FCA releases detailed 5-point plan to make UK a fintech powerhouse

0
78

Following the announcement of the UK budget for 2020, Chancellor Rishi Sunak Ron Kalifa tasked OBE with an independent review of the UK fintech sector. On February 26, eight months later, the FCA released the 108-page report, which contains several clear guidelines designed to cement the UK’s position as a fintech powerhouse.

Over $ 95 billion was spent by UK fintech companies in 2019, and with 10% of the global market share, the UK is already ahead of the curve in fintech adoption and business. According to the report, investments in UK fintech companies totaled $ 4.1 billion in 2020 – more than the next five European countries combined.

Kalifa was still identifying areas where the UK could improve its approach to creating a welcoming environment for the next generation of fintech players.

“However, the development of the UK fintech industry is at a turning point of opportunities and risks. Although Britain’s position is well established, its future is not assured, ”the report said.

The three main threats to the UK’s current fintech dominance are COVID-19, Brexit and overseas competition. Regarding the pandemic, the report notes that the lockdown has accelerated digital technology adoption in ways politics and marketing never could, and which country comes to this realization first will benefit the most.

With this in mind, the report suggests five key ways the UK can create an environment that is more conducive to fintech in the years ahead.

Politics and regulation

The report recommends that the UK put in place a new regulatory framework for emerging technologies and urges the UK to put in place a digital financial package for this purpose. A “scalebox” should be created to support businesses focused on scaling new technologies and a digital enforcement task force should be created to ensure consistency between government agencies, the report said.

Additionally, the report suggests that fintech companies should hear their own voice when it comes to trade policy.

Competencies

Focusing on the social aspect of the inevitable digital transformation, the report recommends creating educational services to educate and train adults in the UK. A pipeline of fintech talent should be formed to support fintech scale ups by offering internships to students in higher and higher education, it adds.

investment

With regards to investing in fintech companies, the report suggests expanding existing corporate investment programs and venture capital trusts, and increasing research and development tax credits for fintech companies.

The report calls for the creation of a £ 1 billion ($ 718 million) fintech growth fund and recommends the creation of a group of fintech indices to improve global visibility for the industry.

International

The creation of an international action plan for fintech and the introduction of a “fintech credential portfolio” would improve international credibility and facilitate the process of conducting international business in general, the report said.

The report suggests making better use of existing financial innovation and technology centers to drive international cooperation and setting up an international fintech task force to ensure coordination between participating countries.

National connectivity

The report focuses on fintech development within the UK’s borders and suggests that the top 10 fintech clusters should receive special attention and support in order to reach their highest growth potential.

Notable growth clusters have been identified in Edinburgh, Scotland, with the number of fintech firms using corporate finance to jump from 26 to 151 in just over two years. Other notable clusters in the UK are Cardiff, Wales and Manchester, Leeds and Birmingham in England.

The report notes that the goal is not to neglect other areas of the country but to ensure that existing fintech hubs can reach their full potential.

Nik Storonsky, CEO and co-founder of London-based fintech company Revolut, said the Kalifa review could provide a way to ensure the UK retains its place among the top fintech destinations in the world:

“It is important to maintain and strengthen the UK’s position as the first choice to start and grow a fintech business. I applaud the Kalifa Review and the government’s commitment to keeping the UK leading the way in innovation and growth. “

Ashok Vaswani, CEO of Consumer Banking and Payments at Barclays, referred to Britain’s newly gained independence after the Brexit agreement:

“As the UK wants to find its own way in the world, it is absolutely right that the government investigate how to ensure the continued success of the UK fintech sector.”