The economic challenges of 2022 may have taken their toll on global investments, but they also demonstrated just how resilient the UK’s Fintech industry is and why the sector has a vital role to play in helping the UK economy bounce back this year.
A tough year
From soaring inflation and interest rates to markets rocked by the uncertainty of war in Ukraine, 2022 was a tough year for the global economy.
Latest estimates predict that we’ll continue to feel the economic shockwaves this year. The World Bank revised its 2023 global growth forecast down from 3% six months ago to just 1.7%, with investment growth in emerging markets set to reach a two-decade low.
First glance at the impact on Fintech
At first glance, unprecedented global economic conditions appear to have taken a serious toll on global investment deals which dropped 14%, with a knock-on effect on Fintech.
Even established Fintech giants weren’t immune: Coinbase hit the headlines in November 2022 when their value plummeted from $79.6 bn to below $10 bn in just a year.
The UK Fintech sector felt the pinch, with Finextra recently reporting an 8% “funding slump”, with investment dropping to $12.5 billion in 2022, down from $13.5bn the previous year.
Taking a closer look
A closer look at the context behind the headline-hitting numbers tells a different story: given the scale of the economic challenges in 2022, Fintech has proved itself to be a resilient industry that’s worthy of continued investment.
Whilst globally investments dipped by around a third, Fintech investments only reduced by 8% according to the latest report by Innovate Finance.
The result was that even in the face of extreme economic unpredictability, over $92 bn was invested into Fintech firms around the world last year.
A UK success story
Not only did Fintech hold its own compared to investment in other sectors globally, the UK’s Fintech sector remained a vital force in the UK economy.
Reductions in Fintech funding in the UK were smaller compared to other markets, with investment in London firms down by just 5%.
UK Fintech giants continued to grow with SumUp raising €590m and checkout.com securing $1 bn in series D funding. Rising stars also continued to catch investor attention, with GoHenry passing 2 million users and raising $55 million in October 2022.
Add up the Fintech investment the UK received and we’re second only to the US; in fact, you’d need to add together Fintech investment in the next 10 European countries to equal the amount of funding the UK Fintech industry brought in.
And that’s in a “bad year”.
The future of Fintech
Fintech’s resilience in the face of global economic turmoil underlines its potential. And investors are ready.
Backing startups has been a successful strategy for the UK, having already produced 122 unicorns — companies valued at £1 bn or more — with a staggering 258 more on the “unicorn track” according to Deal Room.
Fintech accounts for almost 20% of those unicorns, with London alone being home to 21 Fintech unicorns according to figures from Beauhurst.
Building teams for growth
Looking behind the headlines at how Fintech has performed in context demonstrates what an important driver of economic growth it has been and will continue to be throughout 2023.
Fintech firms with the right team in place will be perfectly positioned to bounce back from the challenges of 2022 and take advantage of the renewed optimism and opportunities of 2023.
As Fintech recruitment specialists, we’ve seen this positivity and continued investment last year, with firms reaching out to us to help recruit sales leaders, first hires and c-suite execs.
If you’re looking to grow your Fintech sales team in 2023, get in touch with our team to find out more about how our unique network of Fintech sales talent could help you create the next fintech unicorn.
