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FinTech – insurance risk considerations for start-ups

The UK is looking to the future. It is encouraging to see industries thriving, despite the challenges of the last 12 months.

Financial Technology (FinTech) is one area with clear potential. The UK FinTech industry has more investment than any other country in Europe1,  its revenue is forecast to reach almost £11bn2 this year. Business expansion is driving this growth along with rapid start-up rates. Scotland illustrates this perfectly.

Scotland has over 140 FinTech companies, and its growth is outstripping London.3 Edinburgh has been voted the best place in Europe4 to locate a tech business. Scottish Enterprise, and Scottish Development International are all investing heavily in the sector, and FinTech Scotland has recently partnered with Lloyds Banking Group to open a new incubator hub in Edinburgh. There is clear investment and focus, with training, events and partnerships connecting and driving the growth across all Scotland’s major cities.

What is a FinTech Company?

There are three core types of FinTech service:

Payments services

Technology is evolving fast to keep pace with global business trends and the need for more efficient and secure banking.


Start-ups are increasing, and crowdfunding is the popular practice of raising funds for a venture by obtaining small amounts of money from a large amount of people. This alternative finance provision relies heavily on secure technology.


There are organisations that need physical tech, for example, to enhance machine learning or to deal with cyber risks.

FinTech is complicated. Fast-moving markets and disruptive technology will always lead to new risks. It is therefore essential to have the right FinTech insurance cover to protect against the unknown.


The entire industry is centred around innovative and disruptive technologies. Emerging tech can be unpredictable. Policies need to protect against any technology issues that might result in customer service problems and resulting claims.


FinTech organisations rely on other parties through distribution models and third-party contractors. The sheer numbers mean more risk of negligent advice and client service failures. This all adds up to an extra liability risk that needs to be covered.

Regulatory environment

The wealth of new technology and new products means a whole host of opportunities. These opportunities bring risks and exposures. FinTech companies need to ensure they implement and manage effective risk management systems. As the FinTech market grows and evolves, the regulatory structures will also change - so it’s vital to keep up to date with all updates to UK and international regulations.

Cybercrime and theft

Cybercrime is an issue for any industry dealing online. FinTech involves large funds being moved around, so businesses are particularly vulnerable to monetary theft and larger scale cybercrime. Network breaks and data breaches all need to be prepared for and covered for.

There are a few insurers who will do the above risks as a package with either blended or separate heads of cover on one insurance policy. However, it’s essential to check all of the details because of the complicated and diverse nature of FinTech. Research is important for any potential start-up or growing FinTech company, and a number of specific FinTech insurance policies may need to be taken out to ensure complete cover.

The rapid growth in Scotland is hugely exciting - and with investment and support, it can only continue. The key will be for it to grow securely.

Our dedicated team of technology insurance specialists can arrange the right level of cover to protect against the unknown. We can help. Need advice? Request a call back.



1 https://www.privateequitywire.co.uk/2021/01/20/294677/uk-retains-crown-europes-capital-fintech-investment

2 https://www.ibisworld.com/united-kingdom/market-research-reports/financial-technology-industry/

3 https://www.fintechscotland.com/ecosystem/financial-services/

4 https://www.scotsman.com/business/edinburgh-best-city-uk-launch-start-1450889