Optimism and investment among FinTech SMEs holds key to industry’s growth in 2024
By Mike Tomlinson, Managing Director, Three Business.
Small and medium businesses are the lifeblood of the UK economy and local communities. They account for three fifths of UK employment, half of private sector turnover and 99.9% of the total business community.
In the fintech industry, they play an equally important role in driving innovation. By adopting changes at a quicker rate than larger companies, smaller businesses often find themselves at the forefront of developments and helping the sector to grow.
But those vital contributors have not had an easy ride in the past few years. The pandemic, political uncertainty, supply chain issues and geopolitics have added to the day-to-day pressures of running a business and realising their true potential.
Unsurprisingly, when talking to the small business leaders in the financial services sector for Three Business’ recent Ambition Index report, 70% told us that the uncertain environment has intensified the risks and pressures of running their business.
We commissioned this report, underpinned by economic analysis and polling, because we wanted to get a full picture of and shine a light on how SMEs are feeling coming out of this difficult period.
What we found confirmed what we already knew to be true: SME business leaders have incredible resilience and a clear sense of mission. Entrepreneurs are (and have to be!) an optimistic bunch, but even so, it was surprising to see the extent of positivity and ambition we saw coming out of the data.
Despite the ongoing external challenges, three quarters of financial services businesses said that they are feeling more confident in their business having survived the fallout from the pandemic and the ongoing cost of living crisis. Even more encouragingly, 81 % said that they are planning to ramp up investment in the year ahead.
This optimism among the sector’s small businesses was backed up in our economic analysis. Looking at their predictions, they expect to achieve an average of 19% year-on-year revenue growth in 2024, bringing overall banking and finance SME turnover to £135.2 billion.
With increased investment and a desire to grow, the opportunities for fintech companies are clear. More than a quarter of businesses that we spoke to in the sector said that the adoption of AI and other digital technologies are among the key areas in which they plan to invest in the year ahead, which is likely to drive even greater growth within the industry.
It is so exciting to see fintech SMEs fired up for next year and ready to invest, grow and face anything that’s thrown at them. Running a business has always required a huge amount of energy and agility, but recent years have truly tested leaders and shown that even the best laid plans can be disrupted by outside pressures.
At Three Business, we work in partnership with a wide range of SMEs to make sure connectivity is an enabler for growth. We are proud to be a small part of these businesses’ journey, taking one small thing off their plate and allowing them to do what they do best.
The impressive level of ambition and drive bodes well for SMEs, the UK at large and the fintech sector in particular. We hope to see legislators, industry and communities echoing this optimism and providing the support that the sector’s SMEs need to make sure their hopes and plans are realised, and 2024 is the successful year we all know it has the potential to be.