Beginner’s Guide on Starting a FinTech Business in the United Kingdom

Starting a Fintech Business in the United Kingdom

With around a million people working in the financial sector in the UK, the country is one of the most attractive destinations for fintech companies. Even if the market is competitive, starting a fintech business in the United Kingdom is still a great idea because of the opportunities that lie in the field.


What is a Fintech Business?

Fintech is the short form for ‘financial technology.’ It means applying Information Technology to Finance to make financial tasks more efficient and effective.

Fintech has a wide range of applications. It can assist companies, their owners, consumers, and the general public in managing their financial operations, processes, and lives with the help of specialised software and algorithms. It is a very broad concept; for example, bookkeeping software, as well as cryptocurrencies, are based on financial technology.


Industry Trends to Know for Starting a Fintech Business in the United Kingdom

When starting a fintech business in the United Kingdom, you need to know exactly what you want to offer with your solution. The trends that you need to follow also depend on that. However, in a general view, these are the trends and the predictions that can be useful for you:

Artificial Intelligence & Machine Learning

Artificial intelligence (AI) and machine learning are to thank for most of the innovations in the fintech industry. With artificial intelligence, human problems can be solved by machines faster and with more efficiency. Some of the ways that AI helps are with decision-making, automated customer support, insurance management, automated virtual financial assistance, etc.

One of the best examples of AI can be chatbots. They act as personal virtual assistants in software and websites, adhering to the end-users command and also helping them with general issues. On the other hand, AI can help Fintech Industries by giving important information about the behaviours of the customers that they can leverage that to make their products better.

Digital Banking

The COVID-19 pandemic changed the world into a new normal. Banking and finance are some of the sectors that the virus affected significantly. It changed some of the previous trends and made way for new ones, and digital banking is now going to be more important than ever.

Forget about going to the bank; these days, people are unwilling to even visit the ATM. With this, banks not only in the UK but around the world have created websites and apps, and the ones that already had apps are updating and making them more stable and useful. Thus, if you are thinking of offering financial services, this also means that you need to have access to digital banking.

Big Data Analysis

Big data analysis, as a part of Artificial Intelligence, allows companies to track their customer behaviours in a variety of details. In simple words, Big data basically means a large amount of data, and big data analysis is the process of using a particular software to collect, manage, and analyse the data.

Big data analysis can be of various types, like Customer, Predictive, and Real-Time analysis. It allows fintech companies to be more personally connected to the customers, which in turn increases the company’s decision-making and efficiency. In other words, with big data analysis, you will be more familiar with your customer expectations over the changing times and needs.

Blockchain and Cryptocurrency

Many use blockchain and cryptocurrency interchangeably, even if they are different. However, both combined, they become one of the most important trends that you should know while starting a fintech business in the United Kingdom.

Blockchain is a technology that allows people and companies to send and receive money anonymously. It is a decentralised ledger of transactions, meaning that you can use blockchain to send money with passing a central authority. Popular cryptocurrencies like bitcoin are currencies that use blockchain.

As we can see with the popularity of cryptocurrencies, especially bitcoin and others like XRP and even dogecoin, many people may want to use and invest in cryptocurrencies. Thus, you should have the facility for that.

More Security

Security is one of the biggest challenges, yet one of the biggest necessities in the Fintech Industry. When it comes to the blockchain as well, as we discussed before, people use it to remain anonymous to make their transactions more secure. Now, that is one way of implementing security, but there are other measures you need to take.

Fraud, identity theft, website hacks, etc., are becoming frequent these days. Things like these can be especially chaotic if it happens to a fintech system. Thus, when you enter the industry, you need to understand the workings of various tools that help with risk management, identification verification, fraud mitigation, etc. You may also need to hire security experts or even allow bug bounties to find vulnerabilities in your software or website.

Cloud Computing and Data Processing

There are numerous cloud computing and data centre services in the United Kingdom. You may choose one depending on your needs as both cloud computing and data centre services are very important for your fintech business.

Data centres allow companies to store a large amount of data. Also known as data warehouses, they can offer other services like data analysis, data mining, data modelling, etc., all of which can help you to make your daily operations efficient and understand your customers more. On the other hand, cloud computing means storing your data on the cloud- or in servers located outside your premises. They tend to have more space and security than in-house storage.


Steps for Starting a Fintech Business in the United Kingdom

After understanding the trends, you now need to have some knowledge about the company registration process. In most cases, you would like to work with a United Kingdom corporate service provider who can help you to register a company. However, you still need to know the basics.

Find Your Niche

Fintech isn’t a specific kind of business. It can mean anything related to technology and finance. Based on your competitive advantages and team skills, you decide to open a solution for digital payment, trading, and investments, insurance, mobile banking, personal financial management, etc.

If the market is right, you can decide to make your solution more specific. For example, you can start an app that helps users with car insurance. Similarly, you can start a personal financial management software for small business owners.

Find the Right Location

Most of the fintech services are online, but that doesn’t mean that location isn’t the key. There are two things to remember when finding a location. You have to choose the right place to build your business, and you have to choose the geographical area you want to operate in.

Ensure that there isn’t a lot of competition or at least the competition that overpowers you. Also, you need a registered address before starting a business in the UK.

You can discuss it with your company incorporation services provider to know more about it.

Settle on a Company Name and Type

You can open a one-person company or a partnership. Similarly, you can open a private limited company. This all depends on the organisational structure you want, which is based on the size of your business. The limited company is the best company if you want a transparent structure that can protect your personal assets.

For the company name, you have to choose a name that isn’t confusing or too long. Offensive and sensitive words aren’t allowed as well. Make sure that you have a couple of alternatives and don’t make your name the same or too similar to existing companies.

Register Your Company

Now that you have figured everything else out, you have to register your company. There isn’t really a minimum investment needed. However, if you are a foreigner, you may have to apply for a visa or a pass to come and start a company in the UK.

The registration process can be kind of confusing for first-timers. If you are new or don’t want to spend time contemplating the process, consider hiring a professional team. For more information, check company registration in United Kingdom.


What are the Licences Needed for Starting a Fintech Company in the United Kingdom?

You need to get a licence before starting your company operations in the UK. This is a sensitive issue, so it will be better for you to consult a legal expert. However, for an idea, here are some licences you may need based on the things you do:

  • Notification to Process Personal Data for the Information Commissioner’s Office (ICO): If your organisation processes personal data in an automated form.
  • Public space surveillance (CCTV) Licence: A public surveillance licence is needed to carry out manned guarding activities with the use of CCTV equipment.
  • Financial Conduct Authority (FCA) Authorisation: To conduct a finance business.
  • Financial Services Authority (FSA) Authorisation: To undertake regulated financial activities or offer consumer credit.
  • Consumer Credit Licence (All UK): To allow using credits.
  • Money Laundering Registration (All UK): To run a business subject to money laundering requirements.
  • Licence to Use Music on the Radio: If you want to broadcast copyright music for your advertisements on the radio.
  • Licences to Use Music Online or on Mobile Technology: To use copyright music on mobile technology; for example, on your apps.
  • NLA Media Access Limited Business Licence: Licence from the NLA Media Access Limited to make copies of newspaper content for internal use in a business.
  • Authorisation to Act as an Insolvency Practitioner (England, Scotland & Wales).
  • Become a Registered Auditor: To provide company accounts auditing services.
  • Permission to Distribute Leaflets: To distribute brochures of your services.

Note: This is only a guideline on the licences you may need, based on your operations. Once again, you must work with a legal practitioner.

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