Landscaping UK Fintech

Commissioned by
UK Trade & Investment
 Foreword
Sue Langley
Chief Executive Officer

UKTI Financial Services Organisation

Technology applied to financial services (Fintech) has a significant impact on our daily lives, from facilitating
payments for goods and services to providing the infrastructure essential to the operation of the world’s
financial institutions.

As the world’s leading financial centre, the UK is fast becoming a destination of choice for companies wanting to
establish a global presence in the Fintech sector, with leading international companies in Fintech choosing to have
a base in the UK whilst at the same time providing a fertile environment for start-ups and entrepreneurs.

The UK Government is committed to supporting Fintech companies; creating jobs and growth as well as further
strengthening our position as the world’s pre-eminent financial services destination. Working with colleagues
across government, UK Trade & Investment (UKTI) are leading efforts to attract more inward investment to
the UK’s Fintech sector and support UK-based Fintech companies seeking to internationalise their business
and services.

In order to better inform our strategy to meet these objectives, UKTI commissioned EY to produce a report on
the UK Fintech sector. It is intended to help us map out the Fintech landscape; to create a recognised taxonomy;
and highlight important growth trends, drivers and barriers.

We have taken the step of publishing excerpts of this report for the wider Fintech community as we believe
financial technology businesses, investors and regulators will all benefit from increased research and
transparency on this increasingly important, innovative and fast growing sector.

This report has provided valuable insight and helped shape our strategy for developing and promoting this sector
in our bid to assist more companies looking to establish a presence in the UK; and help both indigenous and
foreign owned UK companies leverage opportunities internationally.

1 Landscaping UK Fintech Commissioned by UK Trade & Investment

Executive summary

►► UK Fintech is currently energised by the cumulative effect of ►► Much of Emergent Fintech is focused on a small number
digital connectivity, customer dissatisfaction with banks, and of sectors (for example peer-to-peer platforms, payments,
a lack of innovation and investment by incumbent providers. capital markets), however we believe there is a huge amount
of white space open to disruptive and innovative models,
►► We estimate the Fintech market (as defined in the scope
particularly in the middle and back office of insurers and
agreed with UKTI) to be worth c. £20bn in annual revenue
banks.
and growing, the majority of which is generated by what we
term Traditional Fintech and in the order of 18% is generated ►► We believe the UK scores highly as an attractive location for
by Emergent Fintech. global Fintech. The size of the market opportunity in the UK
is significant due to a large indigenous and technologically
►► We describe Traditional Fintech as ‘facilitators’ (larger
sophisticated customer base, and in London’s position as
incumbent technology firms supporting the financial
a world leading centre for institutional financial services.
services sector) and Emergent Fintech as ‘disruptors’ (small,
The UK also scores highly due to the availability of capital
innovative firms disintermediating incumbent financial
which is sufficient for the sector although there are gaps at
services firms with new technology). The UK is poorly
the development capital and at the IPO stage. Interviewees
represented in Traditional Fintech (four out of the top 100
commented favourably on supporting factors including the
globally), but is strong in Emergent Fintech (one half of all
UK’s regulatory approach, financial services infrastructure
promising start-ups in Europe).
and London’s position as a global trading hub. Three of our
►► The key themes affecting the sector are the disintermediation interviewees had relocated their businesses to London due
of incumbent models, the disintermediation of incumbent to the attractiveness of the market.
infrastructure, the monetisation of data, and the requirement
►► Our interviews suggested the UK government should
for fraud and identity protection.
consider additional actions to support the Fintech community
►► We have categorised the Fintech space into Payments particularly in the areas of improving access to talent;
(c. £10bn), Software (c. £4.2bn), Data and Analytics (c. encouraging closer collaboration and information sharing
£3.8bn) and Platforms (c. £2.0bn). between established financial services businesses and
Emergent Fintech; and actively championing the sector. We
►► The highest growth areas are peer-to-peer platforms,
believe the government should also take a leadership role
online payments and the data and analytics products (credit
in setting the agenda on data/privacy protection as this will
reference, capital markets and insurance) which together
increasingly become a central pillar of the financial services
represent c. 60% of the sector.
marketplace and critical in enabling the Fintech sector to
►► We believe the UK has an international market leadership operate and prosper.
position in peer-to-peer platforms, aggregator platforms, and
the data and analytics products. Two potentially attractive
areas where the UK could build an international market
leadership position are risk management/compliance/fraud
software and online payments.

Landscaping UK Fintech Commissioned by UK Trade & Investment 2

Unique factors are driving the financial
technology sector
Recent changes in UK market dynamics

Digital connectivity
Smartphone and internet penetration have revolutionised
consumer connectivity allowing consumers and businesses
to connect in ways previously unimagined. Many of these
connections have financial components. The UK has one of the
highest levels of internet and mobile phone penetration globally,
highest e-commerce spend in Europe and is a leader in online
access to financial services.

Economic downturn
Consumer sentiment plummeted post-crisis globally and has
continued to remain low in the UK, while recovering in other
European countries. This has created an environment whereby
the UK consumer is open to adopting new business models and
products from new providers. At the same time, the crisis has
meant incumbent institutions have failed to invest in technology
and innovation.

Regulatory changes
A range of new regulation introduced in recent years has
prompted financial services industry players to monitor their
activities more stringently. This, in turn, has created demand for
a range of new and innovative solutions. The UK regulator has
also been dynamic in their approach by keeping an open mind
and engaging closely with innovators.

Changes in market dynamics have led to

the UK becoming a leader in the financial
technology industry, with London being the
ultimate capital.

3 Landscaping UK Fintech Commissioned by UK Trade & Investment

Traditional vs. Emergent Fintech

We observe both Traditional and Emergent models in the UK Fintech sector, with the key aspects
of both summarised below.

Traditional Emergent

►► Market players are generally perceived as facilitators ►► Market players are disruptors and innovators by nature.
Positioning

which are typically large, incumbent technology They are disintermediating incumbent financial services
vendors supporting the financial services sector. firms or provide new technology solutions to service
existing needs.
►► For example: Fiserv, SunGard, Infosys, FirstData.
►► For example: Zopa, Fidor Bank, Transferwise.

►► Companies focus on the support, maintenance and ►► Two operating models have emerged of either utilising
Infrastructure

provision of the existing infrastructure. existing infrastructure which tends to be controlled by

established players or by replacing them completely.
►► The replacement of infrastructure is a high risk strategy,
however, produces high returns if successful.

►► Operate under established revenue models that tend ►► Emerging revenue models are broad and tend to
Revenue model

to use cost per transaction, percentage of assets or function using multiple different types of revenue stream
license fees. including advertisement and the monetisation of data.

Landscaping UK Fintech Commissioned by UK Trade & Investment 4

Emergent themes in the Fintech sector

A number of common themes are evident

across the sector.
Monetisation of data
Fintech is fundamentally changing the way consumers pay for
financial services. There is a shift away from paid subscriptions
or free float revenue models to alternative models based on
advertising and monitoring or reselling of data to third-party
companies. This is due to the richness of data in financial
services and the emergence of a sophisticated and liquid market
for digital leads. This is an important area for the government to
focus on and help to steer debates around consumer protection
and privacy.

Fraud and identity protection

The connected world is very complicated making protection
of personal financial details more challenging. As emergent
Fintech and incumbent providers rush into the space with
new and untested models security is often a secondary focus.
We expect a significant amount of activity in this sector from
new providers.

Infrastructure replacement
The most radical Emergent Fintech players are frustrated with
existing infrastructures and are completely circumventing it.
This includes the peer-to-peer networks as well as cryptographic
currencies such as Bitcoin. Historically this strategy has
produced multinational winners in Fintech including Visa,
Mastercard and Square, and is the backdrop to the phenomenal
success of M-Pesa in Kenya. At the margin some established
Fintech are seeking to deliver a step change in legacy
infrastructure through the development or acquisition of
infrastructure accelerators.

Disintermediation
Emergent Fintech is disrupting business models and working
around incumbent financial service providers, most visibly in
peer-to-peer lending. We see mainstream consumers willing
to use the players without the traditional barriers of trust,
credibility, familiarity and scale impeding uptake.

5 Landscaping UK Fintech Commissioned by UK Trade & Investment

Sizing the UK Fintech market £8.1bn

Based on an approximate and top down view of the UK Fintech sector we believe the industry
£8.1bn
currently generates c. £20bn in revenue annually. £1.9bn

Payments Payments, £10bn£8.1bn

Payments is the largest microsector and based on the level of £8.1bn
innovation and scale could be broadly spilt into infrastructure Infrastructure £1.9bn
Online
and online segments.
The former is dominated by well established and large players £1.9bn
with business models based on economies of scale. The latter £1.9bn
has seen the largest number of new entrants and remains Infrastructure Online
fragmented. Most successful players are those that have been
able to grow adoption internationally.
Infrastructure Online
£2.2bn
Infrastructure Online

£1.0bn
£0.6bn
Financial data and analytics Financial data and analytics, £3.8bn
£2.2bn
Successful business models in this microsector rely on Credit reference Capital markets Insurance
economies of scale and ability to collect a diverse range of
£1.0bn
financial data on individuals, corporates and particular market £2.2bn £0.6bn
activities (e.g., trading). We grouped market players based on £2.2bn
the type of data into: £1.0bn
Credit reference Capital markets Insurance
£0.6bn
►► Credit reference £1.0bn
£0.6bn
►► Capital markets Credit reference Capital markets Insurance

►► Insurance data analytics Credit reference Capital markets Insurance

£4.0bn

Financial software Financial software, £4.2bn

The microsector is dominated by large international technology
companies who are mostly headquartered outside of the UK and £4.0bn
offer a range of solutions to financial institutions that include:
£0.2bn
►► Risk management £4.0bn
Software to financial
£4.0bn Accounting
►► Payments software services
►► Core banking, insurance, asset management and capital
£0.2bn
market software
►► Accounting software Software to financial Accounting
services £0.2bn
£0.2bn
Software to financial Accounting
Platforms Platforms, £2.0bnservices
Software to financial Accounting
The platforms microsector dynamic varies significantly services
depending on the market segment and include:
►► Peer-to-peer platforms
£0.8bn £0.7bn
►► Trading platforms £0.5bn
<£50mn
►► Personal wealth platforms Peer-to-peer Trading Personal Aggregators
►► Aggregators wealth
£0.8bn £0.7bn £0.5bn
<£50mn

Peer-to-peer £0.8bn
Trading Personal
£0.7bn Aggregators
£0.5bn
<£50mn wealth
£0.8bn £0.7bn
Landscaping UK Fintech Commissioned by UK Trade & Investment £0.5bn 6
<£50mn
Peer-to-peer Trading Personal Aggregators
wealth
Peer-to-peer Trading Personal Aggregators
Fintech microsector attractiveness

We set out below our Fintech microsector attractiveness matrix highlighting current size and
future growth potential.

Fintech microsector attractiveness

Large
Payments:
Infrastructure

Software:
To financial
institutions

Software:
Risk management*

Data:
Capital markets
Size

Payments:
Online

Software:
Payments*

Data:
Credit reference

Platforms:
Platforms:
Trading
Personal wealth

Platforms: Data:
Aggregators Insurance
Software:
Accounting Platforms:
Peer-to-peer
Small
Growth potential
Low High

= UK market leadership position

*Illustrative market size

7 Landscaping UK Fintech Commissioned by UK Trade & Investment

White space opportunities for disruptive
Emergent Fintech businesses
The schematic below highlights areas where existing disruptive Fintech is focused and also
hightlights the white space for further innovation.

Illustrative financial services landscape with Emergent Fintech overlaid

E-wallets/
Sectors Products Activities Credit reference prepaid cards Customers

Payments P2P Front office Middle office Back office Core Non-core

Current Savings ►►Customer ►►Risk ►►Security ►►Employed ►►Sub prime

Payments acquisition management ►►Collections ►►Affluent ►►Unbanked
account accounts
Consumer and on- ►►Payments
boarding ►►Loan ►►High net ►►Youth
Secured Unsecured
Cards ►►Servicing portfolio worth
credit credit ►►Underwriting management
Banking
Liquidity ►►Advisory ►►Risk ►►Security ►►Large ►►Small/
Payment management corporates new SMEs
management ►►Underwriting ►►Work out
Wholesale ►►Treasury ►►Loan ►►Low credit ►►Speciality
►►Payments portfolio risk FS
Underwriting Advisory
Aggregators and management
quotation platforms ►►Customer ►►Servicing ►►Claims ►►Employed ►►High risk
Liquidity management acquisitions handling
Personal ►►Asset ►►Affluent ►►Youth
►►Underwriting management ►►Risk
Motor Home Health reporting
Insurance
Corporate risk ►►Broking ►►Servicing ►►Claims ►►Large ►►Trade
►►Underwriting ►►Asset handling corporates credit
Wholesale Speciality
management ►►Risk ►►SMEs
Catastrophe reporting
►►Customer ►►Risk ►►Reporting ►►Mass ►►Midsize
Active Passive
acquisitions management ►►Settlement affluent pension
Absolute ►►Research and ►►Compliance ►►Insurance funds
Asset management Balanced
returns analytics ►►Trade companies ►►Low
►►Investment execution ►►Pension income
Specialist Private wealth process funds retail

►►Research and ►►Risk ►►Reporting ►►Large ►►Pension

Research Execution analytics management asset funds
►►Custody
Capital markets ►►Trade ►►Compliance managers ►►Speciality
Security execution ►►Clearing and ►►Hedge FS
Clearing
servicing settlement funds

Trading platforms Capital markets Middle and back

software office software

Landscaping UK Fintech Commissioned by UK Trade & Investment 8

Attractiveness of the UK market

The UK market is one of the most attractive markets in Europe based on our analysis of market
opportunity, availability of capital and regulatory environment.
We have separated our analysis of the attractiveness of the of the market opportunity for financial services in the UK,
UK market into: the quality of infrastructure and the regulatory context.
►► Fundamental drivers which reflect the market opportunity in ►► We believe the UK scores less well in terms of availability
the UK and the availability of capital; and of capital (good versus Europe but poor versus the US)
►► Supporting factors which include a wide range of factors that and also on tax and grants, not because the UK is not
encourage firms to adopt the UK as a centre of business. generous, but rather foreign competitors are more generous
(e.g., Singapore).
►► We found that the UK, and London in particular, performs
well across a number of aspects due in part the absolute size

Fundamental drivers Supporting factors

Market opportunity Regulatory approach

►► Large and sophisticated consumer market open ►► Regulator well regarded relative to international peers
to innovation. and open minded to innovation.
►► London has the highest concentration of global financial ►► Could be more approachable.
institutions across banking, capital markets, insurance
and asset management in the world.
Talent
►► Access to high quality financial services talent.
►► Dependant on importing technical talent.

Availability of capital Tax and grants

►► Significantly ahead of the rest of Europe but there is a ►► Good angel investor support but no company help.
fundamental gap in comparison with the US.
►► Foreign grants can be very generous.
►► Nonetheless good businesses and ideas are funded by
international capital.
Infrastructure
►► The gaps are in development and IPO capital. ►► World class financial services infrastructure.
►► Good support for angel investment offset by a risk-averse ►► Banks often restrict access.
investment culture.

Culture and position

►► London is open, welcoming and has a mercantile culture.
►► London is perceived as a hub for launching into EMEIA.

9 Landscaping UK Fintech Commissioned by UK Trade & Investment

Fundamental drivers: attractive
consumer market
£1.0trn 400mn
The UK market has a large and sophisticated consumer base with world leading mobile and
internet penetration and is open minded to innovative products from new providers.
£0.5trn
£1.0trn 200mn
400mn

High level of aggregate financial services activity Population

£1.0trn by country and value of financial services400mn
£0.0trn
£0.5trn 0mn
200mn
The UK financial services sector is one of the largest globally, £1.0trn UK Germany France US 400mn
representing approximately 9.4% of GDP. £0.5trn FS GDP value (£tn) Population (m)200mn
£0.0trn 0mn
£0.5trn UK Germany France US 200mn
£0.0trn 0mn
FS GDP value (£tn) Population (m)
UK Germany France US
£0.0trn FS GDP value (£tn) Population (m)0mn
UK Germany France US
FS GDP value (£tn) Population (m)

Source: World£1,175
Bank, United States Census Bureau
£1,017
£892 £663
£374 £539 £581
Openness to adopting new models Consumer £1,175
e-commerce £297 spend £360 £446
per capita £532
£1,017 £252
The UK has been an early adopter of a large number of £892 £1,175 £663
£374 £539 £581
innovative business models (for example, aggregators and DIY £1,017 £446 £532
UK Germany
£297 France USA £663
£892 £1,175 £360 £539
investing), particularly those offering: £2522010£374 2011 2012 £581
£1,017 £446 £532
£892 £297 £360 £663
►► Lowest upfront cost £252 £539 £581
UK Germany £374 France
£446 USA
£297 £532
£252 2010 £360
2011 2012
►► Internet delivery UK Germany France USA
2010 2011 2012
►► Greater convenience UK Germany France USA
2010
Source: IMRG X-border Training 2011 Population
Guide 2013m 2012figure obtained from
IDATE/Industry data and Ofcom

131% 132%
World leading level of mobile and internet penetration Mobile and internet penetration,95%
% of population
93%
84% 83% 80% 78%
The ability to access online services and an active online
131% 132%
economy is key to Fintech adoption. UK Germany France United States
84% 95% 93%
131% 132% (%83%
Mobile penetration 80% mobile access)
of population with 78%
The UK has one of the highest levels of mobile and internet
Internet
84%penetration 95%
(% of population80%
83% 93%
with Internet access)
penetration globally. 131% UK 132%
Germany France 78%
United States
Mobile penetration (%83% 95%
of population with 93%
UK84% Germany France80% mobile access)
United 78%
States
Internet penetration (% of population with Internet access)
Mobile penetration (% of population with mobile access)
UK Germany France United States
Internet penetration (% of population with Internet access)
Source:Mobile penetration
Mobile penetration ITU(%International,
of population withpenetration
internet mobile access)
World Stats
Internet penetration (% of population with Internet access)

Increasing propensity to switch providers Level of confidence in banks

Historically, the primary brake on innovation in financial services
68%
level

has been inertia around switching providers.

47% 49%
42% 39%
There was a significant drop in confidence in the banks following 32%
Confidence

23% 23% 68%

level

the financial crisis which, to date, has still not returned, leading
47% 49%
to consumer willingness to try alternative providers. 42% 39% 32% 68%
level level
Confidence

Germany UK France US 49%

42%
23% 47% 23%
39% 32% 68%
Confidence

2008 2013
47% 23% 42%
23% 49%
UK Germany 39%
France
32% US
Confidence

Source: Edelman Trust Barometer

23% 23%
UK Germany2008 France
2013 US

UK 2008
Germany 2013
France US

2008 2013

Landscaping UK Fintech Commissioned by UK Trade & Investment 10

Fundamental drivers: leading international
financial services centre
London is one of the world’s largest financial institutions centres and unlike some peers serves a
truly international client base:
►►251 foreign banks
Global rank =
►►588 foreign quoted companies 73%
19% 18% 18%
14%
11% 11%
8% 8% 8% 8% 8% 6%
5%
►► UK is a global leader in banking and cross border lending 1% 1% #1
Borrowing Lending Cross border bank lending 73%
Securitisation
19% 18% 18%
14% UK US Germany 11% France 73%
19% 11%
8% 18% 8% 8% 18% 8% 8% 6%
14% 5%
11% 11% 1% 1%
8% 8% 8% 8% 8% 6%
5%
Borrowing Lending Cross border bank lending 1%
Securitisation 1%
Borrowing UK
Lending US Germany France
Cross border bank lending Securitisation
UK US Germany France

41% 49%
34%
19% 23%
2% 3% 4% 7% 7% 8% 0%
►► The UK is a global leader in trading related activity, and in particular foreign exchange and over the counter derivatives #1
Foreign exchange turnover Interest rates OTC derivatives Exchange-traded derivatives,
49% number of contracts traded
41% 34%
19% UK 49% US 23% Germany France
41% 2% 3% 4% 7% 7% 8% 0%
23% 34%
19%
Foreign exchange 3%
2% turnover Interest rates OTC 7%
4%derivatives 8%
7%Exchange-traded derivatives,
0%
number of contracts traded
Foreign exchange turnover Interest rates OTC derivatives Exchange-traded derivatives,
UK US Germany France number of contracts traded
UK US Germany France

►► The UK is the second largest asset management centre in

35%the world after the US.
►► Reflecting London’s
15% status as an international 18% under management #2
hub, overseas clients account for 40% of total assets18%
8% 10%
(aum) in the UK. 2% 3% 0% 1% 2% 5%

Fund management (AUM) 35% fund (AUM)

Hedge Private equity (AUM)
15% 18% 35% 18%
UK US Germany France 10%
8% 5%
15% 2% 3% 18% 0% 1% 18% 2%
8% 10%
2% 3% 1% 2% 5%
0%
Fund management (AUM) Hedge fund (AUM) Private equity (AUM)
Fund management (AUM) UK US Hedge Germany
fund (AUM) France Private equity (AUM)

UK US Germany France

►► The UK is a leading provider of insurance services that account for 7% of worldwide premium income; with specific
#3
strengths in speciality insurance.

26%
21%
7% 5% 6% 6% 4% 4%

Breakdown26%
of worldwide premium income Marine insurance net premium income
21%
7% 26% UK US Germany France
5% 6% 6% 4% 4%
21%
7%The City UK
Source: BIS and
5% 6% 6% 4% 4%
Breakdown of worldwide premium income Marine insurance net premium income
Breakdown of worldwide premium UK
income US Germany France
Marine insurance net premium income
UK US Germany France
11 Landscaping UK Fintech Commissioned by UK Trade & Investment
Fundamental drivers: availability of capital

The schematic below maps the stages of a company’s development to the availability of capital in
the UK market. UK companies have good access to capital, however, there are weaknesses at the
development and IPO stages relative to the US.

Start-up (angel, Development capital PE capital Trade capital IPO (£1bn+)

incubator and (VC, £2–£20mn) (£20mn–£300mn) (£20mn–£1bn)
accelerators,
£0–£2mn)

Amount of capital available

Stage of
development
UK market

►►Private investors ►►VCs invested ►►28%4 of all European ►►42%5 of all ►►There have been no
account for £800mn £300mn–£400mn2 PE investment was acquisitions in Europe Fintech IPOs in the
to £1bn of early stage in to the UK in 2012. made in UK and by the Fintech 100 in last three years.
investments in the There are c. 140 Ireland3. last the three years
UK1. active funds in the UK. were in the UK.

►►Angel investors in the ►►VCs invested c. £5bn1 ►►A total of $426bn3 ►►Globally UK accounted ►►The NASDAQ has
US market

US provided c. £18bn in the US. There are was invested by US PE for 10% of trade had 108 IPOs in
of funding. c. 800 active funds in funds in 2012. acquisitions while 52% the financial and
the US. were in the US, 14% in technology space in
Europe and 24% RoW. the last three years.
14 of these were
Fintech companies.

Source: EY analysis
Source: 1UK Business Angels Association; 2NVCA year book 2013; 3BVCA; 4Private equity growth capital council; 5European Venture Capital Association, 2012;
6
Mergermarket/Capital IQ.

Landscaping UK Fintech Commissioned by UK Trade & Investment 12

Appendices

13 Landscaping UK Fintech Commissioned by UK Trade & Investment

Segmentation of the UK financial
technology market
Financial technology microsegments can be divided into several key market segments.

Payments

Market segment Est. market size

(revenue)
Market players include operators of national payment infrastructures, cards
Infrastructure schemes, issuers, processors and merchant acquirers. The segment is dominated by £8.1bn
large established players, however, new infrastructure solutions are emerging.
This segment is highly fragmented and diverse and includes e-wallets, B2B and P2P
Online payments payment providers, payment gateways, virtual terminals and online money transfer.
£1.9bn
and FX This segment has seen a significant amount of innovation, changing the way we
make payments.

Data and analytics

Market segment Est. market size

(revenue)
Credit reference and data analysis aims to measure the credit worthiness of
Credit reference companies and individuals. Increased automation of this segment is leading to new £1.0bn
software solutions emerging.
This market has traditionally been dominated by large capital market players.
Capital markets However new entrants are emerging with some reaching significant scale by utilising £2.2bn
data analysis opportunities in previously unexplained areas of the market.
Insurance data analytics industry uses data to better understand risk and price
Insurance it more accurately. Insurance market players are increasingly embracing new £0.6bn
technology solutions and more innovation is anticipated.

Landscaping UK Fintech Commissioned by UK Trade & Investment 14

Segmentation of the UK financial
technology market (continued)
Financial technology microsegments can be divided into several key market segments. (cont’d)

Financial software market

Market segment Est. market size

(revenue)
Financial services institutions have to manage a range of internal and external
risks, with regulatory pressure on effective monitoring increasing continuously.
Risk management
The increase in global connectivity creates new risks leading to a wide range of new
innovative solutions emerging.
Evolving needs of rapidly developing and changing payments industry (e.g., online
Payments banking, regulatory changes) has created a demand for new solutions which are
being offered by new entrants and innovators.
The market is dominated by well established technology vendors. There has been
Market size for all
Banking a limited amount of innovation due to high costs of switching and dominance of the
software excluding
encumberent players.
accounting — £4bn
The market is highly fragmented with a large number of front to back office solutions
Asset offered by international and local providers. The asset management and capital
management and markets industry has been impacted by the financial crisis and regulatory changes,
capital markets encouraging incumbent players to improve their technology, utilise data, and
automate compliance monitoring, which is likely to drive further innovations.
The market is fragmented and represented by large international software vendors.
Insurance Traditionally, the insurance industry has taken a conservative approach to technology
adoption creating an opportunity for potential innovators to enter the sector.
The UK has a market leadership position in Europe in this segment with new
Accounting opportunities emerging where providers starting to take advantage of new £0.2bn
technologies and connectivity.

Platforms

Market segment Est. market size

(revenue)
The terms ‘peer to peer lending’ and ‘crowd funding‘ describe a variety of new,
direct financial models that connect lenders and borrowers, investors and investee
Peer 2 Peer (P2P)
companies. The UK is a market leader in Europe. It is estimated that in 2013 c£1bn <£50mn
lending
of funding was committed through P2P platforms. This sector is widely expected to
grow significantly in the coming years.
Trading platforms cover a broad range of unregulated trading venues including
Trading platforms £0.8bn
multilateral trading facilities and systematic intermediaries.
Personal wealth platforms comprise intermediary, direct to consumer and corporate
platforms. Disruptive technologies are evolving fuelled by the high levels of wealth
Personal wealth £0.7bn
available requiring advice, offering strong growth opportunities to potential
investors.
Aggregators have become a major distributor for a variety of financial products. The
Aggregators £0.5bn
UK has established itself as a market leader in this segment.

15 Landscaping UK Fintech Commissioned by UK Trade & Investment

Contacts

For further information, please contact:

Imran Gulamhuseinwala
Partner
EMEIA Financial Services — Transaction Advisory Services,
Commercial Advisory
+ 44 20 7980 9563
igulamhuseinwala@uk.ey.com

Angelina Kouznetsova
Director
EMEIA Financial Services — Transaction Advisory Services,
Mergers & Acquisitions
+ 44 20 7951 3092
akouznetsova@uk.ey.com

Landscaping UK Fintech Commissioned by UK Trade & Investment 16

17 Landscaping UK Fintech Commissioned by UK Trade & Investment
Landscaping UK Fintech Commissioned by UK Trade & Investment 18
EY | Assurance | Tax | Transactions | Advisory

About EY
EY is a global leader in assurance, tax, transaction and advisory services.
The insights and quality services we deliver help build trust and confidence
in the capital markets and in economies the world over. We develop
outstanding leaders who team to deliver on our promises to all of
our stakeholders. In so doing, we play a critical role in building a better
working world for our people, for our clients and for our communities.
EY refers to the global organization, and may refer to one or more, of
the member firms of Ernst & Young Global Limited, each of which is a
separate legal entity. Ernst & Young Global Limited, a UK company limited
by guarantee, does not provide services to clients. For more information
about our organization, please visit ey.com.
This material has been prepared for general informational purposes
only and is not intended to be relied upon as accounting, tax or other
professional advice. Please refer to your advisors for specific advice.

Ernst & Young LLP
The UK firm Ernst & Young LLP is a limited liability partnership registered in England and Wales
with registered number OC300001 and is a member firm of Ernst & Young Global Limited.

Ernst & Young LLP, 1 More London Place, London, SE1 2AF.

© 2014 Ernst & Young LLP. Published in the UK.

All Rights Reserved.

ED None

1487474.indd (UK) 08/14. Artwork by Creative Services Group Design.

In line with EY’s commitment to minimise its impact on the environment, this document
has been printed on paper with a high recycled content.

Information in this publication is intended to provide only a general outline of the subjects covered.
It should neither be regarded as comprehensive nor sufficient for making decisions, nor should it be
used in place of professional advice. Ernst & Young LLP accepts no responsibility for any loss arising
from any action taken or not taken by anyone using this material.

ey.com/uk