Despite ongoing economic turmoil, the UK has managed to retain its dominance as Europe's major financial center, with London as the Silicon Valley for fintechs. Though 2023 looks rocky still, fintechs are known for swift innovation – constantly adapting and reinventing themselves – and will ride this wave.
Access to capital will be a huge hurdle for rapidly evolving fintechs looking to continue their scaling journeys across the UK and beyond. The fintechs that will capture their part of the pie are those that will focus on – and demonstrate to investors – one word: resilience.
Staying laser-focused on operational basics will help fintechs prove their worth, especially as the world watches the collapse of the cryptocurrency exchange FTX and crypto lender BlockFi. Investors will expect to see fintechs follow regulatory advice, minimize their reputational risks, keep their customers protected, and utilize innovative technology to accelerate and scale their processes and maintain compliance.
There is also no doubt that regulatory complexities will increase in 2023. Take buy-now-pay-later (BNPL), for example. Its explosive resurgence has made it an attractive alternative to traditional spending this year, although it's not without its risks.
It will be imperative for fintechs to take the high ground and look for innovative ways to both educate and protect their customers while getting ready for regulations recommended by the Financial Conduct Authorityto come into play in 2023. BNPL providers have made growth commitments to investors. They will expect them to keep those promises, as well as keep operations stable and their customers safe and secure.
These predictions were authored by Melba Montague, head of banking and capital markets, Europe and first appeared in Verdict.