AS BANKS and financial services firms in the UK switch their attention from pandemic survival to driving growth, they are increasingly tapping into the booming fintech space as a way to future-proof their business, according to new research.

Almost half (46 per cent) of the UK's financial services firms are targeting acquisitions and partnerships with fintechs in the next year, in a bid to access emerging technologies and boost their product offerings, as consumer needs evolve post-pandemic.

Recent M&A deals include NatWest's acquisition of children's pocket money app RoosterMoney and Royal London's acquisition of robo-adviser Wealth Wizards.

"The UK has one of the most vibrant fintech communities in the world," said Steve Everett, head of payments at Lloyds Bank.

"They are at the forefront of innovation within financial services and, by partnering with them, the UK's largest firms are showing they are committed to developing new products and services to meet changing client needs through collaboration."

More firms expect to grow investment in their technology systems and core platforms over the next 12 months (77 per cent) compared to last year (62 per cent).

And it's clear they see tech investment as a source of similar benefits, with the majority (71 per cent) planning investments to improve client experience, drive growth (60 per cent) and boost productivity (59 per cent).

"The pandemic is not over, but firms are now in a position to focus the lion's share of their investment on growth and supporting clients," said Adrian Walkling, head of financial services at Lloyds Bank.

"Innovation is the bedrock of UK financial services and will help the sector continue to lead the pack."

It's a theme that spreads further than London to corporates across Europe, where banks took part in a record 142 fintech deals last year, according to Pitchbook data.

There's no indication of corporate venture capital slowing down across Europe this year, either, as banks have invested in 98 fintechs so far.

One of those most notable moves was Goldman's £50m investment in the UK's Starling bank in April.

(c) 2021 City A.M., source Newspaper