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Fintech 2020 Bank, Finland, Financial Technology, Finance, Computer Software

The fintech review: What happened in 2020?


Maddy Christopher looks at the top UK fintech stories of the past year.

31st Dec 2020
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Fintech was one of those tech trends poised to take off in 2020. The sector was even earmarked by Chancellor Rishi Sunak in his Budget announcements for its own Treasury review. Commentators including AccountingWEB columnist Richard Sergeant have speculated what the government might do to accelerate growth of the fintech sector, but with other issues to contend with there has not been time to come up with any interim recommendations. 

The full review is expected to report back to HM Treasury at the start of 2021, so watch out for any further announcements in the March Budget.

Wirecard collapse

Like other areas of tech, digital processes and payments came into their own when businesses were forced to move to remote working. But the acceleration has resulted in mixed fortunes for the industry as market leaders got stronger, but some of the stragglers began to fall away.

The most spectacular example came from Germany-based Wirecard, once the shining star of European fintech. On 26 June, Wirecard filed for bankruptcy following the arrest of CEO Markus Braun for conspiring to inflate the company’s assets. The company’s share price soon toppled from €192 to a few Euros per share.

More to the point for UK businesses and consumers, local fintech services that relied on Wirecard payments were thrown into disarray as regulators froze the company’s assets and stopped payments mid-transaction. Exhibiting a range of emergency responses ANNA Money urged customers to withdraw their cash, Pockit claimed its business was working as usual and Curve urged users to carry a second card.

Curve, which was already planning to move away from Wirecard, made the transition in just 60 hours to get its payment service up and running again. 

Ups and downs among the neobanks

The Darwinian impacts of 2020 also played out among the new generation of digital banks. Neobank growth rates dropped by an average of 18-36% amid the pandemic turmoil and even with the backing of a high street brand, NatWest shut down Bó just four months after its launch.

Monzo and Revolut continued to rack up losses, with Monzo announcing job cuts following a 40% valuation hit after co-founder Tom Blomfield stepped down as CEO.

In contrast, however, Starling emerged as the clear market leader in a three-way fintech showdown with Monzo and Revolut and even managed to turn a profit for the first time in 2020.

The government’s strategy for minimising the impact of Covid-19 tilted the playing field back towards the more established banking names. Initially, the British Business Bank authorised just 40 lenders for the underwhelming first wave of the Coronavirus Business Interruption Loan Scheme (CBILS). After more tinkering, the alternative and easier to access Bounce Back Loan Scheme (BBLS) was channelled through borrowers’ existing banks, once more favouring the incumbents

CBILS and BBLS were eventually opened up to neobanks, which responded with impressive figures for application speed and access to funds. But even this success had its downside. Three months of offering BBLS to its customers, Tide announced that it had run out of funds and halted lending altogether.

In a topsy-turvey year for every industry, UK fintech took its share of hard knocks during 2020. But the players that retain the support of their investors will emerge stronger for having weathered the initial pandemic storm. More uncertainty and economic hardship is in the offing for 2021, so all eyes will be turning to the Chancellor to see whether or not his wallet is big enough to stimulate further competitive gains in this fascinating market.

Given everything else he is likely to have on his plate in 2021, that fintech review may be a long time in coming.


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