Each week, we take a look at some of the latest fintech news in the UK. This week, banks miss out on potential savings worth £6billion, Watford FC is paid in cryptocurrency and the UK’s first digital only credit card launched.
UK innovators attract record levels of Venture Capital Investment
The research published today using data supplied by PitchBook, recorded more than £6.5billion invested into fast growth UK businesses in Q2 21. A strong COVID-19 vaccination programme and greater business confidence in the post-Brexit environment, resulted in 708 deals being completed in Q2 21, up 7% on the previous quarter.
Fintech and healthtech businesses attracted the largest deals in Q2 21, including a $500million (£360million) raise by B2B payments firm SaltPay.
Bina Mehta, Chair of KPMG UK and Head of the firm’s UK Emerging Giants Centre of Excellence said: “The UK has demonstrated resilience and adaptability in attracting overseas investment in a post-Covid, post-Brexit era, which is likely due in part to the maturity of our scaleup ecosystem.
“Whilst it is our established late stage businesses that are attracting the big investment, Angel investors and university incubators are playing an increasing role in developing strong and active programmes in the regions, which attribute to our diversity and growing number of disruptive scaleup businesses. It is great to see that early stage businesses are starting to attract the funding they need in order to scale. Supporting our early stage businesses will be crucial in order to continue to develop our ecosystem and maintain our global position as leaders in innovation.“
UK retail banks miss out on potential savings worth £6billion
UK retail banks stand to save £6billion simply by reviewing the contracts they have in place with third-party vendors. This is the claim made by Strategic Resource Management (SRM) Europe and comes shortly after the Kearney Retail Banking Radar reported that European banks must reduce costs by over £25billion in order to become profitable within five years.
David Royle, managing director UK, SRM comments: “Third-party contracts are a huge proportion of banks’ operational costs, but where vendors have entire teams permanently negotiating and renegotiating their contracts day in day out, banks will typically only review their contracts once every few years, with little point of reference to comparative data. This leads to a negotiating imbalance and sub optimal contracts.
“Those banks have historically been fixated on reducing headcount and branch cuts as a means of balancing the books. In doing so, they ignore the real issue: they are continuing to pay their vendors too much. IT costs alone, including core processing, payment providers, automation, and digital platforms have increased a staggering 80% since 2015.
“Despite being so-called strategic partners, and regardless of their business alignment with the bank, it is in every vendor’s best interest to keep the banks paying as much as possible, for as long as possible. We want to change this in the UK market.”
NewDay launches Bip the UK’s first digital only credit card
NewDay, a UK provider of accessible credit, has launched Bip – the first completely cardless consumer credit proposition in the UK. Bip has been designed around the customer, offering a fully digital credit experience that is simple to use, fully transparent on costs and with the customer in complete control.
With no physical card, Bip customers can apply and have access to appropriate credit within minutes. Bip is available via the App Store and Google Play – and can be added to the digital wallet of the user’s mobile phone. Just like a traditional card, it can be used anywhere
Sharvan Selvam, Commercial Director at NewDay said: “We worked with our customers all the way through the design, testing and launch of Bip. It is a proposition designed to make credit easy to access, simple to use and, importantly, puts the customer in full control.”
Watford FC paid in cryptocurrency, as part of new sponsorship deal
Premier League football club Watford FC said their new shirt sponsor has paid in cryptocurrency. The news comes as the football club previously featured the bitcoin logo on their shirts, as well as being one of the first English football clubs to offer bitcoin as a payment option.
Paul Roach, Co-Founder of crypto wallet and payments platform Zumo: “We may be early on in the crypto game, but this is just one more sign of crypto making it onto the big stage. It’s great to see crypto finding this level of mainstream adoption, and we can surely expect to see a lot more of these kinds of deals in the business-to-business arena.
“Sports is a hot space for the crypto industry, and we’re starting to see a lot of high-profile sponsorship deals across football, rugby, and Formula 1 to name just a few. Clearly, crypto and sports is something that’s not going away.”
UK financial institutions spend an average of £374k each year on preventing financial crime
Financial crime prevention costs UK financial institutions an average of £374k every year, according to new research from the global legal business, DWF.
The survey of 300 financial crime decision makers working in the financial services sector in the UK, also found that on average, organisations spent £53 annually on financial crime defence for each customer relationship they have. Moreover, they refused an average of £90,240.77 and exited an average of £90,869.52 worth of UK customer relationships for financial crime reasons during the last 12 months.
Andrew Jacobs, head of regulatory consulting at DWF, said: “In a climate where businesses are being held to account on their Environmental, Social and Governance approach by investors, clients, employees and society more broadly, it is important for financial services business to make sure that they are considering evolving parameters, so that governance is robust and their control framework remains alive to new risks.”
Fintechs turn to partnerships to offer market leading savings accounts to their retail clients
Fintechs are using partnerships with more mainstream financial services companies to offer market-leading savings products to their retail clients, according to new research from Investec.
By using their technology and the infrastructure of the larger banks they partner with, Investec’s analysis reveals that fintechs can offer some of the most attractive savings account interest rates in the marketplace.
Investec found that the average interest rate on instant access savings accounts from fintechs was 0.28%AER, which is in the top 20% of all easy access savings accounts in the market.
David Hunt, Head of Funding Partnerships at Investec, said: “Fintechs continue to revolutionise the retail financial services sector. With digital offerings and state of the art technology, combined with leveraging the infrastructure of larger banks, they are able to offer very attractive savings propositions whilst retaining control of their customer journey.
UK home to top three global e-commerce market when compared to national GDP
The latest research by leading BNPL provider, Butter has provided insight into the scale and influence of the e-commerce retail sector in the world’s ten biggest e-commerce nations.
The world’s biggest e-commerce retail market is, unsurprisingly, China. In 2020 alone, almost $2.3 trillion was generated through online retail. China’s GDP is $14.7 trillion. This means that the $2.3 trillion created by e-commerce retail is comparable to 15.6% of the overall GDP. No other country on earth comes close to having a e-commerce sector of such immense scale. The nation to come closest within the western world is the United Kingdom, where total e-commerce retail sales of $180 billion equate to 6.7% of the nation’s GDP which currently stands at $2.7 trillion.
Timothy Davis, Co-Founder and CEO of Butter, commented: “E-commerce retail is booming and is set to become the default choice for shoppers across vast swathes of the world. Its dominance is a result of the ease, affordability, and choice it offers over more traditional retail methods.
“Physical retail won’t completely disappear, though. Instead, successful retailers are already starting to blur the lines between online and high street shopping by offering the ability to transact while spreading the cost of a purchase in-store.
“It will be key for retailers to ensure that the in-store experience offers at least as much flexibility as the online experience if they want to boost physical retail sales.”
UK crying out for financial help even as lockdown restrictions lift
Creditspring, the subscription loan provider, reveals that it is signing up over 2,000 new members per month for its Stability Hub service, and has seen an 82% increase in members since the start of the pandemic. The free tool provides personalised support for members, including monthly financial health checks, alerts to tell them when they are pre-approved to borrow money, and actionable tips to support more informed and responsible financial decision making.
Neil Kadagathur, Co-Founder and CEO of Creditspring, comments: “The financial impact of the pandemic is still being felt acutely by people across the country and they are in desperate need of support even as restrictions begin to lift. Our goal is to help people improve their financial health and prevent those who could easily fall into a cycle of expensive debt from falling prey to unscrupulous lenders. Our Stability Hub gives these people personalised guidance to regain control over their finances and helps work towards being able to access more affordable forms of credit.
“Unlike high-cost lenders that lure borrowers into a spiral of long-term debt, much like the dating app, Hinge, our job is done when our customers don’t need us anymore. We want to educate our members and be their guide and ally, helping them work towards a more financially stable, resilient and independent future.”