I am the founder of Roonyx.tech, where we develop innovative solutions for startups and businesses in the financial industry. Over the years, we have created dozens of applications, incorporating blockchain and artificial intelligence technologies. Working on projects for clients in different countries, we see first hand how the financial industry landscape changes from year to year, and we strive to make it more technologically advanced.
Over the past year, global factors such as the post-pandemic complications, energy crisis caused by war, cryptocurrency market crash, high inflation, and rising interest rates have made it challenging for businesses worldwide to adapt. Despite these obstacles, the UK fintech market has grown remarkably, providing businesses with simpler and more accessible financial services to stay ahead of the curve.
From 2010 to 2016, the UK was considered the best location globally to launch a digital bank or Fintech company due to new regulatory changes, including leading on Open Banking and enabling entrepreneurs to become digital banks. The UK government showed strong support for this industry and encouraged competition through regulators. As a result, the vintage of companies founded during this time is now maturing and scaling up.
Despite the fact that according to Innovate Finance, the total amount of fintech investments worldwide reached $92 billion in 2022, which is 30% less than the previous year, previously established trends in the UK will continue to develop.
You know, about a year and a half ago, some really amazing things were happening in the fintech market. There was so much money, and it was being invested in such strange ideas meaning that when startup founders came to us for development and consulting, we had to turn them away. We weren’t turning them away because we couldn’t handle the work, we were turning them away because 70% of the projects didn’t make sense. This has saved us from the crash that is happening now. The thing is, the number of new startups with really good futures is the same as before. Now investors believe less in valuations and futures and more in profits. This shift will enable the creation of truly robust businesses in the coming years, based on real customer needs and with the ability to earn money.
Embedded finance may not be new, but its potential has yet to be fully realised. Recent research suggests that this may be the year when that happens. A survey of 1,000 business leaders in the UK, the Netherlands, and Belgium showed that 59% expect the boundaries between e-commerce platforms and traditional banking services to “blur” this year. Our startups that develop such solutions also confirm this market demand, but the driving force behind this trend will be the younger generations who are accustomed to digital technologies.For users, this technology simplifies and speeds up purchases and makes goods more accessible. In addition to providing suppliers with the ability to maintain strong relationships with additional suppliers, embedded finance allows suppliers to increase customer loyalty through a bundled purchase.
RegTech is a novel term that denotes the application of technology to regulate business operations. In today’s world, the fight against money laundering, along with growing instability in international relations and an increasing number of protectionist laws, new crypto standards, sanctions, and the like, demand companies to closely monitor the adherence to these regulations to avoid hefty fines. Given this scenario, the RegTech market is projected to expand from $8 billion in 2022 to approximately $45 billion by 2030, making it a lucrative industry for all stakeholders.
The maturity of blockchain in fintech is set to reach new heights. Analysts predict that institutional players are behind the long-term growth of Bitcoin after its fall in 2022. At my company Roonyx, we are also developing the projects with serious companies integrating blockchain into their infrastructure after the crypto-winter sifted out the dreamers. This presents an opportunity to create a parallel financial system where cryptocurrencies become legitimate and real rules and trust begin to emerge. It’s a great opportunity to enter a market that’s ripe for growth.
I also see that, despite losses at Klarna and regulatory pressure on the BNPL model, this trend will continue to develop, perhaps not as quickly. I also believe in PaaS because more consumers will use banking services through non-financial brands supported by BaaS, rather than traditional banking services.
The UK fintech sector anticipates significant legislative changes to the Financial Services Act update to counteract the current post-Brexit slowdown. Nonetheless, to regain its edge, the country must actively participate in technological experimentation and enable large-scale implementation, drawing on its pioneering work in regulatory sandbox initiatives. Certain decisions, such as the closure of Technation and transfer of its funding to Barclays, are insignificant. It is essential to foster innovation and provide competitive advantages to the entire market.
Another issue. Without proper identification and verification, the UK may face the same limitations as those imposed by the European Union. This is a topic that is increasingly being discussed and needs to be taken into account. The Fintech industry is heavily reliant on state decisions in regulating the sector. Where the government either does not hinder or responds quickly to changing trends, opportunities, and competitive advantages arise.
However, the UK is in second place, and it’s not just about the amount of investment. The projects we are working on have brought together very talented people, modern infrastructure and social connections in the UK market. UK-designed products are used around the world and often serve as blueprints for offerings, with start-ups now on the market that are shaping the landscape only in the UK and elsewhere.
