United Kingdom

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Part
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Digital Banking By Industry: UK

After an exhaustive search through credible sources, it appears that information on three to five industries in the United Kingdom (U.K.) that have embraced digital banking services the most is unavailable in the public domain.

HELPFUL INSIGHTS

DIGITAL BANKING SERVICES IN UK

  • More than half (57%) of small businesses in the U.K. have adopted digital business banking services.
  • According to Statista, around 74% of banking customers in the country utilize online banking services.

UK MOBILE PAYMENTS

  • Mobile payments in the U.K. are segmented to retail sectors like bars and pubs (9.25%), coffee shops (11%), public transport (11%), and quick-service restaurants (11.3%).
  • In 2017-2018, mobile payments within the fashion industry rose by approximately 500%.
  • Mobile payments in the U.K. have reached 126 million transactions, with around £975 million being spent ($1.184 billion USD) in 2017.
  • As reported by BusinessWire, the mobile payments sector in the nation is projected to reach $408,020.5 million by 2025, growing at an estimated CAGR of 6.9%.
  • In 2018, the use of mobile payments was adopted by about 13% of the U.K. population, or about 7.2 million individuals.
  • The mobile payment industry in the country involves mobile recharge and bill payment, as well as other payments such as mobile recharge/payment, insurance payments, rental payment, credit cards payment, wellness and healthcare bills, broadband/data cards recharge/payment, DTH recharge/payment, fuel bills, and landline recharge/payment.

UK TRAVEL BOOKING INDUSTRY

The U.K. travel booking sector depends heavily on mobile payments, which consists of offline and online travel booking, flight bookings, train and bus bookings, hotel bookings, transit and toll - metro and cabs bookings.

UK E- WALLET PAYMENTS

  • Around 22% of e-commerce payments in the U.K. are conducted through e-wallets such as Android Pay, Apple Pay, and Samsung Pay.

Top industries in the UK

Banks in the UK

  • The leading challenger bank companies in the U.K. are Monzo, Atom, Metro Bank, Monese, Tandem Bank, Tide, Secco, Starling Bank, Mondo Bank, and Cryptaura.
  • According to Startups, the "best challenger bank accounts for business" in the U.K. are Revolut, Starling Bank, Soldo, Mettle, Countingup, Cashplus, Tide, Monzo, and CardOneMoney.
  • Large traditional banks in the U.K. include HSBC Holdings, Lloyds Banking Group, Royal Bank of Scotland Group, Barclays, and Standard Chartered.

Research Strategy:

Our research began by searching for information on the industries that have endured the highest uptake of digital business banking services in the U.K. in various market reports such as Mckinsey, Forbes, E-marketer, BusinessWire, Fintech Magazine, and others. However, most of the information focused on individual personal digital banking rather business digital banking to derive further.

Next, we searched for information on the top industries in the U.K. from various sources such as World Atlas, Blue Black Global, and others. Using this strategy, we discovered that the top industries in the country include information technology, construction, oil and gas, healthcare, agriculture, manufacturing, tourism, transportation, logistics, etc. Furthermore, we tried to derive information on the adoption of digital business banking services in those sectors through various industry reports such as Deloitte, PWC, Euromonitor, and IBIS World, among others. We only came across reports focused on the digitization of respective industries but not specific to digital banking to triangulate further.

Afterward, we looked for the top digital-only banks/EMIs across various banking databases, such as Venture Radar, Startups UK, Crunchbase, and Hoovers, that offer digital business banking services. We found out that the best U.K. challenger bank accounts for business are Revolut, Starling Bank, Soldo, Mettle, Countingup, Cashplus, Tide, Monzo, and CardOneMoney. Based on this list, we exhaustively examined publications and periodical reports of them to review the segmentation of their business clients to triangulate the adoption of the digital business banking services industry-wise. However, most of the annual reports merely quoted their stats on customers, but there was not further segmentation.

Also, we attempted to search for traditional banks that offer both traditional and digital banking services as triangulation failed to derive at industries that have had the highest uptake of digital business banking services in the UK with respect to digital-only banking. We discovered that large traditional banks in the U.K. include HSBC Holdings, Lloyds Banking Group, Royal Bank of Scotland Group, Barclays, and Standard Chartered, and most of the banks offer digital services. Nevertheless, details on client segmentation was not published in the public domain.

Finally, we expanded the scope of our search to include European reports on digital business banking services such as Everest GRP, Digitalist Mag, Small Business, Ipsos, Fis Global, Finance Digest, Disfold, and others, to determine the industries that have had the highest uptake of digital business banking services in the U.K. However, most of the reports quote general insights on digital banking but nothing specific to digital business banking services to derive further. Due to the unavailability of data, we were unable to provide information on three through five industries with the highest uptake of digital business banking services in the U.K. The information regarding the industries that have most embraced digital business banking services in Germany for digital banking services overall that offer both traditional and digital banking services is also not available in the public domain. There is very limited data on digital business banking services in the U.K. as most of the information focused on individual personal banking rather business banking to triangulate further.
Part
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Part
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Digital Banking: UK

Digital banking is very popular in the UK, especially among millennials. The major mode of accessing digital banking in the UK is via mobile apps with almost 25 million people are found to be using mobile apps to access digital banking services. A deep dive of the same is provided below.

DIGITAL BANKING POPULARITY IN THE UK

  • According to the trade body of UK Finance, approximately 22 million people in the UK used digital banking in 2017.
  • According to a report provided by CACI, the number of people using digital banking is continuously growing whereas the number of branch visitors is declining which shows the increased interest of people of the UK in digital banking.
  • According to the above report, the number of branch users is expected to decline by 55% by 2024 while consumers of digital banking are expected to reach 71% by 2024.
  • According to a study by GlobalData, 28% of people in the UK are now willing to use digital banking services.
  • According to a report provided by the Fidelity National Information Services (FIS), 71% of all the banking services are now digital in the UK while only 6% of interactions are happening in physical branches.
  • Among the general population, millennials are more interested in using digital banking services.
  • According to a survey performed on more than 1000 banked consumers in the UK, the usage of digital banking among UK consumers has grown emphatically last year.
  • According to a study performed by financial services review website Smart Money People, 39.2% of people in the UK prefer to use apps for dealing with digital banking.
  • According to the above report, digital banking is most popular(53%) among the 18-24 age group while its popularity has shown significant growth among senior citizens(13%) as well.

ACCESSING DIGITAL BANKING IN THE UK

  • According to the trade body of UK Finance, nearly 174 app logins were made every second in 2017 to access digital banking.
  • According to a report provided by CACI, the use of mobile banking apps is growing among citizens of the UK.
  • According to the above report, there are currently 25 million people in the UK that are accessing digital banking services via mobile apps.
  • According to the above report, half of the current account holders are using mobile apps to manage their bank accounts.
  • According to a report provided by FIS, 59% of banked UK consumers have claimed to have used mobile apps for accessing digital banking services.
  • When it comes to people in the age range of 18 to 27, for almost 40% of the people, mobile apps are the primary source of accessing digital banking services over other accessing modes.
  • According to a study performed by financial services review website Smart Money People, the preference for both mobile apps and online services to access digital banking has increased from 75% to 78%.
  • According to a financial advisor, This is Money, almost 1.2 million bank accounts are opened currently that can be accessed via smartphone, tablet or computer app.
  • According to a financial advisor, This is Money, more than one million banked consumers are using mobile apps for accessing savings accounts, credit cards, and mortgages.
  • According to the market research company Ipsos, 49% of people aged 15-34 and 27% of people above 35 years of age have used bank's mobile apps in the last 12 months to access their bank account.


RESEARCH STRATEGY

We commenced our research by reviewing several databases of credible research companies including Ipsos and others. We also searched through various sources including Forbes, Business Hub, Finextra, and others that targeted digital banking in the UK based on surveys and studies conducted. Following this path, we were able to determine the popularity of digital banking, the modes that people prefer to access these services and various other insights and hence provided the same in our brief.
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Part
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Apple Pay Statistics: UK

There are over 250,000 locations in the UK that support Apple Pay, including fast food places like KFC and McDonald's, and shops like Boots, Marks & Spencer, and Waitrose. In 2018, 708 million transactions were made via online and mobile payment methods like PayPal, Apple Pay, Google Pay, and Samsung Pay.

HELPFUL FINDINGS

2017:

2018:

  • Total UK Payments in 2018: 39.3 billion
  • In 2018, debit cards, with 15.1 billion payments, were the most used payment method, a 14% increase from 2017.
  • Credit card usage increased by 4% to 3.2 billion.
  • Cash payments decreased by 16% to 11.0 billion and were the second most frequently used payment method.
  • Contactless debit and credit card payment volumes totaled nearly 7.4 billion.
  • The volume of direct debit transactions was 4.4 billion, with an overall value of £1,327 billion.
  • The volume of faster payments and other remote banking was 2 billion.
  • The volume of transactions via other payment methods, which include (but are not limited to) online and mobile payment methods such as PayPal, Apple Pay, Google Pay, and Samsung Pay was 708 million.
  • Apple Pay compatible UK banks include First Direct, HSBC, NatWest, Nationwide Building Society, Royal Bank of Scotland, Santander, Ulster Bank, Bank of Scotland, Coutts, Lloyds Bank, Halifax, MBNA, M&S Bank, TSB Bank, HSBC, and Barclays.
  • According to MBNA, Apple Pay is available to those holding one of its football, travel, and charity branded cards including cards from Arsenal FC, Chelsea FC, Liverpool FC, Manchester United FC, Tottenham Hotspur FC, Virgin Atlantic Airways, Emirates, Etihad, Worldwide Fund for Nature, and the British Heart Foundation.
  • Apps that will accept Apple Pay in the UK, include Addison Lee, Airbnb, Argos, Booking.com, British Airways, Domino's, EasyJet, Hailo, HotelTonight, hungryhouse, JD Sports, Just Eat, lastminute.com, Miss Selfridge, Ocado, Stubhub, thetrainline.com, Top 10, Topshop, Uncover, Vueling, YPlan, Zalando, and Zara, among others.

NUMBER OF APPLE PAY USERS IN UK:

  • The number of Apple Pay users worldwide is 87 million.
  • UK's mobile wallet usage percentage is 24%.

NUMBER OF MOBILE PAYMENTS BY VOLUME

  • In 2017, 126 million in-store contactless transactions were made via a mobile device.
  • Digital wallets, including Apple Pay, Google Pay, and Samsung Pay, were responsible for 59% of all in-store mobile transactions in 2017.
  • Mobile payments by volume via digital wallets (ApplePay, GooglePay and Samsung Pay) was 74,340,000 (126 million * 59%)
  • In 2018, 708 million transactions were made via online and mobile payment methods like PayPal, Apple Pay, Google Pay, and Samsung Pay.

NUMBER OF MOBILE PAYMENTS BY VALUE

  • In 2017, a total of £975 million was spent in 126 million in-store transactions via mobile payments.
  • Digital wallets, including Apple Pay, Google Pay, and Samsung Pay, were responsible for 59% of all in-store mobile transactions in 2017.
  • In 2017, mobile payments by value via digital wallets (ApplePay, GooglePay and Samsung Pay) was ‭£526,500,000‬ (£975 million * 59%)

NUMBER OF MERCHANTS ACCEPTING APPLE PAY

  • There are over 250,000 locations in the UK that support Apple Pay, including fast food places like KFC and McDonald's, and shops like Boots, Marks & Spencer, and Waitrose.
  • Apple's website includes a full list of retail shops and apps that accept Apple Pay.
  • Many UK-based apps such as Transferwise, Deliveroo, EasyJet, Adidas, as well as nonprofit organizations like Cancer Research UK, Marie Curie, and British Heart Foundation also accept Apple Pay.

RESEARCH STRATEGY

To provide statistics showing how widely used Apple Pay is in the UK, we searched the company's website, articles, and industry reports like eMarketer, Merchant Savvy, and UK Finance. While we were unable to find or triangulate the number of Apple Pay payments by volume and by value, we have provided the next best alternative volume and value we could find — the total volume and value of mobile payments via digital wallets (ApplePay, GooglePay, and Samsung Pay). Below are the details.
We began by searching for the requested information through Apple's website, but this approach did not yield information on the number of Apple Pay users and the number of Apple Pay payments by volume and value. We were, however, able to identify the merchants accepting Apple Pay in the UK.
Our second approach was to search for data from government websites like GOV.UK Pay, which accepts Apple Pay and Google Pay for online services. However, this approach failed as most of the information available was on its support services such as global entry services, online basic DBS checks, Registered Traveller Service, and Electronic Visa Waiver Service.

Lastly, we tried to look for precompiled information through surveys or consumer reports, and profile analysis with statistics on the use of Apple Pay in the United Kingdom, specifically, the number of Apple Pay users in the United Kingdom, their payments by volume and by value and other related data. Although we found information on the number of Apple Pay users globally, there was no information specific to Apple Pay usage in the UK to reasonably triangulate the number of Apple Pay users in the UK. Sources like UK Finance, which created the UK Market report did not yield any detail of ApplePay users in the UK, specifically, but an overall percentage together with PayPal, Google Pay, and Samsung Pay. Most of the articles we found were related to guides on how to understand the process of using Apple Pay and the overall payments made in the UK. Below are some helpful triangulations we made.

TRIANGULATIONS

1. The number of Apple Pay Users:

  • Total number of Apple Pay users globally: 87 million
  • Percentage of mobile users (not specifically Apple users) in the UK: 24%
  • Therefore, the estimated number of Apple Pay users in the UK = 87 million * 24% = 20,880,000 users

2. Mobile Payments in General by volume in 2017 = Total number of payments * percentage of mobile transactions in the UK.

  • The number of in-store contactless transactions made via a mobile device totaled 126 million in 2017.
  • Digital wallets, including Apple Pay, Google Pay, and Samsung Pay, were responsible for 59% of all in-store mobile transactions in 2017.
  • Therefore, Mobile payments by volume via digital wallets (ApplePay, GooglePay, and Samsung Pay) = 74,340,000 (126 million * 59%)

3. Mobile Payments in General by value in 2017 = Total amount of payments * percentage of mobile transactions in the UK.

  • In 2017, £975 million was spent over 126 million in-store transactions via mobile payments.
  • Digital wallets such as Apple Pay, Google Pay, and Samsung Pay, were responsible for 59% of all in-store mobile transactions in 2017.
  • Therefore, mobile payments by value via digital wallets (ApplePay, GooglePay, and Samsung Pay) = ‭£526,500,000‬ (£975 Million x 59%)


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Part
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Google Pay Statistics: UK

The use of mobile payments without cards have been around in the UK for some time and using services like Apple Pay and Google Pay to enable phone and smartwatch payment. There is a prediction that over the next decade mobile payment will grow by 56% to reach 877 million. Apple and Google Pay accounted for 561 million payments in 2017.

UK and Fears of Privacy

  • Google Pay has been supported in the UK since 2018.
  • Most people in the UK are conservative and do not want to lose their privacy due to a cashless society. 41% of people believe they will witness a cashless society in their lifetime.

UK and Mobile Payments

  • The use of mobile payments without cards have been around in the UK for some time and using services like Apple Pay and Google Pay to enable phone and smartwatch payment. There is a prediction that over the next decade mobile payment will grow by 56% to reach 877 million.
  • Apple and Google Pay accounted for 561 million payments in 2017.
  • 8.3 million people in the UK in 2019 use mobile payment. In 2018, 7.2 million people used mobile payment representing 13% of UK population and Google Pay is just an aspect of a mobile payment in the UK, hence the use of mobile payment in the UK is not too common based on the available statistics.
  • Apple Pay, Google Pay, and Samsung Pay may drive the growth of mobile payment in the UK upward.
  • Year 2018 had about 8.5 million people, or 16% of the adult population that registered for mobile payments in the UK with 79% of these registered users recording a payment. About 46% of these registered users made payments weekly or more frequently, and the UK Finance market research found that "younger people are more likely to use Apple Pay, Google Pay or Samsung Pay than older people".

Google Pay Termination — UK

  • After September 6th, 2019, the "UK will no longer be able to send or request money through Google Pay apps".

RESEARCH STRATEGY

Broad Search for Data

We began by looking at a broad perspective to gather data from global resources that gives details on fintech and mobile payments to unearth data in regard to statistics showing how widely Google Pay is used, the number of Google Pay users in the UK, the number of Google Pay payments by volume in the UK, the number of Google Pay payments by value (EUR) in the UK, and the number of merchants accepting Google Pay in the UK. Hence, we used Merchant Savvy to find the data, but we were unable to find substantial information.

Merchant Machine was consulted too, in a bid to unearth the required data. Here, we found that the UK had 24% of mobile usage by country and that Google Pay was supported in the UK.

Country Search for Data/Narrowing

Subsequently, we examined market research domains such as Emarketer, UK Finance, and Access to Cash Review.
On Emarketer, we found the percentage of mobile payment users in the UK in 2018 and predicted that Google Pay and Apple Pay would contribute to an increase in the use of mobile payments in the UK.

The UK Finance did not provide any data to address the question. However, we found the mobile payment volumes in the UK and the source also revealed that the younger generations prefer to use Google Pay, Apple Pay, etc. when compared to older generations.

Access Cash Review forecasted the rate of usage of Apple and Google Pay in the UK in the next 10 years. Nothing more was found on this source.

Business Statistics

We had to consult statistics database such as Statista. The source gave us details on the number of mobile payment users in the United Kingdom, mobile payment apps in the UK.

Mathematical Analysis

We tried to club all the data that was garnered so far to see if we could triangulate the answer using mathematical analysis. But, there was no correlation with the data available to find the statistics showing how widely Google Pay is used in the UK, the number of Google Pay users in the UK, the number of Google Pay payments by volume in the UK, the number of Google Pay payments by value (EUR) in the UK, and the number of merchants accepting Google Pay in the UK.
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Part
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Digital Services Trends: UK

In the United Kingdom, trends concerning digital services that are offered by the financial services industry to businesses revolve around the emergence of digital solutions that permit crowdfunding, easier cross-border B2B money transfers, B2B digital asset banking, artificial intelligence-powered B2B invoice payments, and invoice insurance automation.

CROWDFUNDING SERVICES

  • According to an article published by Bdaily, an online publisher of regional business news in the United Kingdom, crowdfunding platforms are emerging in response to the financing needs of businesses, especially those of small and medium-sized enterprises (SMEs) that are hoping to scale up but are finding it difficult to get funding from banks.
  • This trend is happening because additional regulations are now preventing mainstream banks from delivering funds as much as they did prior recession. Many businesses are unable to meet the banks' stringent requirements despite a clear demonstration of concept, revenue, and profitability potential. According to TSB bank, a bank in the United Kingdom, approximately 50% of first-time SME borrowers are rejected.
  • Startup Crowdcube is one example of a United Kingdom-based company that is offering a crowdfunding platform. As of September 2018, Crowdcube had, so far, facilitated over 100 funding campaigns of at least £1 million each. Startups Monzo, BrewDog, Revolut, and Adzuna were among Crowdcube's prominent clients.

CROSS-BORDER B2B MONEY TRANSFER SERVICES

  • According to an article published by FSTech, a leading resource for information technology decision makers in the United Kingdom's financial services sector, cross-border B2B money transfers are growing in number worldwide, and as a result, financial institutions are thinking of ways to make cross-border B2B money transfers easier.
  • Driving this trend are regulatory changes, the fintech sector, and new technologies such as blockchain, e-invoicing, and virtual accounts. According to FSTech, the money transfer market is "ripe for disruption."
  • At the forefront of this trend are Visa and Mastercard, both of which have operations in the United Kingdom. Both companies have recently teamed up with fintech companies to provide their business clients with a smoother cross-border B2B money transfer experience. Visa has partnered with Billtrust to offer business clients virtual cards, while Mastercard has partnered with Optal to offer business clients virtual accounts.
  • WorldRemit has also recently launched WorldRemit for Business to mark its entry into the cross-border B2B money transfer market. SMEs in the United Kingdom were the first to gain access to the solution.

B2B DIGITAL ASSET BANKING SERVICES

  • According to an article published by Proactive UK, a multi-media financial news organization, DAG Global is looking to become the United Kingdom's "first B2B digital assets bank."
  • Apparently, there is a huge unmet demand in the corporate space for B2B digital asset banking services. DAG Global CEO Sean Kiernan explains that there is a substantial demand for digital asset banking services from businesses that have raised funds through initial coin offerings (ICOs) or from businesses that are interested in cryptocurrencies.
  • DAG Global is planning to offer the following services: fiat banking, banking for cryptocurrencies or digital instruments, bitcoin custodial services, services for transacting bitcoin with sterling, and lending services.

AI-POWERED B2B INVOICE PAYMENT SERVICES

  • According to an article published by Financial Director, a community of finance executives from the United Kingdom, predictive technologies such as artificial intelligence (AI) are revolutionizing B2B payments. Businesses can now avail of solutions that will remove the uncertainty, delay, and paperwork typically associated with B2B payments.
  • These solutions are emerging because of the tremendous delays suppliers are experiencing in getting paid. Based on the aforementioned article, "many suppliers are left waiting 60, 90, 120 days or longer to get paid." Seventy-seven percent of small suppliers in the United Kingdom are affected by slow payments, and 50,000 small suppliers close shop each year because of delays in payments.
  • Previse is one example of a company addressing this problem. The London-based company has an AI-enabled solution that computes the likelihood of a buyer paying or settling an invoice and that determines which invoices should be settled instantly. With this technology, small suppliers will be spared the late payments.

INVOICE INSURANCE AUTOMATION SERVICES

  • Digital solutions that enable small businesses to insure their invoices or accounts receivable quickly online are emerging.
  • This trend is being driven by changes in domestic trade and international trade. According to Nic Gadaracos, InvoiceInsure's chief commercial officer, the rapid changes in domestic trade and international changes are leaving thousands of smaller businesses vulnerable, prompting these businesses to insure their invoices.
  • To address this need, InvoiceInsure and Hokodo have teamed up to develop the Single Invoice Insurance platform, which enables businesses, especially smaller ones, to instantly and cost-effectively insure their accounts receivable online. The platform gives businesses "access to real-time pay-per-use insurance."
  • Euler Hermes, a subsidiary of Allianz, also offers a Single Invoice Cover API to businesses in the United Kingdom.

RESEARCH STRATEGY

Since a report or article that readily lists the trends could not be located in the public domain, we consulted United Kingdom-based publications or news sites that cover the financial services industry. We looked at what financial news sites such as Bdaily.co.uk, FSTech.co.uk, ProactiveInvestors.co.uk, and FinancialDirector.co.uk and mainstream news sites such as BBC have recently published. We cast our net wide by exploring the different aspects of finance (e.g., payment, lending, insurance, banking) and the different market players (e.g., banks, startups, insurers). Common themes were then identified and researched further for examples and supporting information.
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Part
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FinTech Companies: UK

The 10 FinTech companies in the UK which received series A, B, C or D funding in 2018 or 2019 are Curve, Soldo, Jaja, Neudata, PaySend, JRNI, Flatfair, TrueLayer, Fnality International, and SeedLegal.

CURVE

  • Website: https://www.curve.app/
  • Description: Curve is an over-the-top banking platform, consolidating all your cards and accounts into one smart card and even smarter app.
  • It allows customers to supercharge their legacy banks to the 21st century without leaving their bank or topping-up.
  • Funding: in 2018 there were no series funding rounds while in 2019 it raised $55,000,000 in Series B funding.

SOLDO

  • Website: https://www.soldo.com/
  • Description: Soldo integrates prepaid MasterCard® cards, a web-based administration console and a mobile app into one intuitive future-ready platform.
  • It was founded by a group of tech veterans and payment pioneers who refused to accept the inefficient and fragmented state of business spending in the 21st century.
  • Funding: in 2018 there were no series funding rounds while in 2019 it raised $61,000,000 in Series B funding.

JAJA

  • Website: http://jaja.co.uk/
  • Description: Jaja is a mobile-first business that provides digital and physical credit cards and other financing services.
  • Funding: in 2018 it raised $7,764,750 in Series A funding while in 2019 it raised $22,185,000 in Series B funding.

NEUDATA

  • Website: https://www.neudata.co/
  • Description: Neudata is a global alternative data evaluation startup that works with all types of alternative data, from sentiment to social media, weather to web-tracking, and economic to environmental.
  • Providers are based in dozens of countries and range from small entrepreneurial start-ups to multinational conglomerates.
  • Funding: in 2018 there were no series funding rounds while in 2019 it raised $1,000,000 in Series A funding.

PAYSEND

  • Website: https://paysend.com/
  • Description: PaySend is a financial technology platform that solves the universal problem to securely enable any bank card (Visa or MasterCard) to send and receive money worldwide.
  • Funding: in 2018 it raised $20,000,000 in Series A funding while in 2019 there were no series funding rounds.

JRNI

  • Website: https://www.jrni.com/
  • Description: JRNI is the market leading appointment scheduling, queuing and event management platform.
  • It combines a customer engagement platform with applications - Events, Appointments, Queuing, Insights, Call Center - that put omnichannel conversion at the heart of business.
  • Funding: in 2018 it raised $13,400,000 in Series C funding while in 2019 it raised $6,000,000 in Series C (Extensive) funding.

FLATFAIR

  • Website: http://www.flatfair.co.uk/
  • Description: Flatfair helps tenants sign rental leases without the need for large security deposits.
  • The company allows tenants to sign up for a Flatfair membership fee through an online portal or mobile app, leave a debit card on file, and if there are any disputes at the end of the lease period, the company will arrange an independent arbitrator to resolve the dispute.
  • Funding: in 2018 there were no series funding rounds while in 2019 it raised $11,000,000 in Series A funding.

TRUELAYER

  • Website: https://truelayer.com/
  • Description: TrueLayer provides an application to build financial applications. It offers a toolkit to build financial apps that connect to bank data, verify accounts, and access transactions in real time.
  • Funding: in 2018 it raised $7,500,000 in Series B funding while in 2019 it raised $35,000,000 in Series C funding.

FNALITY INTERNATIONAL

  • Website: https://www.fnality.org/
  • Description: Fnality International provides a digital cash system that uses block chain technology to settle financial transactions. It was established in April 2019 and is headquartered in London, England.
  • Funding: in 2018 there were no series funding rounds while in 2019 it raised $55,462,500 in Series A funding.

SEEDLEGAL

  • Website: https://seedlegals.com/
  • Description: SeedLegal helps companies build and negotiate terms sheets, shareholder agreements, cap tables, stock option allocations, EIS approvals, hiring agreements, NDAs and more.
  • Funding: in 2018 there were no series funding rounds while in 2019 it raised $4,000,000 in Series A funding.

YOUR RESEARCH TEAM APPLIED THE FOLLOWING STRATEGY

The following Conversion metrics have been used to convert the monetary amounts from Euro to US Dollar (wherever applicable): 1 Euro = 1.11 US Dollar (the currency rate at 19:57; 08/21/2019 Wed).
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Part
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FinTech Climate: UK

The climate for FinTech in the UK is exceptionally favorable. This is achieved by making it easier for developers to launch and test their startups, by ensuring the availability of the tech talent, and by protecting customers from losing their financial data.

SOURCES OF STARTING CAPITAL AVAILABLE IN THE UK

  • The UK has an impressive history of crowdfunding projects with a world record £25 million raised during a single campaign and £217.7 million raised in 2017.
  • Equity financing is constantly growing and reached £2.1 billion in 2017.
  • There are banks, for example, Silicon Valley Bank and OakNorth bank, that provide debt finance specifically for FinTech.

THE UK GOVERNMENT INCENTIVES FOR FINTECH STARTUPS

CUSTOMERS' TRUST TOWARDS FINTECH COMPANIES

  • Transfer of personal data is highly regulated and monitored in and outside of the UK.
  • There are certain sanctions varying from fines to criminal liability for those FinTech companies that transgress personal data regulations.
  • Retail Banking Market Investigation Order published in 2017 ensured that customers could share their financial information securely.
  • Thanks to the customer-friendly environment, banking apps are used by more than 20 million people in the UK.

PROVISION OF SAFE SPACES FOR CONTROLLED EXPERIMENTATION

  • Project Innovate helps new and established FinTech companies to develop further by providing an opportunity to test new innovations and offering legal advice safely.
  • Various sandboxes such as the Global Financial Innovation Network and the UK Information Commissioner's Office are working in the UK for the development of the FinTech startups.

CONSTANT REPLENISHING OF FINTECH HUMAN RESOURCES


Part
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Part
08

Registering a New Company: UK

In the United Kingdom, it takes about 48 hours to register a new business, but it takes an average of 13 days to complete all the administration, while opening a business banking accounts will take three weeks to three months for a bank account application in the UK to be approved and meetings to be arranged.

Process of Starting a New Business (Private Limited Company) in the UK

  • The first step is to register the company with Companies House. Then it will be registered for Corporation Tax at the same time.
  • A "certificate of incorporation" will be issued which confirms the company legally exist. The certificate will also show the company number and formation date.
  • At least 3 pieces of personal information about the applicant and the shareholders or guarantors are needed.
  • When registering, a Government Gateway user ID and password for the company should be created. The personal Government Gateway ID cannot be used.
  • Ways to register: by post, using an agent, and using third-party software.

Challenges in Starting a business in the UK

WHEN STARTING
  • A company can be formed and incorporated in the UK within 48 hours, but it takes an average of 13 days to complete all the administration, with the lion’s share of that time spent dealing with Her Majesty's Revenue and Customs (HMRC) and registering for a withholding tax on incomes called PAYE (pay-as-you-earn).
  • Foreign businesses who are planning to come to the UK should be informed that all UK company accounts are subject to "public disclosure through the Registrar of Companies".
  • Although there are little fees charged, the number of procedures can make the process quite laborious for businesses.

GETTING CONSTRUCTION PERMITS AND PROPERTY REGISTRATION
  • In the UK, construction is streamlined, requiring nine procedures that would take less than 100 days.
  • Obtaining planning permission from the relevant authorities and getting water and sewerage connection takes the longest time, and is the most costly element.
  • However, registering a property is the most strenuous task when setting a business, according to data from the International Finance Corporation and the World Bank. It takes six procedures that would take around 22 days.

GETTING ELECTRICITY
  • UK Power Networks is the one that handles electricity connections and the proceedings can take up to around 100 days to complete.
  • This requires submitting plans, obtaining inspections, and waiting for the external connection works to be carried out.

GETTING CREDIT
  • The UK ranked one in the world in terms of ease of getting credit.
  • The robust financial sector and diversified nature of acquiring credit gives start-ups and developed businesses good access to much-needed funds.
  • However, knowing which type of credit will suit which business is a difficult task and often requires assistance.
PAYING TAXES
  • The tax system in the UK is notoriously tricky, largely because the country’s legal system has been adopted in a piecemeal fashion.
  • About 110 hours per year were given to companies to complete their tax obligations which include labor and corporate charges, and sales and environmental taxes.

Is the UK Generally Considered Challenging For Those Setting Up a Business Compared to Other Region?

  • The UK is ranked at #17 in terms of ease of doing business compared to Ireland which is ranked at 23rd, Germany at 24th, and France at 32nd.
  • Also, UK's 3 of the top high-rated topics on ease of doing business are about starting a business (94.58%), getting electricity permit (96.45%) and trading across borders (93.76%), according to Doing Business 2019 report.
  • In dealing with construction permits in the United Kingdom and comparator economies for small and medium-sized companies, UK has only 9.0 index score which is below OECD high-income average of 11.5. Also, the UK has the lowest index score compared to other regions: London (14.0), Ireland (13.0), United States (11.2), and Germany (9.5).
  • In getting credit in the UK and comparator economies, the UK ranked at 32nd compared to Germany and Ireland at 44th, and France at 99th. However, the United States has a better ranking than the UK which is ranked at 3rd.

How Long Does It Take To Set Up Business Banking Accounts in the UK and the Associated Challenges?

  • In the UK, opening a business banking account will take three weeks to three months for a bank account application to be approved and meetings to be arranged.
  • People cannot open a business bank account online for the majority of banks, the initial application can be made on the selected bank’s website.
  • Most banks will require a meeting in person before granting access to a business account.
  • The bank will also need to meet face-to-face with at least one of the company representatives in the UK to sign a bank mandate so the business bank account can be opened.

FOR FOREIGN ENTITIES
  • Opening a business bank account from abroad or an international account may not be the right choice because they will have to make a big initial deposit and commit to paying a minimum amount of money each month.
  • Some banks will also charge a monthly fee in addition to these requirements. This can make a bank account costly to open and run.
  • There may also be other restrictions. For instance, they may not be able to close the account and switch to a better deal until a set period of time expires.
Part
09
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Part
09

Co-Working Space: UK

Co-working in the UK has grown significantly in recent years, and the country now accounts for more than 25% of global supply.

General Information

  • According to market research from The Instant Group, co-working operators are seeking to increase the scale of their spaces rather than the number of locations.
  • Additionally, flexible workspaces are growing in popularity outside of London. Nevertheless, as the locations of the results below demonstrate, co-working is still heavily concentrated in London.
  • An independent analysis of the 2018 Global Coworking Survey shows that the average UK co-working space has 121 members, an increase of 19% on the previous year.
  • In the UK the largest operators account for less than 20% of the market.

Companies

1. Regus

287 locations

2. WeWork

60 locations

3. LEO

37 locations

4. The Office Group

33 locations

5. Landmark

27 locations

Research Strategy

For background information on coworking in the UK we began with an article in an industry magazine that gives facts about UK co-working spaces. We then determined the top co-working space providers based on the number of locations from a 2018 industry report that listed major operators. Next, we cross-referenced it with an article on the largest co-working brands in London from the office space website Hubble and with one on the nicest co-working spaces in the capital, among others, to expand the list. We researched the companies individually to determine the number of coworking spaces each one has in the UK.

We were not able to find the exact number of UK co-working operators with 3+ locations. This is likely because the market is dominated by small operators. Hence, when discussing size, only the very largest are mentioned in industry reports, blogs, and news articles.

To find the number of UK co-working operators with 3+ locations we first looked at industry reports. While we found the largest operators, these reports did not specify the total number of major operators. We also looked at the business and industry publications, such as Business Insider and deskmag.com, but the co-working statistics they reported are not broken down with such granularity.

Next, we searched sites that list co-working spaces offered by multiple providers to see which ones were most popular. Unfortunately we could not filter by operator so it was impossible to see the number of operators with more than three locations.

Finally, we cross-referenced multiple industry news articles and blogs on the "top" and "largest" co-working operators and searched the number of locations they each had. By excluding those that had fewer than three we were able to estimate that there are at least 18 co-working operators in the UK with 3+ locations.
Part
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Part
10

Business Statistics: UK

There are approximately 5.7 million businesses in the UK.


UK BUSINESS STATISTICS

BUSINESS SIZES AND DESIGNATIONS IN THE UK

SOLE TRADERS OR EQUIVALENT
  • Businesses with no employees or Micro businesses fall into the sole proprietor group.
  • Businesses with 0 to 9 employees are 5,416,000 in the UK
BUSINESSES WITH LESS THAN 250 EMPLOYEES
  • The number of businesses in the UK with less than 250 employees can be determined by adding the number of micro, small, and medium-sized businesses in the UK. Given this calculation, there are 5,661,000 businesses with less than 250 employees in the UK.
BUSINESSES WITH LESS THAN 50 MILLION EUROS IN ANNUAL TURNOVER
  • 5,661,000 businesses in the UK have less than 50 million Euros in revenue.

OTHER FINDINGS

RESEARCH STRATEGY

We used information from Merchant Savvy to carry out the calculations below.
BUSINESSES WITH LESS THAN 250 EMPLOYEES
  • The number of businesses in the UK with less than 250 employees can be determined by adding the number of micro, small, and medium-sized businesses in the UK. Given this calculation, there are 5,661,000 businesses with less than 250 employees in the UK.
  • 5,416,000 + 210,000 + 35,000 = 5,661,000 businesses in the UK
BUSINESSES WITH LESS THAN 50 MILLION EUROS IN ANNUAL TURNOVER
We determined these findings by dividing turnover by the number of businesses.
  • Businesses with 0 employees = 275,000,000,000 / 4,278,000 = 64,282.4 Euro/business
  • SMEs = 1994,000,000,000 / 5,660,000 = 352,296.8 Euro/Business
  • Micro Businesses = 808,000,000,000 / 5416,000 = 149,187.6 Euro/Business
  • Small businesses = 590,000,000,000 / 210,000 = 2,809,523. Euro/Business
  • Medium = 595,000,000,000 / 35,000 = 17,000,000 Euro/Business
  • Large Businesses = 1868,000,000,000 / 8000 = 233,500,000 Euro/Business
Since only the large businesses have an average of 233,500,000 Euros per company, with the remaining SMEs having less than a million in revenue, it is safe to say that all SMEs have less than 50 million Euros in revenue, representing 5,416,000 businesses in the UK
Part
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Part
11

Challenger Digital Banks: UK

Revolut, Starling Bank, Monzo, and Atom are four of the top challenger banks in the UK. It is advised to keep an eye on Soldo, Mettle, and Tide, as they are claiming a market share.

REVOLUT

  • Revolut was founded in 2015 and is based in London. In 2017, they reported $15.67 million in revenue, and $17.31 in 2018. From 2016-2017, their revenue growth was 443%. They offer personal and business products. Revolut launched in Germany in 2017.
  • Their market valuation is currently $1.7 billion, with $336.5 million in total funding over 12 rounds, with the last being March 27, 2019. They are a private company and considered a tech unicorn.
  • Revolut has completed a total of 350 million transactions at a total value of $48.9 billion.
  • Revolut states they have 7,000 new accounts opened daily.
  • They have nearly 20,000 businesses as customers, along with 4.5 million customers total. In the UK, they have 1.6 million customers.
  • Businesses may hold, receive, and exchange 29 currencies without charge.
  • Revolut claims they are ten times cheaper than a bank.
  • They have had significant reported losses.
  • Their business customers have an Open API to integrate their Revolut account into their current workflow and stack.
  • Revolut operates in Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece, Hungary, Iceland, Ireland, Isle of Man, Italy, Jersey, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland and the United Kingdom.
  • Their website may be viewed here.

STARLING BANK

  • Starling Bank was founded in 2014, by Anne Boden. They are headquartered in London and are a private company. They offer personal and business products.
  • The 2017 reported revenue was $39 million.
  • Starling's business account is currently only open to owners of limited companies with significant control.
  • Their business customers have access to integrations with Xero and FreeAgent. A sole trader account may be opened if the customer has a personal account as well.
  • Starling raised $54 million in funding in 2017.
  • They won "Best Business Banking Provider" in 2019.
  • Starling has 46,000 SME members along with a $122.4 million dollar grant to develop their business offerings. They plan to hit a total of one million customers in 2019.
  • They have 20 institutional clients, including the UK government.
  • Starling has over 30,000 SME business and sole trader accounts.
  • A goal of a 6.7% share of the SME market has been set to achieve within the next five years.
  • Their website may be viewed here.

MONZO

  • Monzo is a London based digital bank that was founded in 2015, by Gary Dolman, Jason Bates, Jonas Huckestein, Paul Rippon, and Tom Blomfield. They are a private company with a Late Stage Venture funding status. They offer personal and business products.
  • The current market valuation is $2.45 billion.
  • Monzo has raised $397.56 million in funding over 14 rounds. Their latest funding round was on June 25, 2019.
  • They currently have 2,797,950 customers total.
  • Monzo launched business accounts for 100 sole traders this year. Currently there is a wait list with over 15,000 businesses.
  • They are adding help with taxes, international payments, payroll multiple payments, and payments by a link for business customers.
  • Their website may be viewed here.

ATOM

  • Atom Bank was founded in 2014, by Aykley Heads in Durham, UK. They offer personal and business products.
  • They have a total funding amount of $525.27 million raised over eight rounds. Their latest funding round was August 14, 2019.
  • The current market valuation is $1.3 billion.
  • Atom specializes in money management, savings and mortgage services.
  • Only UK residents may become customers.
  • In late 2018, they reached 65,000 customers and had $2.2 billion in deposits.
  • They are investing in automation.
  • Their website may be viewed here.

DIGITAL BANKS TO WATCH

  • Tide, launched in 2017, operates in the business banking market with 86,000 small and medium business (SME) customers. They process over 11 million transactions per month, and have an annual transaction volume of almost $7.3 billion. They have a goal to secure 8% of the business banking market by 2023. They have 1.4% of the UK's SMEs as clients. They received a $73.4 million dollar grant to increase their business offerings.
  • Soldo currently has over 40,000 SME businesses and was founded in 2015. They have raised a total of $83.2 million in funding over 6 rounds, with the latest being July 2019. They claim to offer a world-class technological, regulatory and operational platform.
  • Mettle offers a free business account for small businesses, sole traders, and freelancers. They were founded November 5, 2018.

MARKET INFORMATION

  • Britain is not saturated with big banks and branches like the US, leading to a favorable area to offer digital banking.
  • The UK was an early adopter of digital banking.
  • British SMEs account for 99% of all private companies.
  • Fintech funding deals are on the decline in the UK. In 2017, there were 239 fintech, In 2018 there were 226, and this year there have only been 87.
  • The global digital banking market is expected to grow at a CAGR of around 3.8% between 2019-2025.
  • The business banking market in the UK is over $17 billion. There are 24.5 million SMEs in the UK, and the four largest banks have a 90% market share.

RESEARCH STRATEGY

To locate the top challenger digital banks, we first located industry articles that stated who the best digital challenger banks were. To be included in the next stage of our research, a bank had to be mentioned multiple times. Once we had our list, we then researched each bank separately to obtain an across the board metric. This proved difficult, as some banks did not list their annual revenue. We believe this happened because some banks are operating at a loss due to how new they are. Our next approach was to order them by their customer numbers. This again proved difficult, as the biggest bank we researched did not separate their customer base, and some banks only do business banking. Active users and monthly transactions also ran into the same issues. To combat this problem, we holistically looked at all the metrics we obtained to get our top listings.

To assess the market penetration, we began by locating industry reports and market studies. This did not give us enough information to triangulate a market share, as most of the information was global. Consulting business press releases from Globe Newswire, PR Newswire and from each business’ website gave us the bulk of our information. To finish our research, we researched available banking information from the government. Again, this gave us a few facts. Ultimately, we were able to put together a snapshot of the market, but not exact figures.
Sources
Sources

From Part 01
Quotes
  • " In the UK, according to the Federation of Small Businesses (FSB), small businesses accounted for 99.3% of all private sector businesses at the start of 2017 and 99.9% were small or medium-sized (SMEs), while the combined annual turnover of SMEs was £1.9 trillion, 51% of all private sector turnover in the UK. "
  • "This is reflected by 57% of SMEs that now want to move to an online/mobile banking business environment and the fact that in 2017 40% of all SME financial transactions were completed online or via mobile. "
Quotes
  • " In 2018, 74 percent of all individuals used the internet for online banking, but usage was higher among those who had used the internet within the last three months, at 78 percent."
Quotes
  • "Worldpay research in 2017 on UK mobile payments reveals the extent of growth in the rapidly developing market with an estimated £975 million spent over 126 million in store transactions."
  • "According to research from Cardlytics in 2018, the UK businesses winning most from the rise of mobile payments are quick-service restaurants (11.3%), coffee shops (11%), public transport (11%) and bars and pubs (9.25%). Meanwhile, separate research from Worldpay indicates fashion retailers have seen the most growth in mobile payments with an increase of almost 500% between 2017-2018. "
Quotes
  • "The mobile payment industry in United Kingdom is expected to record a CAGR of 6.9% to reach US$ 408,020.5 million by 2025. The mobile wallet payment segment in value terms increased at a CAGR of 7.0% during 2018-2025."
Quotes
  • "This year, we expect only 7.2 million people in the country will use mobile payments, making up 13.0% of the population."
Quotes
  • "The top ten industries in the United Kingdom include finance and banking, information technology, construction, oil and gas, government, healthcare, manufacturing, wholesale and retail, transportation and logistics, and education."
Quotes
  • "Currently, in the UK, 22% of e-Commerce payments are made via e-Wallets. Apple Pay, Samsung Pay and Android Pay are just some of the recent entrants into the e-Wallet space."
From Part 08
Quotes
  • "This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited liability company to start up and formally operate in each economy’s largest business city."
Quotes
  • "Private limited companies are not permitted to offer shares to the public. They are, however, the most popular structures for a small business. Public limited companies (PLCs) may offer shares to the public to raise capital."
From Part 11