Market Highlights: A Record-Setting Day on Wall Street
November 12, 2024
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Neobanks like Monzo, Starling Bank, and Revolut have revolutionised banking by operating entirely online. Offering features such as instant notifications, expense tracking, and currency exchange, these platforms cater especially to younger demographics and freelancers seeking convenience and flexibility.
Revolut, for instance, reported a remarkable surge in pre-tax profits to £1 billion in 2024, more than doubling the previous year’s £438 million. Revenues increased to £3.1 billion from £1.8 billion, fueled by a rise in cryptocurrency trading and a substantial increase in customer numbers, which reached over 50 million, with 15 million new users added in 2024.
Since its introduction in 2018, open banking has empowered UK consumers to share their financial data securely with third-party providers. This has led to the development of apps that consolidate multiple bank accounts, provide personalised budgeting tools, and recommend financial products tailored to individual needs.
Building on this foundation, the UK is now developing its open finance framework under the Data Protection and Digital Information Bill. This initiative aims to expand data sharing beyond banking to encompass a wider range of financial services, including insurance, investments, and pensions.
Platforms like Nutmeg and Moneyfarm utilise algorithms to manage investment portfolios based on user-defined goals and risk tolerance. These robo-advisors offer a cost-effective alternative to traditional financial advisors, making investing more accessible to a broader audience.
In 2025, AI-powered wealth management is expected to provide hyper-personalised financial advice, offering customised investment plans in real-time, considering individual financial goals, risk tolerance, and market trends.
Artificial Intelligence is playing a pivotal role in enhancing security and efficiency within the financial sector. UK banks and fintech firms employ AI systems to monitor transactions in real-time, detect anomalies, prevent fraudulent activities, and assess creditworthiness, thereby reducing losses and improving decision-making processes.
For example, NatWest has formed a groundbreaking collaboration with OpenAI to boost its digital assistants and customer support, making it the first UK bank to engage in such a partnership. This initiative is central to NatWest’s strategy to enhance customer experience, reduce costs, and combat financial fraud.
Beyond cryptocurrencies, blockchain technology is being adopted for various financial applications, including speeding up cross-border payments, securely recording transactions, and supporting regulatory reporting. Its ability to increase transparency and reduce operational costs makes it a valuable asset for financial institutions.
Fnality International, a blockchain-based payments firm backed by major financial players including Goldman Sachs, UBS, Barclays, and BNY Mellon, launched its blockchain-based sterling payment system in December 2023 with clients such as Lloyds, Santander, and UBS. The company now plans to expand in the U.S. with a blockchain-based dollar payment system slated for late 2025 or early 2026.
Embedded finance integrates financial services directly into non-financial platforms. UK companies like Zopa and Klarna are leading this trend by offering services such as buy-now-pay-later options, loans at checkout, and integrated payment solutions within e-commerce platforms, enhancing the consumer shopping experience.
The embedded finance industry in the UK is expected to grow by 6.3% annually to reach US$6.47 billion in 2024. The embedded finance industry is expected to grow steadily over the forecast period, recording a CAGR of 19.5% from 2024 to 2029.
Regulatory Technology (RegTech) tools assist financial institutions in automating compliance processes. In the UK’s heavily regulated financial environment, these tools help firms stay compliant by automating reporting, monitoring regulatory changes, and managing audit trails, thus reducing the burden on compliance teams.
In 2025, advancements in digital identity solutions, including biometric authentication and AI behavioural analysis, are enhancing security in banking, digital payments, and peer-to-peer lending.
Peer-to-peer (P2P) lending platforms like Funding Circle and Zopa connect borrowers directly with investors, offering an alternative to traditional banking loans. These platforms provide transparent terms and have become increasingly popular in the UK, catering to both individual and business loan needs.
Zopa, an online bank established in 2005 and launched as a bank in 2020, has secured £68 million in funding from AP Moller Holding, the owner of Maersk. This investment will support the launch of a new current account and advancements in artificial intelligence (AI) technology to enhance customer interaction.
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