UK Fintech Market Turns to Artificial Intelligence and Puts Customers First
- FinTech StartUps , IT Innovations
- 13.03.2017 11:45 am
In a new report, ‘The start-up view: a year in FinTech’,Startupbootcamp and PwC analyse application data from Startupbootcamp’s FinTech accelerator programme as well as the volume of deals in the UK FinTech market in 2016. Working alongside startups and financial services companies, they have seen a big change in culture over the past year and a shift towards a better understanding of artificial intelligence and its potential to solve customer problems.
Startups are putting more emphasis on solving real customer problems using AI and machine learning. In the past few years, focus on AI and machine learning has been driven by a need to further understand and develop the technology with no clear concept of how to implement it in daily life. The past year, however, has seen FinTech companies working with financial services firms to use this technology to identify and attempt to solve real-life customer issues. Enterprise Bot, a member of the 2016 cohort, provides a good example of this having developed AI-powered virtual assistants that can be deployed as white label solutions on various platforms to improve customer service.
There remains, however, a disconnect in the interest shown in this area by startups and investors, with the report showing that for many investors it is still too soon to invest in smarter faster machines. The report suggests that investment in this space, particularly in blockchain, is being driven predominantly in-house by financial companies themselves. 16% of applications to Startupbootcamp focused on smarter, faster machines versus only 9% investment in this area according to the funding data.
Despite Brexit, the UK should remain a global FinTech centre
UK based startups made up 34% of all applications to Startupbootcamp in 2016, up from 22% the year before, demonstrating the constant growth of innovation and wealth of talent in the UK.
The UK FinTech sector has continued to progress following the EU referendum, with FinTech ‘bridges’ being built between London and China, South Korea, Singapore, India and Australia.
While running successful FinTech accelerator programs in Europe, Asia, US and now Latin America since 2014, Startupbootcamp has witnessed that FinTech startups are not only finding new ways of tackling difficult financial challenges but also applying those solutions in new emerging markets.
Like other sectors, FinTech is not immune to the impact of uncertainty surrounding Brexit, but the European FinTech sector is in a healthy position. Regulators across Europe and further afield are following the UK’s example as they seek to foster an agile and innovative environment, showing continued support for the UK FinTech scene. So far concerns around Brexit have been minimal and mainly hypothetical, mostly due to the fact that most early stage startups tend to be predominantly focused on their domestic market.
Collaboration is key as relationship between startups and incumbents matures
The early perception of FinTech is shifting. Where startups were once seen as a threat by incumbents, the emphasis is shifting to one of collaboration. While it has taken a while for startups and incumbents to find a way to work together, Startupbootcamp and PwC have witnessed a clear increase in the two parties working together to solve important problems – both for customers and for the companies themselves.
As the relationship matures, incumbent financial services firms continue to struggle with measuring and reporting the success they find when partnering with startups. Nevertheless, the atmosphere of collaboration and mutual understanding is positive and expected to accelerate.
Commenting, Francisco Lorca, Managing Director of Startupbootcamp FinTech London, said:
“Despite political, economic and financial uncertainty causing people to believe FinTech might be derailed, at Startupbootcamp we have yet to see any real impact yet. This year, we have seen the sector’s entrepreneurs, including the Startupbootcamp FinTech 2016 cohort, consistently proving that they have genuinely transformative ideas to offer – and that these ideas are commercially viable. One can only imagine what will come next, but both incumbents and start-ups should be prepared to embrace the change”