The UK FinTech sector has continued to attract rising levels of investment, despite global economic uncertainty, although many still see challenges ahead in finding the right talent and the levels of consumer adoption.

The 2019 UK FinTech Census from EY and Innovate Finance, based on a study of over 224 FinTech companies and supported by HM Treasury, revealed that the average total investment raised by firms grew by a third from £15 million in 2017 to more than £20 million in 2019, despite the uncertainty surrounding Brexit.

In their next funding round, UK FinTech firms are expected to raise a total of £2.6 billion, with Series A funding - the first significant round of venture capital financing - accounting for over a quarter (26 per cent), with one-third of respondents anticipating an Initial Public Offering (IPO) in the next five years.

As well as a capital injection though, FinTechs are looking for additional benefits from investors: more than half (54 per cent) value access to new customers as the most important benefit; 14 per cent cite partnership opportunities and 12 per cent list international expansion and growth.

Finding the right digital skills, however, remains a key challenge for the industry and one that hasn’t changed much in the two years since the last such census – over half (53 per cent) of firms this year reported recruiting suitable talent as a major challenge.

Software engineering, system architecture and development was cited as the most in-demand skillset - ranked first by 52 per cent of firms - but also the hardest to find. The second most valuable, and equally difficult to source, was data analytics and data science skills – ranked top by 19 per cent of firms.

Many UK FinTechs are looking at home to solve this problem and build their talent base, with a number of larger FinTechs looking to Europe and Asia as the two most important regions, with the latter overtaking North America as the second most popular region since the 2017 Census.

Levels of customer adoption (48 per cent) and building partnerships with established players (37 per cent) are also seen as significant challenges by the industry. Additional concerns for FinTechs are ensuring sufficient capital and liquidity (44 per cent) and navigating Brexit uncertainty (42 per cent).

At the same time, gender diversity continues to be a challenge for the sector. The gender split of the UK FinTech sector’s employee base is 70.5 per cent male and 29.5 per cent female - consistent with the 2017 Census results - while the 2019 Census also showed that only a quarter have at least one female co-founder.

Tom Bull, UK head of FinTech at EY, said that looking ahead, the industry maintains a positive outlook, however challenges remain.

“Persistent issues over talent are a real cause of concern and the UK government’s talent and skills agenda is welcomed as the sector looks to secure the necessary resources to flourish – equally, the Census makes it very clear that more needs to be done to try and redress the gender imbalance, which remains a challenge despite the efforts of government and industry to make FinTech more diverse.”

Charlotte Crosswell, chief executive at Innovate Finance, added: “Investment levels are high, and set to break new records, but we need to support businesses in attracting and retaining talent, and back their ambition to scale globally.”

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