The early 2020s experienced a growing optimism and interest in fintech from institutional players. More than 80 percent of global financial services companies planned to increase fintech partnerships throughout the next three to five years. However, reality has taken a different turn.
In 2023, global fintech VC funding continues to fall, with a nearly 50 percent decline year-over-year in the first six months. The UK mirrors this trend, with a staggering 57 percent decline in VC funding since 2022.
As highlighted by the Financial Times, institutional investors’ retreat from startup companies has prompted Venture Capital Trusts (VCTs) to engage in longer commitments. KPMG predicts that professional investors will keep their spending low and most likely avoid down rounds as much as possible. In these uncertain and fragile times, the UK fintech industry desperately needs support, emphasising the critical role of fintech PR.
Why the UK needs fintech
When it comes to financial innovation, countries with an advanced fintech landscape can witness major benefits. Fintech is challenging traditional banking norms, compelling them to innovate in order to remain relevant and gradually move away from revenue streams traditionally derived from market inefficiencies. For consumers, this translates to potentially improved access to superior services. These changes also raise the bar for regulators and supervisors. While many fintech firms remain relatively small, they have the potential to rapidly expand into riskier client bases and business segments compared to their traditional counterparts.
In times of declining VC, it becomes crucial to engage in discussions about fintech—encompassing technologies, innovations, and emerging startups. This helps to raise awareness among a broader pool of potential investors, encouraging their active involvement in the exciting realm of financial advancements. So, how can PR contribute to this mission, and why is investing in communications so crucial?
PR budget cuts don’t do fintech justice
The reason is quite apparent—PR serves as an exceptional tool, not only showcasing the brand and technology behind it but also demonstrating the vibrancy and continuous evolution of the fintech market as it enhances traditional financial processes.
During times of crisis, most fintech companies tend to implement budget cuts and downsizing, often with PR and marketing teams among the first casualties. We’ve witnessed this unfortunate trend with widespread layoffs in the fintech sector. However, if this sobering trend has taught us anything, it’s the importance of strengthening the PR teams and never underestimating the influence of the media.
While cost-cutting measures may seem logical on the surface, they prove ineffective in addressing the reputational challenges that fintech businesses may encounter during economic uncertainty, including the VC decline.
As we see, the fintech industry is facing a challenging time, with global VC funding continually falling, particularly in the UK. Yet, the potential benefits of fintech for both consumers and regulators make it an industry that must be supported. Now more than ever, it is time to recognise the critical role of fintech PR and invest in it to build a stronger and more resilient industry.