The UK is the world’s second leading centre for fintech and much of this success to date is down to the rise of three homegrown challenger banks: Revolut, Monzo and Starling — with all three eyeing IPOs.
This is not to say that everything has been plain sailing. Starling’s recent 25 per cent profit drop, tied to its exposure to the UK’s Bounce Back Loan Scheme, highlights that success is rarely linear.
Now, as attention shifts to London’s next fintech wave, there are important lessons for fintech founders and their backers to draw from the successes, and mis-steps, of these first-generation disrupters.
Growth alone is never enough
Simply put, growth must be underpinned by compliance and differentiation.
First, tomorrow’s most successful fintechs will be built with compliance from day one. Entering highly regulated markets demands early focus on governance, transparency and internal controls. This includes having boards with independent voices, ensuring reporting integrity, and avoiding overly concentrated decision-making structures that can backfire when under pressure.
UK fintech Lanistar’s struggles after regulatory warnings from the FCA underscore the importance of embedding regulatory expertise early — either within founding teams or through initial hires — to ensure robust anti-money laundering and ‘know your customer’ processes before scaling.
Secondly, a relentless focus on customers provides the insights needed to refine the product road map and differentiate from the competition. The most successful fintechs constantly expand their offerings as they scale and create products that are sticky with their digital-native customers.
Starling knows this all too well, having initially led SME banking but lost ground as competitors introduced more engaging features. Monzo thrived through distinctive branding and millennial-first features while maintaining user-centric UI. Revolut excelled through community-driven product innovation and strategic perseverance in business banking.
Thirdly, the best fintech founders and advisers around them recognise the strategic value of brand storytelling. This is not about marketing fluff. Strategic communication on partnerships, product and hiring acts as signalling to partners, investors and regulators. This helps fintechs shape their own reputation rather than lose control of the narrative, which can happen when any start-up is quiet for too long.
Proactive communication also demonstrates that transparency is core to a mission, helping build trust and long-term credibility.
Regulatory advantage
The next generation of UK fintech has a major advantage over the last: they are innovating within a far more mature regulatory ecosystem.
The FCA has already introduced a wave of landmark regulatory frameworks: the 2018 open banking mandate, which positioned the UK as a global pioneer in secure API-driven data sharing, and the forthcoming Buy Now, Pay Later (BNPL) scheme, which will enforce compulsory affordability checks, tailored consumer protections and Financial Ombudsman Service recourse for third-party BNPL schemes, marking a major step in bringing short-term credit fully into the regulated fold.
For new fintechs, these frameworks provide clearer guardrails, level the competitive playing field, and reduce regulatory uncertainty, making it easier to design compliant products from the outset.
The FCA’s regulatory sandbox further helps start-ups quickly test and refine new products with consumers under regulatory supervision, reducing time to market and improving consumer outcomes.
Paving the way for the next generation
With the largest UK fintechs approaching IPOs, attention turns to the next generation. London’s fintech future hinges on start-ups and investors leveraging lessons from past successes: prioritising compliance, product innovation and strategic branding alongside growth.
Early-stage fintechs that embed these principles into their DNA will thrive within the UK’s evolving regulatory ecosystem, ensuring London maintains its global fintech leadership.
Ewa Kompowska is VP at RTP Global