As much as 72 per cent of fintechs are currently looking for investment. However, as the industry struggles to return to its peak and as investment levels continue to fall, a quarter of fintechs have had to change their funding plans over the last year, according to new research from financial trade show FinTech Connect.
Around 44 per cent of fintechs in the UK are concerned about the trajectory of fintech company valuations over the past 12 months, while a quarter are extremely concerned, according to data from the latest State of Investment survey by FinTech Connect.
Despite this disappointing outlook, the survey, which gauges the concerns, plans and predictions of UK investors and fintechs, found that 70 per cent of fintechs also foresee industry investments enjoying steady growth in the next three to five years, while 67 per cent have a positive overall sentiment towards the fintech sector right now.
Laurence Coldicott, senior content director at FinTech Connect
“With 72 per cent of fintechs actively seeking investment, it’s clear that funding remains a top priority across the sector. However, our research reveals that a significant portion has had to alter their investment strategies due to challenges in securing funding over the past year,” explained Laurence Coldicott, senior content director at FinTech Connect.
“These findings underscore the pressures on fintechs to not only attract capital but to navigate an increasingly selective investment landscape, and it’s telling that almost half (48 per cent) believe private equity provides the most investment opportunities within the fintech space.”
Identifying future trends
FinTech Connect has also identified several trends that it expects to shape the fintech investment landscape in the next five years, including the rise of AI-driven solutions, greater regulatory oversight, increased consolidation and economic nationalism.
While a focus on sustainable tech was also highlighted as a key trend, three-quarters believe that declining investment in fintech is impacting the industry’s commitment to environmental, social, and governance (ESG) sustainability initiatives.
Despite the overall positive sentiment reported, respondents raised concerns about several pieces of legislation, namely AML, KYC, APP fraud and DORA.
Laurence added: “The research has highlighted growing unease among FinTechs and investors about the evolving regulatory landscape. Legislation like AML/KYC requirements, aimed at curbing financial crime, and DORA’s stringent digital resilience standards, add significant operational and compliance burdens to emerging FinTech firms.
“Meanwhile, the escalating risks associated with APP fraud amplify the need for robust anti-fraud measures, which can divert resources from growth initiatives. For FinTechs and their investors, the challenge lies in striking a balance between compliance and innovation in an environment where regulatory pressures will only increase.”
FinTech Connect plans to reveal further findings from the research in the run-up to this year’s FinTech Connect event on the 4 and 5 December at ExCeL in London.
The post Although Fintechs Remain Concerned About Investment Levels, 70% Foresee Steady Growth in Near Future appeared first on The Fintech Times.
