At a major conference in London today, it is clear that fintech, the ‘bad-little brother’ of finance is now being courted by the mainstream with the recognition that technology heralds the way forward for London and the UK to retain predominance in the financial services sector.
TechUK is delighted that government, regulators and the Bank of England are publicly recognizing the force of fintech to attract investment, kick-start new businesses, create jobs and perpetuate a thriving centre of business activity and entrepreneurship in the UK.
In a speech at the first International FinTech Conference on 12 April, Chancellor Philip Hammond stressed the government commitment to the sector. He noted plans to ensure long-term capital availability through the ‘Patient Capital Review’ and £400 million of new capital to be made available to the British Business Bank to leverage £1bn of investment in UK technology businesses. He also pointed to major new investments in the sector such as the opening of Barclays’ London Rise’ fintech accelerator, the largest of its kind in Europe. Further government backing is to come from within the £23 billion National Productivity and Investment Fund announced in the autumn statement.
It is also the clear that one of the main reasons new financial services businesses gravitate to the UK is the openness of regulators to enabling and actively promoting innovation. Speak to any entrepreneur – whether they are in the field of fintech, regtech, insuretech or any of the other emerging ‘–tech’ branches of financial services – and this is the first thing they will say.
Mark Carney’s speech at the same event reiterated the Bank of England’s commitment to continuing this creative and long-sighted view. He pointed to the potential of fintech to democratize financial services, by providing better pricing, product choice and access to credit for consumers and SMEs. Also, for banks, new technologies can speed up and lift the burden of back-end processes across the board, from payments to securities settlement. The Bank is giving proactive help and has just opened its call for applications for the 4th round of its Fintech Accelerator.
The opening of the real-time gross settlement system to non-bank players is a further major sign that UK authorities recognise the fundamental shift taking place in financial services through the emergence of new models.
The UK is well ahead of the game on fintech. Jusrisdictions world-wide are copying the regulatory sandbox models, following the development of open banking and looking to recreate what the UK has initiated. It is essential that government and regulators keep up the good work in promoting the sustainability and growth in this crucial area of the economy. Access to finance, free movement of a skilled workforce and continued seamless links within Europe will also be key to keeping the UK at the top of the fintech tree.