Innovate Finance, the industry body representing the FinTech community in the UK, and Accenture release a new report that quantifies the impact and potential of the FinTech sector as a force for good for the economy and society.
The pioneering study ‘The FinTech Impact Report: Working through the world’s to-do list’ delivered in partnership with Accenture’s FinTech Innovation Lab London, Vested Impact and The Data City, measures FinTech’s true impact by analysing over 500 UK FinTechs and a number of traditional financial institutions against the UN’s Sustainable Development Goals across five key areas: People, Planet, Place, Productivity, and Peace.
Key findings from the report include:
- UK FinTech’s overall contribution to the economy – Almost all of those assessed (98%) are contributing to the UK’s economic productivity and growth, with the remaining 2% only absent due to scale or company infancy.
- Peace, justice and accountability - Over a third of UK FinTechs (36%) are delivering products and services that address these goals such as data security and compliance platforms - using technology to thwart organised crime and fraud
- Delivering on the levelling up agenda - The FinTech sector has led the charge on setting up regional centres to access more talent and is boosting regional economies.
- Increasing financial inclusion - A quarter of UK FinTechs are having a significant impact on reducing inequality by providing greater access to financial services, such as innovative lending products and youth banking services.
The need for cross-sector collaboration
The report illustrates that, while the sector is continuing to grow despite a challenging macroeconomic background, cross-industry collaboration is critical to unlock the sector’s full potential for greater reach and growth. With the growing market demand for more socially conscious organisations, market data shows 84% of companies report incorporating ESG into business practices has improved their ability to raise investment funds, highlighting the pressing need to create solutions and therefore the opportunity for FinTech.
Driving progress on ‘Planet’ and ‘Peace’ priorities
Firms operating in unregulated domains and at an early stage could be more proactive in strengthening governance, accountability and controls to tackle illicit activities, and FinTechs should also focus climate responses on how they can reduce the negative environmental impact associated with financial institutions' investing, lending and underwriting activities (rewiring financial markets to direct capital to planet-friendly activities and transition).
Analysis revealed that only 9% of the assessed FinTechs are making a significant positive contribution towards climate action, underscoring the need to focus on green finance and sustainable operations. Meanwhile, despite an overall positive impact on peace, 42% were identified as having a small negative impact, highlighting a need to curb illicit activity and financial flows in a thriving but rapidly evolving ecosystem.
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.
Andrew Griffith, Economic Secretary to the Treasury, said: “I am pleased to see UK Fintech in such strong shape with London overtaking San Francisco as a FinTech hub. I welcome the findings of this report, highlighting the important role of UK fintech in not just growing the economy but tackling some of the challenges we face in society today.”
Janine Hirt, CEO of Innovate Finance, commented: “We are delighted to release this report in partnership with Accenture to illustrate the power and promise of the FinTech sector in supporting the UK economy and addressing important societal challenges. It is thanks to the innovation intrinsic to the sector, and to our phenomenal FinTech founders and experts, that we can now address some of our greatest societal challenges with more confidence. We must all - industry, government, and regulators - work together to support our world-leading UK FinTech community in driving even greater positive impact and unlock FinTech’s next era of productivity and growth.”
Graham Cressey, Accenture’s London FinTech Innovation Lab Director, said: “There’s no doubt that the UK FinTech sector has stepped up to help society navigate unprecedented levels of change in recent years, whether it’s facilitating easier payments, improving the transparency of sustainable investing, or boosting financial inclusion. However, barriers to fairer representation in the industry still exist which are preventing it from reaching its full potential. Through cross-industry collaboration and a solid understanding of technology, data and how to measure what matters, UK FinTech can continue to lead the way and bring even more positive change in partnership with the broader financial services industry.”
Kimberley Abbott, CEO of Vested Impact said: “The best, and perhaps the only, chance we have as a society to solve some of the world’s greatest challenges 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.”
Alex Craven, Co-Founder of the Data City, said: “We are delighted to have contributed to this project. The Fintech industry is reinventing financial processes at a large scale, but it is also redefining the way the public engages with financial planning and investment.”
