How to make it as a fintech startup in the UK

Here, Eyal Nachum, Co-Founder and fintech guru at Bruc Bond, explores how fintech startups can prosper in the UK market

UK fintech is one of the most thriving markets in the world. With such a diverse blend of new startups and well-established tech giants, finding a gap in the market has never been more difficult. Yet, this is exactly what startups must do if they want to survive.

The meteoric rise of UK-based fintech firms such as Monzo and Revolut is balanced with the fall of businesses such as pay-day loan company Wonga and student finance app Loot that couldn’t capitalise on the market.

With such a vast, competitive market, how then, can fintechs thrive in the UK market?

Finding the right niche

A 2019 report commissioned by the Department for International Trade on the UK fintech market uncovered some statistics which shed some light on the UK’s power and influence.

In 2018, it was estimated that there were over 1600 fintech firms UK wide, a figure which was predicted to double by 2030.

The way for a fintech to succeed in the UK in 2020 is by implementing hyper-segmentation of the market and pursuing niches. It’s clear the traditional systems which have historically dominated the market are being forced to evolve.

The report cited that 56% of traditional financial institutions put disruption at the heart of their strategy, most likely in reaction to the swathe of new, innovative emerging startups.

Embracing Diversity

The UK is one of the most multicultural, cosmopolitan and varied markets in the world.

As one of the markets leading the way in regard to cultural diversity, in 2018 it was estimated that 42% of UK fintech workers were from overseas.

Being aware of this diversity and utilising it could provide the solution when searching for that essential niche in the market.

This diversity creates a market that is rife with cultural and communication challenges, due to workplaces and educational institutions increasingly consisting of varied cultural, racial, and ethnic groups, each with their own needs.

Firms and individuals alike must establish a level of understanding about each other, to better interact, trust and respect each other.

This melting pot contributes to what makes a society great, both as a whole but also for businesses, and underpinning this is the fact that people do business with people, not with companies.

People from diverse cultures contribute varied language skills, new ways of thinking, new knowledge, and different experiences.

For example, the needs of Tamil-speakers in the UK are not quite the same as the needs of Ugandans, or even Urdu speakers.

Going after these niches would allow a fintech startup to address the needs of very specific segments of the market.

Access to work

The UK is one of the best places to do business. It is easier and cheaper to become a freelancer, sole proprietor or small business owner in the UK than perhaps in any other place in Europe.

This has brought unprecedented levels of creativity and innovation which is driving the market. In UK, there are significantly fewer entry barriers than other nations, which could explain why it continues to attract highly skilled workers.

This draws both UK-born and EU-resident independent workers to set up shop in the UK, creating a whole new level of segmentation to be explored and exploited by a fintech player.

By focusing on niche-specific segments, a fintech could avoid competing with others for the same “general” market.

It’s clear the UK market is awash with successful fintech startups. But rather than being put off by the competition, startups should see it as an opportunity to offer something unique to the market, capitalising on the diverse wants and needs of its consumers.