IT Pro is supported by its audience. When you purchase through links on our site, we may earn an affiliate commission. Learn more

Fintech sector voices concern over future funding

Digital Finance Forum survey suggests startups are in for tough times when the government support schemes end in October

Almost half of UK-based fintech founders believe the COVID-19 pandemic will make it harder to raise finances in the next year.

The limited access to capital is seen as the most pressing challenge to the industry, according to a survey by the Digital Finance Forum (DFF).

It comes as the UK, which recently entered a recession, braces itself for potential job crisis, with the government's support packages for businesses also being rolled back. 

Some three-quarters of respondents were positive about how the government has supported the economy so far, with half taking advantage of schemes such as the Future Fund and 61% also tapping into the furlough scheme which ends in October. 

Signs of financial troubles are already upon some fintech startups, as a fifth surveyed by the DFF used the government's bounce back loans. Under that scheme, SMBs can borrow up to a quarter of their annual turnover, which is capped at £50,000. 

However, in April, research from Plexal suggested that many startups were in financial trouble, despite the Future Fund. According to the DFF survey, 37% of fintech founders had sought a bank load but were not able to qualify for one. 

The pandemic has seemingly impacted every industry and even the biggest of fintech firms have not managed to avoid it. In July, Monzo reported that its losses had tripled for the year and warned it might not be able to continue to grow. 

"The UK's Fintech companies have a huge role to play in helping to drive our economic recovery, and in many respects, the sector is just getting started," said Christian Faes, chair of DFF and co-founder of LendInvest. "Even more reason for the government to support the sector to ensure we remain a world leader."

The UK's government has recently launched an independent fintech review to consider how it can continue to grow and maintain an ecosystem that supports growing firms across financial services.

"Digital Finance Forum's results reinforce my commitment to ensuring the UK's pre-eminence as a place for fintechs to do business," said John Glen MP and economic secretary to the Treasury.  

Featured Resources

Four strategies for building a hybrid workplace that works

All indications are that the future of work is hybrid, if it's not here already

Free webinar

The digital marketer’s guide to contextual insights and trends

How to use contextual intelligence to uncover new insights and inform strategies

Free Download

Ransomware and Microsoft 365 for business

What you need to know about reducing ransomware risk

Free Download

Building a modern strategy for analytics and machine learning success

Turning into business value

Free Download

Recommended

Google rescinds mandatory vaccination policy for US staff
Business operations

Google rescinds mandatory vaccination policy for US staff

24 Feb 2022
How coronavirus has accelerated the digital transformation of Britain's public sector
public sector

How coronavirus has accelerated the digital transformation of Britain's public sector

28 Jan 2022
How to manage people successfully from a distance
Business strategy

How to manage people successfully from a distance

27 Oct 2021
Phishing emails target victims with fake vaccine passport offer
cyber crime

Phishing emails target victims with fake vaccine passport offer

21 Sep 2021

Most Popular

16 ways to speed up your laptop
Laptops

16 ways to speed up your laptop

13 May 2022
Preparing for the 3G sunset
Network & Internet

Preparing for the 3G sunset

18 May 2022
(ISC)2 launches free scheme to get 100,000 UK citizens into cyber security
Careers & training

(ISC)2 launches free scheme to get 100,000 UK citizens into cyber security

17 May 2022