How will ESG FinTech develop in the next 5 years & UK FinTech seed deal activity falters in Q3 2023

Top Story of the Week

How will ESG FinTech develop over the next five years?

Climate change is one of the most critical challenges humans need to overcome. Financial institutions play a major role in the world’s shift to a greener future, and many are stepping up to the plate to prioritise sustainability across their operations.

Read the full story?here.

Research highlight

UK FinTech seed deal activity falters in Q3 2023, more than halving YoY

Key FinTech seed deal stats in Q3 2023:

• UK FinTech seed deal activity reached 37 deals in Q3 2023, a 58% decline from the same period last year
• WealthTech was by far the most active FinTech subsector in the UK during the third quarter with 12 deals
• The average seed deal size saw no change YoY in Q3, remaining at $2.2m

UK FinTech seed deal activity recorded a worrying drop in Q3. In the third quarter of 2023, the number of UK FinTech seed deals amounted to 37, reflecting a 58% decrease compared to the same period in 2022. This is significant because based on FinTech seed deal activity in H1 2023, seed deals were projected 5.1% growth in Europe and the UK was the most active country in Europe during this period with 133 deals, averaging 66.5 deal per quarter. The third quarter results were 44% below this this average. In Q3, the average seed deal size remained constant YoY, staying at $2.2 million.

Vega, a wealth management platform, had the largest UK FinTech seed deal in Q3 2023 after raising $8m (￡6.6m) in their seed round, led by Motive Ventures. The round also saw investment from Picus Capital, Citi Ventures, and No Label Ventures. The round also saw participation from over 60 angel investors, including senior partners from leading investment firms such as KKR, Blackstone, and Permira along with fintech executives with leadership experience at firms such as N26, Trade Republic, and Klarna. With this funding, Vega has emerged from stealth mode. It will use the funds to reshape wealth management. “As a new generation of high-net-worth individuals emerges, we are building the financial products and technological infrastructure the wealth management industry needs to serve them,” said Alexis Augier, founder and CEO of Vega. “Our goal is to provide a unified wealth management platform that transforms the experience for end-users while equipping advisors with institutional-grade solutions.”

Starting from August 1, 2023, the FCA’s (Financial Conduct Authority) Digital Sandbox, after two successful pilot phases, will become a permanent resource for a wider spectrum of innovative businesses, startups, and data providers. This innovative testing environment supports companies in the early stages of product development by facilitating experimentation through proof of concepts. Additionally, the permanent Digital Sandbox welcomes data providers to list their data on the platform, offering them valuable insights and exposure. Previously, this platform was only accessible to participants in pilots and TechSprints. Notably, the Digital Sandbox has proven to be a catalyst for innovation and growth, with more than half of SME participants from earlier phases achieving positive outcomes such as product launches, funding, partnerships, and industry recognition. This permanent Sandbox aligns with a broader strategy to promote economic growth and international competitiveness and offers a range of features including access to high-quality datasets and APIs, robust data security measures, collaborative tools, and an observation deck for interested parties to witness technical testing.

WealthTech was by far the most active FinTech subsector in the UK during Q3 2023 with 12 deals, a 32% share of total deals. RegTech was the second most active with seven deals, a 19% share of deals and InsurTech was third with four deals.

Weekly FinTech deal roundup

CyberTech firms dominate in this week’s funding rounds

This week was a relatively quiet week for the FinTech sector, with FinTech Global reporting on 22 deals across the market and investment totalling $422m.

Read the full story?here.

RegTech news

• How are RegTechs using technology to boost efficiencies and effectiveness? – For financial services companies that are looking to ensure a strong level of stability and regulatory compliance, technology is continuing to come up trumps as the route for them to become more efficient and effective. Read the full story?here.
• How entity resolution addresses the growing challenge of risk data management - RegTech firm Sigma360 has recently outlined how entity resolution can solve for rapidly growing risk data challenges.?Read the full story? here.
• The next wave in digital innovation: How forms automation is shaping customer experience - The realm of forms management is currently witnessing a significant turning point. With the increasing demands of customers and employees, companies are constantly striving to maintain technology costs whilst introducing in-house solutions. Smart Communications, a pioneer in customer engagement, has released a new white paper exploring the role of firms in interaction experience management. Read the full story?here.

Don't Miss Out - AML & FinCrime Tech Forum will be hosted on 5th December 2023!

CALLING ALL FINANCIAL CRIME, AML, FRAUD & COMPLIANCE PROFESSIONALS! THE AML AND FINCRIME TECH FORUM IS BACK.

Find out more?here.

InsurTech news

• Unraveling insurance data standardisation: CDR vs. MRC -?The insurance industry relies heavily on efficient data communication, and two key terms, the Core Data Record (CDR) and the Market Reform Contract (MRC), play significant roles in standardising this communication. While distinct, both concepts contribute to insurance processing and documentation, streamlining operations in the sector. Read the full story?here.
• Smart Communications powers Mountain West’s leap to cloud customer experience -?Mountain West Farm Bureau and its subsidiary 360 Insurance Company have joined forces with Smart Communications. Read the full story?here.
• Insurance transformation: exploring change with Hyperexponential -?In the ever-evolving landscape of the insurance industry, achieving meaningful change extends far beyond the realm of structural shifts and organisational adjustments. The dynamics of insurance, like any other sector, are heavily influenced by the mindsets of employees and the fabric of organisational culture. Read the full story?here.

WealthTech news

• What will the rise of super apps mean for wealth management? - The global super app market was valued at $58.6bn in 2022 and is projected to grow at a 28.9% CAGR to reach a $722.4bn valuation by 2030. Having originated in Asia, super apps are now becoming popular around the world. Read the full story?here.
• Unlock the power of digital currency: How Morningstar can supercharge your advisory services -?Cryptocurrency is rapidly emerging as a vital asset class, transforming the financial landscape. However, the lack of visibility into cryptoassets has hindered advisors from delivering truly holistic advice. Read the full story?here.
• WealthTech’s digital transformation: The 4 biggest trends shaping the sector - WealthTech signifies much more than merely integrating technology into financial planning. At its core, it embodies a pivotal shift that is radically changing the dynamics of wealth management. Read the full story?here.

Don't Miss Out - Global WealthTech Summit will be hosted on 2nd November 2023!

The must-attend event for leaders and innovators across private banking, wealth, and asset management.

Find out more?here .

CyberTech news

• KYND unveils new internal security capability to bolster cyber risk management solution - KYND Limited, a leader in cyber risk management has launched a pioneering new product designed to bolster the ways in which firms can identify areas of risk. Read the full story?here.
• Persona introduces industry-first reusable identity solution with dynamic risk signals -?Persona has unveiled a groundbreaking addition to its identity solutions that will allow businesses to more holistically evaluate risk using dynamic signals. Read the full story?here.
• Island, the enterprise browser market leader, secures $100m in Series C investment -?Island, described as the pioneer and front-runner in the enterprise browser market, has recently made headlines with a major financial announcement. Read the full story? here.

ESG FinTech news

• Switzerland sets its sights on combatting greenwashing in finance -?Switzerland’s Federal Department of Finance (FDF) has declared its intention to put forward regulations to challenge greenwashing in the financial realm. Read the full story?here.
• Climate tech investments decline, but show signs of resilience - Climate tech investments witnessed a 40% decline in 2023 due to factors like economic uncertainty and geopolitical conflicts. Read the full story?here.
• 64% of investors cite financial returns as sustainable investing drive -?The latest report by global investment manager Schroders unveils a decisive turn in the realm of sustainable investing. Read the full story?here.

Other FinTech news

• Framing’s impact on Italian youth’s financial decisions - In a recent post by EveryoneInvested, the company outlined how framing influences the financial perspectives of Italian young people.? Read the full story?here .
• Fenergo study highlights emerging risks in FinTech payments sector - Fenergo, a leading provider of digital solutions for Know Your Customer (KYC), Transaction Monitoring, and Client Lifecycle Management (CLM), has conducted a comprehensive study on the emerging risks in the FinTech payments sector since the introduction of FedNow. Read the full story?here.
• Pathward and TabaPay deepen partnership to enable faster money movement solutions for customers -?Pathward and TabaPay have announced the expansion of their partnership, designed to enable faster money movement solutions for their customers.? Read the full story?here.

Don't Miss Out - AI in Financial Services Forum will be hosted on 16th November 2023!

Cut through the AI hype! Join the most senior-level AI in financial services event.

Find out more?here .