The future of fintech: Zooming in on the North
Tuesday August 1, 2023
In our latest article, we explore key findings from our research on the North, and examine both the negative and optimistic views of the future.
Despite high levels of disruption in the fintech sector within the North, our research highlights a level of optimism for the future of the sector.
In our survey of fintech businesses in Manchester and Leeds, we found that two fifths fear failure by the end of 2023, citing the cost of inflation, combined with rising interest rates as key drivers for their uncertainty to trade through to the end of the year.
However, whilst just under a quarter (24%) of firms saw their valuations fall in the last year as they contended with rising input costs, the region had the largest proportion of firms that had seen their valuations increase (56%) of any UK nation or region surveyed.
The North also had the lowest proportion of firms that expect their valuation to decline over the next year (24%), and the highest proportion of firms that expected to see their revenue growth accelerate (42%).
Against a backdrop of rising interest rates, just under a third (30%) have found funding harder to come by over the past 12 months. However, a larger proportion (46%) report accessing financing with greater ease.
With some firms anticipating future challenges, our research highlights a polarisation in plans for the future. More than two-thirds (64%) of the business leaders we surveyed said that they had reviewed and amended their exit strategy in the past year. The most popular option was planning to seek new consolidation (60%), followed jointly by seeking new funding or investment or acquisition opportunities (38%).
Leeds and Manchester hold exciting opportunities for future growth in the fintech space, representing an accessible alternative to London, with lower start-up costs and an excellent pipeline of talent. These opportunities do not negate the financial challenges that all UK businesses are currently facing, and the fear of failure is prevalent through these challenging times however, our research indicates that the North are more optimistic when it comes to valuations, revenue growth and access to funding, so the future, albeit uncertain, looks promising.
For those considering consolidatory and investment support, the coming months will be crucial in optimising commercial operations and future profitability to develop the best proposition for potential investors.
To read more of our findings and insight into the challenges and opportunities facing the UK’s fintech sector in other regions, please click here.
Click below to read the report
Leeds and Manchester hold exciting opportunities for future growth in the fintech space, representing an accessible alternative to London, with lower start-up costs and an excellent pipeline of talent.Daniel Brecker Corporate Finance