PRESS RELEASE
The UK FinTech Sector Continues to Make a Positive Impact, Improving Productivity and Financial Inclusion and Helping Sustainable Developments in Communities Across the Country
- The second report from Innovate Finance and Vested Impact, produced in collaboration with Accenture, reveals the UK FinTech sector's impact on the economy, society and the environment
- 98% of FinTechs have a significant positive impact on Productivity in the UK
- 39% of UK FinTechs are helping to reduce inequality by increasing financial inclusion and promoting financial education
- 26% of UK FinTechs are positively contributing to the protection of fundamental freedoms around data privacy and access to information.
London, October 10, 2024 - Innovate Finance, the industry body representing the FinTech community in the UK, and Vested Impact have today released The FinTech Impact Report 2024, produced in collaboration with Accenture, assessing the impact UK FinTech has on the economy and society.
Following the release of the first report last year, this second report measures FinTech’s impact by analysing a larger number of UK FinTechs (3,560) and a number of financial institutions against a framework of five impact categories linked to the United Nations’ Sustainable Development Goals: Productivity, Peace, Planet, People and Place.
Key findings from the report include:
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- UK FinTech’s overall contribution - 90% of UK FinTechs are a force for good across Productivity, Place, People, Planet and Peace. The UK’s FinTech sector has an overall net impact score of 24 (in a spectrum from -100 to +100), indicating a net positive impact on society, and higher than industries including Capital Markets, Construction and Retail but lower than Telecommunications and Education.
- Impact on Productivity - 98% of FinTech companies have a significant positive impact on Productivity in the UK, encompassing Economic Growth, Job Creation, Innovation and Infrastructure. FinTechs are driving productivity and digital infrastructure, increasing access to finance and financial resilience of the vulnerable. However with a drop in investment by 37% in the first half of 2024 from the previous period, more support is needed for the UK to remain competitive.
- Impact on Peace - 26% of UK FinTechs are positively contributing to the protection of fundamental freedoms around data privacy and access to information. FinTechs are a significant positive contributor to financial security and regulatory compliance, but face challenges as the digital landscape evolves. Against a backdrop of the UK's Corruption Perception Index declining in 2023 for the second year running and a rise in mobile banking services, FinTechs have seen a decline in their positive impact on addressing money laundering and illicit flows of money. However, tackling the challenge will involve multi-sector collaboration. The UK’s emergence as the European market leader in RegTech investment has also contributed to enable financial institutions to comply with regulations in a more efficient and transparent manner.
- Impact on Planet - only 10% of UK FinTechs are driving a positive path for our planet. The Planet Impact pillar addresses key issues such as climate change, responsible consumption and production, water usage, and land management. While the proportion of UK FinTechs negatively impacting the Planet has decreased from 86% to 73% from last year’s report, the overall negative impact has increased, making this the highest negative impact area. Furthermore, the positive contributions from UK FinTech companies are currently not enough to offset the growing negative effects on emissions.
- Impact on People - FinTechs help reduce financial inequality by expanding access to safer financial services for underserved communities and improving financial literacy. 39% of FinTechs are having a positive impact on People, an impact category that covers issues from Social & Economic Inclusion to Education, offsetting the negative impact of 17% of companies in the sector. Relative to FinTechs, incumbent Financial Institutions have a larger relative scale of influence on People (25% vs. 10%) and Place (10% vs. 3%) due to their vast customer and employment networks. However, their depth and quality of impact on People, especially for vulnerable groups, trails behind FinTechs (18% vs 25%).
- Impact on Place - 14% of FinTechs have a positive contribution on local communities and infrastructure, with only 3% having a negative impact. Net Impact Rating for Place is the second highest for UK FinTech after Productivity, addressing Sustainable Cities and Communities through greater access to adequate, safe and affordable housing and services.
The need for cross-sector collaboration
Across all of the UN’s Sustainable Development Goals, the report shows that the UK FinTech sector is having a positive impact. However, to unlock the potential for FinTech and foster further innovation, collaboration between industry stakeholders and policy makers is essential.
Economic Secretary to the Treasury Tulip Siddiq said: "The UK FinTech sector is a powerful engine for economic growth. I want to work with the sector to unleash its potential – driving innovation, boosting investment and supporting financial inclusion.”
Janine Hirt, CEO of Innovate Finance, commented: “We’re delighted to release the second Impact Report in partnership with Accenture and Vested Impact, highlighting the key role the FinTech sector has in boosting the economy and tackling important societal issues. Thanks to the inherent innovation in our industry and the remarkable efforts of our FinTech leaders, we are well equipped to face our biggest societal challenges. It’s essential for industry, government, and regulators to collaborate in supporting our leading FinTech community, driving even more positive impact and paving the way for the next wave of productivity and growth in the sector.”
Kimberley Abbott, CEO of Vested Impact said: “Just a few weeks ago the United Nations and all member states reiterated that the UN Sustainable Development Goals represent the most comprehensive, far-reaching, and people-centred framework for achieving a just and prosperous world, and that a key to achieving these global goals will lay in mobilising the private sector as a force for good. But to effectively do this, we need to move beyond just looking at how companies behave, and look instead at the positive, negative, and indirect impacts a company’s activities, products and services have on the societies and environment around us; backed by data and science – and this report does that.”
Jon Williams, Global Financial Services Sustainability Lead, Accenture: “Multi-stakeholder collaboration across the financial industry is more critical than ever to drive meaningful and sustainable growth. UK FinTech has been empowering industry and society with research, development and innovation, and this report helps to quantify the sector’s transformative role in the UK year-over-year, while highlighting the need for greener practices. As a first of its kind in the FinTech community, we hope that it accelerates the drive towards adopting sustainability principles in the design and the implementation of new technology systems.”
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Notes to Editors
The full report is available to view here from 10am on Thursday the 10th of October.
Methodology
3,560 UK-based FinTechs were identified for analysis against the UN SDGs by Vested Impact. In addition, 14 of the largest established UK FIs were also selected to provide a comparison to the FinTech sector.
Media contact
Seven Hills – innovatefinance@wearesevenhills.com
About Innovate Finance
Innovate Finance is the independent industry body that represents and advances the global FinTech community in the UK. Its mission is to accelerate the UK’s leading role in the financial services sector by directly supporting the next generation of technology-led innovators.
Innovate Finance’s membership ranges from seed stage startups and global financial institutions to investors, professional services firms, and global FinTech hubs. All benefit from Innovate Finance’s unique position as the single point of access to promote enabling policy and regulation, talent and skills, business opportunity and growth, and investment capital.
By bringing together and connecting the most forward-thinking participants in financial services, Innovate Finance is helping create a global financial services sector that is more transparent, more sustainable and more inclusive.
More information at www.innovatefinance.com
