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FinTech

Fintech Ecosystem 2021: analysing the sector.

We want to map the FinTech landscape because SIC codes are not useful to understand this emergent economy.

The task has provided us with critical insights on the structure of the sector, its finances and its geographies, showing a different side of FinTech. Besides, our findings prove the validity of RTICs to produce information on industries misrepresented by existing frameworks. We have captured a total of 2,763 companies in the FinTech space across 8 taxonomy groups. Hence, our data has allowed us to create unprecedent knowledge on the sector.

FinTech RTIC

Our RTICs do not present economic sectors in a hierarchal fashion. Therefore, our segments are not mutually exclusive, meaning that a company can be captured in more than one taxonomy group. This disruptive way of understanding industries adapts to current economic practice, which is evolving out of rigid supply chains. The bar chart below represents how many companies were captured in each segment.

However, we have also prepared a chord diagram to visualise the interactions among taxonomy groups. The chord diagram only represents the companies in each taxonomy that were also captured in a different category.

The diagram quickly tells us that LendingTech is the most specialised segment, as far as only 7 LendingTech companies were also captured in a different taxonomy group. In contrast, Wealth Management is the segment with more and larger relationships. Therefore, RTICs’ approach to emergent economies as non-hierarchal hubs is supported by our FinTech data.

Financial Insights

Definitions of the FinTech sector vary, causing estimates of its total value to vary from £4.7tn to a more modest $309.98bn. A key driver of this difference is the decision whether or not to include high street banks in the sector definition, since their valuation has a large impact. Considering Imerman and Fabozzi (2020) taxonomy, we were convinced they are part of the sector, as they are actively creating their own Fintech products and digitally transforming their core business practices and services into FinTech. Using this definition of the sector, our platform estimates the value of the UK FinTech sector to be £332.9bn with an estimated profit after tax £24.6bn, making FinTech one of the most valuable sectors in the UK economy.

However, not all segments perform the same way. Below a graph that visualises net worth for each of them.

PayTech is the sub-sector with the largest net worth. This is not surprising if we consider that people are increasingly using digital payments on day to day expenses. Besides, our data suggests that the sector employs approximately 224,000 people. Each employee produces an average of £110,000 of the after tax profit, identifying FinTech as an efficient sector from an economic standpoint.

FinTech geography: a local authority view.

Our data also allows us to produce spatial views of the industry. The map below represents local authority boundaries and the number of FinTech companies located within.

We can observe that most FinTech companies are located in London. The local authority City of London hosts 445 FinTech companies, 314 are in Westminster and 180 in Tower Hamlets. This is geography is consistent with the fact that London is the financial centre of the UK, and this will be the region where FinTech products are more in demand.

Wrapping up FinTech

Our RTIC data helped us to understand the size, structure and characteristics of FinTech. This is a revolutionary approach to emergent economies that does not only adapt to modern economic dynamics but can readjust to new scenarios.

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