The Vital Role of FinTech Boards in the UK’s Growth and Innovation Landscape
A recent report by EY and Innovate Finance, titled Setting the Pace or Keeping Up – Are FinTech Boards Future-Fit?, highlights the crucial role that boards play in steering the long-term growth and innovation of the UK’s FinTech sector. As the industry continues to evolve, the findings reveal significant gaps in skills and diversity that could hinder progress.
Skills Gaps in AI and Fundraising
One of the most pressing issues identified in the report is the lack of essential skills at the board level. Nearly half of the surveyed FinTech executives (47%) reported that their boards lack adequate expertise in Generative AI, a technology that is rapidly transforming the financial landscape. Furthermore, only 42% of respondents felt their boards possessed the necessary skills in fundraising, with 30% highlighting this as the most significant gap.
To address these deficiencies, 34% of firms are actively seeking new talent, while 21% are focusing on upskilling their current board members. This proactive approach underscores the importance of equipping boards with the right expertise to navigate the complexities of the FinTech environment.
Gender Diversity: A Continuing Challenge
The report also sheds light on the gender diversity issue within UK FinTech boards. Currently, the top 50 FinTech companies average only 22% female representation at the board level, falling short of the Financial Conduct Authority’s (FCA) recommended minimum of 40%. Alarmingly, 37% of surveyed firms reported having no women on their boards, and a mere 3% indicated an equal or better ratio of female to male board members.
Anita Kimber, UK Partner and FinTech Policy and Ecosystem Leader at EY, emphasizes the importance of diverse perspectives in boardrooms. She notes that while many FinTechs focus on short-term growth, long-term strategic guidance from boards—underpinned by diverse skills and experiences—is vital for sustainable success.
The Importance of Strategic Guidance
The report highlights that effective boards should prioritize strategic, long-term planning while balancing the needs of investors and stakeholders. Although 66% of board members believe their firm’s purpose is embedded within the organization, there is a disconnect when it comes to delivering on key priorities. For instance, while two-thirds of respondents cite customer engagement and service as a priority, only 19% feel they are executing this effectively. Similarly, 78% recognize the importance of Environmental, Social, and Governance (ESG) initiatives, yet only 64% believe they are delivering on these commitments.
Recommendations for Accelerating Progress
To help FinTech firms enhance their board effectiveness, the report offers several actionable recommendations:
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Appoint a Consumer Duty Champion: Designate a board member who understands regulatory requirements and the customer perspective to ensure that consumer interests are prioritized.
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Focus on Purpose: Create a strategic board-level emphasis on the firm’s purpose to positively influence culture and attract customers and investors.
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Reset Diversity Initiatives: Shift the tone from the top regarding diversity to promote broader thinking and perspectives, ultimately driving growth.
- Make AI a Core Focus: Position AI as a central business focus and growth driver to stay competitive in the evolving market.
The Growing Impact of FinTech in the UK
Janine Hirt, CEO of Innovate Finance, points out that since 2008, the FinTech sector has played a pivotal role in democratizing financial services. Today, 80% of UK adults use at least one FinTech tool regularly, and nearly 60% of all SME lending is conducted by FinTechs, challenger banks, or alternative lenders. Despite a global downturn in investment, the UK FinTech sector continues to attract more investment than all other European countries combined.
To maintain this momentum, Hirt stresses the importance of building effective boards from the outset of a startup’s scaling journey. By prioritizing board effectiveness and diversity, FinTech firms can ensure they are well-equipped to navigate future challenges and seize opportunities.
Conclusion
The findings from the EY and Innovate Finance report underscore the critical role that boards play in the success of UK FinTechs. By addressing skills gaps, enhancing gender diversity, and focusing on strategic guidance, these firms can position themselves for sustainable growth and innovation in an increasingly competitive landscape.