Next Steps in Unlocking the Potential of Welsh Fintech Innovation

As we start 2025, the fintech sector in Wales is at an inflection point. Wales has established a strong foundation, with notable advancements in areas like price aggregators, insuretech and digital banking. Yet there remains significant room for growth, particularly in addressing the gap between fostering start-ups and scaling them into sustainable businesses. 

One of the defining technologies shaping fintech is artificial intelligence (AI). The rapid development of AI is revolutionising financial services, from fraud detection to personalised credit scoring. Applications such as robo-advisory platforms offer low-cost, scalable financial advice that has the potential to democratise access to wealth management. In theory, this could level the playing field, ensuring that financial advice and fund management is available not only to the affluent but also to those who need it most to make the best of limited resources. 

AI’s benefits are clear, but they come with challenges. There is a significant regulatory gap that needs to be addressed, particularly in areas like wealth management and financial advice. Unlike traditional human advisors, where accountability is relatively straightforward, it’s much harder to determine responsibility when an algorithm makes a decision that leads to a poor outcome. Who is to be held accountable: the software developers, the company marketing the product, the algorithm itself or the individual users? Until regulators catch up, the widespread adoption of these tools will face hurdles. 

Equally, the rise of AI has brought with it a concerning level of hype. Many businesses are attaching the terms “AI” or “ML” to their operations without offering genuinely innovative solutions, reminiscent of the dotcom bubble of the early 2000s. This risks undermining genuine advancements in the sector and inflating valuations based on little more than marketing spin. 

For fintech in Wales to thrive, there must also be concerted efforts to address the funding challenges that plague the ecosystem. Wales has a vibrant start-up culture, but the transition to scale-ups is often stymied by the lack of local venture capital. Most VCs are London-based, which leaves Welsh companies at a disadvantage when seeking growth funding. Without this critical support, the full potential of the fintech sector in Wales risks going unrealised. 

In this context, universities across Wales have a vital role to play in unlocking the sector’s potential. Many institutions are already modernising their curricula to include AI and related disciplines, equipping students with the skills needed to succeed in an evolving job market. However, more needs to be done to integrate new technologies into lifelong learning solutions, such as micro-credentials, which allow professionals to upskill continuously throughout their careers. 

Collaboration between universities, government, and industry is essential to ensure Wales remains competitive in AI and fintech. Policymakers need to provide a regulatory framework that encourages innovation while protecting consumers. Universities must accelerate their research and training initiatives to meet the sector’s needs, and industry leaders must invest in the long-term development of their workforce and technologies. 

The opportunities for fintech in Wales are immense. Innovations such as low-cost personalised financial services, more secure digital transactions, and accessible financial advice have the potential to redefine the sector. At the same time, the challenges – whether regulatory, financial, or educational – are not insurmountable but require collective action. 

Wales has already proven it can be a leader in fintech. With the right support, the sector can grow further, solidifying its reputation as a hub for financial innovation while contributing significantly to the Welsh economy. This year is an opportunity to make strides towards that goal, and I look forward to seeing how we rise to the challenge.