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LSE backs new review of fintech industry

written by Bella Palmer
lse

The review, launched by Fintech Week London (FTWL), will bring together key industry partners, regulators, investors and fintech companies to ensure the industry ‘continues to thrive’

The London Stock Exchange is backing a new review into the rise and fall in funding and valuations in the fintech industry over the past few years.

The review, launched by Fintech Week London (FTWL), will bring together key industry partners, regulators, investors and fintech companies to ensure the industry ‘continues to thrive’.

Following record investment levels in 2021, there has been a sharp decline in fintech backing in 2022, with firms struggling to raise funds.

There has been an unfortunate growing trend of falling valuations, staff layouts and recruitment freezes across the industry as a whole.

The ‘ground-breaking’ industry review hopes to address this explosive growth and rapid decline in funding and valuations within the fintech industry.

Of the many topical issues affecting the international fintech space, the recent predicted downturn in VC funding is one that affects the entire ecosystem, FTWL CEO Raf De Kimpe said.

Fintechs at all stages of growth and development will feel the impact of changing valuations, slower funding rounds and hesitancy from investors, he said.

He explained this will have a knock-on effect on tech development, talent acquisition and retention, and the flow of innovative financial solutions to the end user.

He called on the community to share its thoughts on how best to protect the fintech industry in this independent review.

We want to know how the industry can move away from hyper-valuations and unsustainable business models to refocus on financial products and services that improve the world in real-time, De Kimpe added.

The review has been backed by London Stock Exchange, the Fintech Times and fintech specialist PR firm SkyParlour, with more expected to follow.

In a particularly uncertain economic climate the government wants fintech to ‘define’ the UK’s post-Brexit economy, PHA Group account director Rhys Merrett commented.

While the country is seen as a global fintech hub, he said, the myriad of issues facing the industry have put it at a crossroads, which is what prompted the launch of the review.

For fintech to remain a core industry of the UK, it needs to transition from growth to consolidation. A reduction in valuations and investment is not necessarily a negative trend, Merrett said.

If anything, it ensures the sector can collectively take a step back and properly evaluate its long-term direction. After all, with Web3 technologies like blockchain on the horizon, we are very much likely to see a new wave of fintech innovation in the coming years, he said.

He called for the review to determine how momentum can be maintained to allow the industry to remain on a constant growth trajectory, rather than going through ‘volatile’ peaks and troughs, ‘which are not conducive to investment flows’.

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