A new study by PwC and Startupbootcamp FinTech London into the evolution of the fintech market in the United Kingdom shows a growing number of startups entering the cloud computing sector and fewer looking to build a payments business.
Comparing the applications to Startupbootcamp Fintech London, the study found an increase to 22 percent in 2016 from 14 percent in 2015 in the "Cloud solutions & processes," making it the biggest jump year-over-year. Most of the other categories, such as "Cashless world," "Crowdfunding," and "Alternative lending" saw a minimal change in applications between 2015 and 2016 - with most rising or falling by a few percentage points.
However, applications for the "Emerging payments rails" plummeted to 3% in 2016 from 11% the year before. The study's authors note that the drop in applications in the payments sector is especially pronounced in those startups working with cryptocurrencies.
The study has also found a change in the ambition of the startups entering the bootcamp program: While a few years ago the goal for these young companies was to "disrupt" the industry they were entering in by reinventing traditional models, the strategy now seems to emphasize working with incumbents that are in search of new solutions that will make their business models run more efficiently.
"The emergence of enabling businesses reflects increasing recognition of the potential for FinTech start-ups technologies and solutions to confront some of the most pressing challenges facing incumbent financial services providers - including their high cost-to-income ratios, which have plagued many large banks and insurers for some years now," the authors wrote in their study.
The fintech market in the UK has particularly benefited from the rise of B2B companies, according to the study, which it breaks down into two factions: Enablers and disruptors. The enablers work with larger incumbents to provide solutions that improve a large company's internal processes, while the disruptors are startups that usually service small and medium-sized enterprises that larger incumbents normally don't service.
Read the whole study here.
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