The much-anticipated independent review of the UK’s fintech sector, led by former Worldpay chief Ron Kalifa underlined that the sector is at a crucial moment and called for widespread changes.
Commissioned by the UK government, the review highlighted the need for an overhaul to the country’s financial services’ ‘listing system’.
The Fintech review takes on heightened importance, with the UK having more than 10 per cent of the global market share in fintech – the sector is now reported to be worth more than £11 billion a year to the UK economy.
Rishi Sunak, Chancellor of the Exchequer, said: “Fintech is one of the UK’s great success stories and will help us seize new opportunities around the world.
“We must now build on our global reputation for fostering innovative start-ups and ensure firms can access the talent, finance and support they need to scale up here in the UK.
“This review will make an important contribution to our plan to retain the UK’s fintech crown, create more skilled jobs, and deliver better financial services for people and businesses.”
The review also detailed the importance of welcoming the best workers from around the world, citing a visa route for specialists as a potential solution to the issue.
It is widely believed that in next week’s budget the government will push forward with a plan for visas that support the fintech sector, as it seeks to secure a future following the UK’s departure from the European Union.
Ron Kalifa OBE added: “Fintech has the power to change lives, both in terms of job creation and better wages that are so essential to our recovery; and making financial services more accessible and relevant to people’s lives.
“Britain has a proud record of starting-up and scaling-up some of the best known fintech products, but we cannot rest on our laurels. The next powerhouses will not be created by accident.
“We must continue to nurture our start-up culture, but crucially we must also give our high growth firms the support to become global giants.
“With the right reforms that encourage entrepreneurialism, investment and make it easy to attract and invest in talent, Britain can usher in a period of dominance that can help us build back better from Covid-19.”
Nigel Verdon, CEO of Railsbank who not only partook in the research but is a strong advocate for the FinTech industry within the UK and can offer a deep insight into the current landscape;
“It’s important to emphasise the Review is not simply about a set of individual recommendations, but a wider strategy for the sector with a delivery model,” Verdon remarked
“We’re not asking for the government to do everything, but rather an 80/20 rule – with main activity driven through the private sector and the government then asked to support and convene activity to enable the delivery of that strategy.”
The UK is yet to settle on key financial services arrangements with the EU with regards to market-clearing, passporting and consumer data protections on UK/EU digital transactions.
This month PM Boris Johnson personally re-appointed key Brexit policy advisor Lord Frost to lead the next stage of negotiations with EU counterparts, with the focus on unlocking financial services conflicts.
Fintech and City observers remain sceptical as to whether the UK can secure a comprehensive arrangement, avoiding for UK financial services to be governed at an individual member state level – adding significant burdens to business costs.
“Amidst ongoing Brexit debate (City warned EU will do London no favours on financial services, January 26) and in light of February’s upcoming industry report by Ron Kalifa, the fintech sector must come together to lead the UK’s economic recovery”
“It’s shocking the elephant in the room with Brexit is never acknowledged – the market dropped from 720 million people to 60 million overnight and has cost all of us millions to set up mirrored infrastructure in Europe”
“That said, we now need to re-adjust. The UK is still a great place to start a fintech and then grow globally, supported by the Department for International Trade. And London is the smart place to float a fintech due to the global investor base still in the City. We should draw parallels with Scandinavia, where companies know how to grow globally because the local market is so small’
“One thing the UK government must address is the potential for a persecutory tax environment which will discourage talent in the UK, much like Francois Hollande chased the French talent to London and Singapore.
Avoid that, and I see cause for optimism”