Fintech AND AI: THE NEXT MOVE

Can AI help Fintech’s to scale up revenue?

Alex Speedie

January 21, 2025

The UK’s fintech sector is showing signs of maturation. According to a recent report by Innovate Finance, venture capital (VC) funding for UK fintech’s declined by 37% year-on-year, which was higher than the global average drop of 20%. However, at the same time UK-based VC firms raised $11.3 billion for their funds in 2024—a 59% increase from $7.1 billion in 2023—highlighting robust future prospects for UK venture investment across the technology industry.

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Artificial intelligence (AI) firms look to be the big winners, driving much of the investment growth. In 2024, UK-based AI companies secured $4.2 billion in VC funding, up 31% from $3.2 billion in 2023. This accounts for 27% of all VC funding in 2024, the highest share on record for AI startups. Five UK AI firms closed "mega rounds" exceeding $100 million each, reinforcing the UK’s position as a global leader in both fintech and AI. Globally, the UK is now the third-largest AI market and home to leading companies such as Google DeepMind, Darktrace, and Wayve, and increasingly the synergy between AI and fintech is becoming clear.

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The UK Government is prioritising its position as a global AI leader through strategic initiatives. Plans include a 20-fold expansion of the AI Research Resource’s capacity within six months and the creation of AI Growth Zones to support the accelerated development of AI data centers. These initiatives aim to bolster the UK’s innovation ecosystem and position the country at the forefront of AI development.

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The adoption of AI in financial services has also grown significantly, with a 98% increase in AI investments over the past year, according to a survey by Lloyds Bank. Nearly two-thirds (63%) of financial institutions are now investing in AI, up from 32% in 2023. Furthermore, 69% of respondents view AI as an opportunity to gain deeper customer insights in an increasingly competitive landscape, driven by new market entrants, increased funding, and incumbents striving to reclaim market share.

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The integration of AI into fintech solutions is enabling companies to deliver enhanced functionality and user value, paving the way for shifts in revenue models from free to premium tiers. This transformation is fuelling demand for talent, particularly in commercial roles such as business development and account management. A report from Rex Machina revealed a 75% year-on-year increase in job vacancies for these roles, highlighting the strategic importance of commercial expertise in AI-driven fintech.

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Despite the constraints of the Rachel Reeves budget, the UK maintains its leadership position as Europe’s premier destination for fintech and AI investment. Over 67% of VC funding in UK companies originates from international investors. Further strengthening this position, a new AI hub has been launched in London. This initiative, a collaboration between Tech Nation, Merantix, and Techspace, provides a dedicated physical space to support early-stage AI companies and accelerate their growth.

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Indeed, such is the explosive growth in the sector, increasingly there is an understanding by hiring managers that recruiting people with industry experience will not only result in a recruitment process that is longer, similarly candidates will demand higher salaries and aren’t necessarily any better in terms of their skills and competencies (outside of specialist roles that obviously demand industry expertise.) This shift opens doors for skilled professionals to join some of the UK’s fastest-growing and most innovative companies.

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If your New Year’s resolution includes exploring new opportunities, now is the time to act. Our clients offer competitive salaries and dynamic environments where your expertise can drive meaningful impact. Contact us to learn how you can take the next step in your career. Or if you are a hiring manager looking for support with sourcing high calibre candidates, get in touch!

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Fintech AND AI: THE NEXT MOVE

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