Shaping the future through fintech investment and innovation at Lloyds Banking Group

What if the biggest opportunities to serve the needs of our customers and clients haven’t even been imagined yet? That’s the challenge and the opportunity as we look beyond today and start shaping tomorrow, and it’s what drives us at Lloyds Banking Group. Financial Services continues to evolve at an ever increasing pace, fuelled by innovative technologies and shifting customer expectations. To stay ahead, we must adapt quickly and embrace the change.  

Where are we now: from investment to tangible impact

Over the past four years, Lloyds Banking Group’s Fintech Investment Team has been doing exactly that, moving fast and embracing change: Connecting with the wonderful, broad and diverse fintech community and partnering with all the teams across Lloyds Banking Group to identify and unlock opportunities that will deliver today’s plans and help shape the future.

In a year when much of the global investment money has gone towards the incredible AI companies we have all been experiencing, we’ve been focused on creating value for our customers, our clients and the wider economy. Our approach is rooted in deep collaboration across the Group, ensuring that every investment aligns with strategic ambitions and tangible opportunities. 

External partners have called our model “stand out” for combining strategic, financial and operational outcomes; investing in fintech is an operating model, not a marketing program. We are here to help all stakeholders succeed: Clients, customers, fintech companies and Lloyds Banking Group.

We take minority (usually <20%) shareholdings in early-stage companies where we identify value for our customers and clients and a solid investment case. The range of companies we work with, and invest in, spans many capabilities, from modern core banking systems and data enrichment to risk management and small business growth tools. 

Take our investment in Coba: By working closely with our business support teams, Coba has become the glue that unlocks value for our SME businesses, enabling multi-currency FX and instantaneous payments. Our market leading risk management capabilities have been accelerated thanks to this partnership. 

Similarly, our investment in Aveni, an AI fintech, has propelled us to the forefront of AI-driven personalisation and decisioning, helping us build a financial services-specific large language model that reflects the unique language of banking, in service of our clients and customers. 

Why fintech investment matters: flexibility, resilience, and growth

The world doesn’t stand still, and neither can we. Making fintech investments is not just about keeping up – it’s about looking ahead.

Staying connected with the market gifts us insight and foresight; signals that allow us to anticipate market change an respond for today and be ready for tomorrow.

Our initial focus was to bring folk together to help solve the challenges and needs of today. As we look ahead, we are expanding our focus to include opportunities that will shape our collective future. This means looking beyond what we know today, and exploring adjacencies and emerging trends that will shape the future of financial services.  In doing so, we are ensuring that we well positioned to address today’s challenges, but also ready to anticipate and capture tomorrow’s opportunities.

This is more than a risk mitigation strategy; it’s a growth strategy. In a landscape where threats and opportunities come from every angle, our ability to adapt is a core strength. We’re not afraid to challenge our own assumptions, to ask new questions, and to embrace ideas that push boundaries. The future belongs to those who dare to innovate.

One of the unique strengths of the Group’s approach is our commitment to bringing the outside in. We don’t just watch trends; we immerse ourselves in them. Whether it’s attending quantum computing conferences in Spain or tracking fintech innovation in Southeast Asia, Africa, and South America, we’re constantly scanning the horizon for the next big thing.

Investment in early-stage funds will give us access to some of the most ambitious founders and innovative ideas, sometimes before they even have a prototype. This global perspective ensures that we’re not just reacting to change; we’re anticipating it and using those insights to inform and challenge our own strategy.

Partnership for innovation across Lloyds Banking Group

Fintech has been at the heart of the banking industry’s transformation, and in recent times there has been a broad acceptance that none of us can innovate at the pace we want and drive the best outcomes for society if we try and do everything alone; working together allows different teams to bring their best to the table and create better results.

Successful partnerships between banks and Fintech requires collaboration and co-creation, and sometimes there’s a need for translation because each has their own language and ways of working and like any new relationship, there’s a need to find a rhythm and means of communication that provides equity and supports agency. Navigating through the differences with an open mind and working together to combat some of the hurdles powers progress. At Lloyds Banking Group, our Fintech Investment Team often steps in to support the early stages of relationship building.

We also play an active role in overseeing the commercial relationships that flow from our investments, helping to unblock the system when challenges arise and ensuring that the value we can create is realised across the Group.

The Fintech Investment Team is part of a broader family of teams  that work together across Lloyds Banking Group to provide a view of where we are and where we will go: Group Strategy, Group Corporate Development, Competitor Analysis, Investor Relations and Fintech Investment work together every day. This structure is intentional. Fintech Investment is not a siloed activity, but a strategic capability embedded within the Group’s decision-making engine .  

Group Strategy sets out the short medium and longer term plans that our Board approves. When plans are best delivered through acquisition then Group Corporate Development steps in to lead and where the outcome is best achieved through minority equity investment you’ll find Fintech Investment. Competitor Analysis keeps our eyes open, providing real-time market intelligence that shapes our priorities and Investor Relations closes the loop, communicating our plans and innovation journey to stakeholders and integrating their feedback into our strategy.

Sharing insights, being aligned on objectives, and with a clear view of the opportunities, we support the business in achieving its goals. This unified approach ensures that every breakthrough is not just a win for one team, but a step forward for the whole business.

These priorities haven’t just been buzzwords – they’re areas where we’re already making a tangible difference. For example, our advanced analytics platform is live in two business units, embedded payment solutions are streamlining customer experiences, and our new digital onboarding process has reduced onboarding time and improved fraud detection rates.

Our fintech ambitions for the future

Our ambition is clear: to be the most influential and innovative financial services group in the UK, shaping the future of finance for the benefit of our customers, colleagues, and communities. By combining the strengths of our business units with the agility and creativity of fintech, we’re not just imagining the future – we’re building it.

The pace of change in financial services shows no sign of slowing. But with the right investments, the right partnerships, and the right mindset, Lloyds Banking Group is well positioned to lead.. The future isn’t waiting – and neither are we.