Key UK Lending Technology stats from Q1-Q3 2023
• UK Lending Technology deal activity reached 34 transactions during the first nine months of 2023, a 57% reduction compared to the same period in 2022
• UK Lending Technology companies raised $844m in the first three quarters of 2023, a 55% reduction YoY
• The UK accounted for 42% of European Lending Technology deals in Q1-Q3 2023
Although an increase in interest rates is bad for companies raising funds. It creates an interesting scenario for Lending Technology companies as capital becomes more challenging to obtain. Customers will likely tap into non-traditional sources boosting the Lending Technology sector. In the first three quarters of 2023, there were 34 deals in UK Lending Technology, marking a 57% decrease compared to the same period in 2022. In the initial three quarters of 2023, UK Lending Technology companies secured $844m in funding, reflecting a 55% drop compared to the previous year. During the first three quarters of 2023, the UK contributed to 42% of all European Lending Technology deals.
Abound, a consumer lending financial firm, had the largest UK Lending technology deal in Q1-Q3 2023 after raising £500m in their latest venture funding round from K3 Ventures, Hambro Perks Ltd. and SR Ventures. The company intends to use the funds to expand the number of customers it lends to, to grow its headcount, and to develop its business-to-business offer. Established in 2020 under the leadership of Gerald Chappell, who serves as the CEO, and Dr. Michelle He, Abound is a financial service that leverages Open Banking and artificial intelligence to offer loans ranging from £1,000 to £10,000, with repayment terms extending up to 5 years. As of now, the company has experienced consistent monthly growth of 30% and has assisted more than 150,000 customers through its platform. It’s worth noting that Abound operates as the consumer-facing division of Fintern Ltd, which also owns Render, the proprietary technology employed by Abound to facilitate intelligent lending solutions.
According to EY, UK mortgage lending is expected to have slow growth, with a forecast of just 1.5% (net) in 2023 and 2% (net) in 2024, marking the lowest two-year growth rate in a decade. The growth is slightly higher at 2.8% (net) projected for 2025. On the other hand, consumer credit demand is predicted to rise by 6.1% (net) in 2023 due to reduced repayments, but it will slow to 5% (net) in 2024 and further decline to 4.3% (net) in 2025. Bank-to-business lending is expected to contract by 0.5% (net) in 2023, followed by a return to growth at 1.8% (net) in 2024 and 3.7% (net) in 2025.
