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This Week in the UK: Fintech News Roundup 20/1

Each week, The Fintech Times takes a look at the top stories in British fintech. In this article we hear about the huge growth in UK EdTech, Open Banking turns three, and there’s been a near-record of VC investment in London.

A special birthday

openBelieve it or not, it’s been three years since PSD2 marked the start of Open Banking, with more than 2.5million UK consumers and businesses using open banking enabled products to manage their finances, access credit and make payments. The aim of the open banking regulation was to increase competition and choice for consumers and small businesses, with 300 fintech and innovative providers joining the ecosystem to create one of the worlds most competitive financial markets. Since it launched in 2018, API call volume has increased from 66.8 million in 2018 to over 5 billion in 2020. Open banking implementation is now in its final stages, with the past 12 months predominantly focused on improving both functionality and usability so that more customers can make use of the technology.

Commenting on the progress of open banking in the UK so far,  Imran Gulamhuseinwala OBE, Implementation Trustee, The Open Banking Implementation Entity (OBIE), said: “Open banking used to be the best kept secret in financial services. We have worked hard to develop the open banking infrastructure and functionality over the past three years and our significant progress is reflected, not only in the millions of active users of open banking technology each month, but in the sustained momentum of growth we are seeing. We have developed a world-leading, thriving ecosystem of nearly 300 regulated providers, who collectively are bringing innovative new products and services to market.”

Digital banking increases, as do scale-ups

Personal finance comparison site finder.com has found over a quarter (27%) of Brits have at least one bank account with a digital-only bank, an increase of 16% from last year. A further 17% of people intend to open a digital bank account over the next five years. The most common reason for opening an account is convenience, as setting up a digital account is an easier option than most traditional bank accounts.

The UK has over 27,280 businesses classed as scale-ups, with Watford, Winchester and Camden the top ten locations for scaling businesses in the UK according to research by Cynergy Bank. A scale-up is defined as a business that has enjoyed three consecutive years of at least 20% growth in turnover, employee numbers or both. Cynergy Bank says that UK banks and the government should do more to support scale-up enterprises, as “scale-ups fall between the cracks of traditional banking models.”

Sustainable investments a hot topic

Saveonenergy.com has analysed data from Schroders and Ahrefs to reveal which countries investors are most concerned about making sustainable investments. The research found 78% of British investors would not invest against their personal beliefs, though 22% would if it led to a higher return on investment. 65% of sustainable investors believe businesses can do ‘much more’ in the new year to help combat various environmental issues, with global warming being on the forefront for many.

VC investment grows in London

Data from Dealroom has revealed that London has seen a near-record of international investment, with $10.5bn poured into the capital start-up scene in 2020, making the UK 5th in the world for VC tech investment and the second-fastest-growing global tech hub. London saw three times as much global investment as the next European city, suggesting that despite Brexit the UK will be a key place for international investment going forward.

Consumer reporting of banking fraud still low

appProlifics Testing has analysed data from the European Commission to find that 68% of Brits would notify the police is they fell victim to online identity theft, compared with 92% of Swedish Citizens. Only 53% of British people would get in touch with the police if they were the target of online banking fraud, with 82% of swedes likely to report it.

EdTech sector increases despite GDP contraction

Fuelled in part by school closures and lockdown measures in light of the pandemic, the UK EdTech sector great by 72% in 2020, in spite of a -11% contraction in GDP (as of November 2020). The growth puts the value of the UK EdTech market at almost £3.6bn, with around 600 EdTech’s based in the UK.

David Roberts, CEO of EdTech KidsLoop said: “Unlike many other sectors, the pandemic acted as a ‘hyper accelerator’ for the EdTech market. Overnight educational institutions were expected to take their classroom delivery entirely remote, with technology being the only enabler of this. In the UK, the biggest barrier to the uptake of EdTech to date has primarily been around the cost & time associated with teacher retraining. However, during lockdown teachers had no choice but to become accustomed to EdTech tools and by and large learnt on-the-job.

“On the whole, the UK is early on in its journey of embedding technology into its education system – but now that the doors have been opened, we move increasingly closer to hybrid classrooms with the help of optimised learning platforms.”

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