are essential for modern enterprises. With the majority of fintechs offering B2B propositions, this underscores fintech’s role in creating a safer, more transparent financial landscape.

But momentum can’t slow

The wider macro-environment continues to be challenging, with end users developing new and ever-evolving needs. The research showed that the most recently formed companies can often provide propositions with greater positive impact than those of older and larger organisations. Now a proven recipe for success, the fintech sector must play to its strengths and continually ensure it is stepping up to the plate and adapting its offers and services to respond to new challenges as they emerge.

Increasingly, for example, consumers and investors now expect organisations to be taking action on the range of issues highlighted by the UN’s Sustainable Development Goals, and businesses require tools to help them calculate and act on the likes of environmental and financial risk.

Yet, our report found that only nine per cent of assessed fintechs are making a substantial positive contribution towards climate action.

This is a call to arms.

Secondary emissions are significantly more impactful than a company’s primary emissions, with Vested Impact estimating 700x more impact from the activities a firm finances. So, climate action is an area ripe for innovation, and one where fintech businesses can lead the charge, rewiring financial markets to support sustainable activities.

Utilising AI

Another area of opportunity continues to be artificial intelligence (AI) and specifically around generative AI. Practical applications of generative AI represent some of the biggest opportunities businesses are currently exploring. The foundations of this latest technological shift are forming right now.

Research from Cambridge Centre for Alternative Finance shows that roughly 90 per cent of all fintech companies are already using some level of AI in their business models, meaning fintechs are uniquely well-placed to leverage generative AI in a way that benefits financial services as a whole. Here lies the opportunity to lead by example by embedding responsible decision-making, greater inclusivity and fair representation principles in the implementation of generative AI across financial systems, and ultimately for consumers.

Despite these opportunities, it must be noted that the fintech sector’s overall impact is constrained by the typical size and scale of fintech organisations. This does however present a major opportunity for the greater good, and an important role for fintech in powering innovative services for those challenged larger enterprises – with their greater customer reach – through partnerships.

To the future

Looking forward, there is significant potential for the UK fintech sector to drive further innovation and impact as a transformative force for good. Its contribution to economic growth, social equity, justice, and environmental sustainability should be nurtured.

However, realising this potential will require continued investment and collaboration across the industry, from enterprises and policymakers, to end users. Encouragingly, this is something we’re now seeing more of on a national scale, with the likes of the newly formed Centre for Finance, Innovation & Technology (CFIT) and the fintech growth fund (FGF), following recommendations made in the Kalifa Review to better support scale-up businesses.

As the UK fintech sector navigates a challenging macroeconomic environment, this collaboration will be key to unlocking new propositions, growth avenues and scaled positive impact, for a more equitable and sustainable future for us all.

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