Digital finance company bosses speaking at the event said
they were confident the sector could weather tough economic
conditions, but said pressure was building on business models.
Lisa Jacobs, CEO of fintech Funding Circle, said much of the
digital finance industry had only ever known low interest rates,
but she was confident the industry could still show its value.
(Reporting by Iain Withers and Elizabeth Howcroft; Editing by
Sinead Cruise and Sharon Singleton)
By Iain Withers and Elizabeth Howcroft
LONDON, April 17 (Reuters) - Digital finance firms in
Britain will find it tougher to raise funds due to higher
interest rates and investor caution after the collapse of
U.S.-based technology lender Silicon Valley Bank (SVB),
executives told an industry event on Monday.
The Bank of England has raised interest rates eleven times
since December 2021 in a bid to curb soaring inflation, which
has squeezed living standards. However, the hikes have also led
to higher funding costs for companies.
"The bar on capital has been raised, from an era where there
was 0% interest rates and relatively easy access
to cash and capital," said TS Anil, CEO of British digital bank
Monzo, speaking at the Innovate Finance conference in London.
Now, Anil said, investors are holding companies to higher
standards. He said this was "healthy for the industry because it
takes the froth out."
Anil said last month's banking sector turmoil, sparked by
the failure of Silicon Valley Bank which spooked investors and
caused a rout in global banking stocks, could contribute to a
broad shake-up in the digital finance sector.
The Bank of England is considering an overhaul of its
deposit guarantee scheme, which could include boosting the
amount covered for businesses if lenders hit trouble, The
Financial Times reported on Sunday.
"The Bank of England looking at the regulations... is the
sensible course to do," Sam Everington, senior executive at
British digital bank Starling, told the event in London.
Britain's digital banks will need support over the next few
weeks and months to help them cope with the market fallout from
SVB's demise, trade body Innovate Finance warned last month.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.