The UK has always been touted as a global leader in fintech, and it certainly has the accolades to back this position. With a strong track record of innovation, technology and development, it’s no surprise that in 2020 – a year of monumental change across all sectors – the UK ranked second only to the US in terms of total capital investment in fintech, with UK-based fintechs accounting for 408 of the 3,052 investment deals, and $4.1bn in funding that year.
This year, a report commissioned by HM Treasury and chaired by industry expert, Ron Kalifa, was published. The Kalifa Review provides a clear strategy and delivery plan to ensure the UK can capitalise on the opportunities fintech presents, and how the continued growth of fintech in the UK will have a major impact on the development of the sector globally.
During a discussion between Ron Kalifa and Pollinate’s Founder and CEO, Al Lukies, Ron expressed the increasing importance and relevance of the sector. Investment in UK fintechs was reported as a higher figure than the next four countries combined in the ranking.
“Fintech is no longer a niche – it’s a sector that is underpinning financial services, employing over 1m people, and is worth about £100bn today globally, with that figure expected to grow three-fold by 2030.”RON KALIFA OBE
In order to foster the growth of fintechs in the UK, and ensure it remains a leading global hub, The Kalifa Review outlined a five-point plan, including:
- Policy & Regulation: Kalifa proposes a “scalebox” which will support organisations focused on scaling innovative technology by enhancing the existing regulatory sandbox, and supporting partnerships between incumbents and fintech/regtech firms
- Skills: Capitalising on the fintech talent pool already in the UK, Kalifa proposes the upskilling and retraining of adults by ensuring access to education at lowered cost. In addition, proposes a new visa stream that would open access to international talent. Kalifa argues that in order to remain a global leader in fintech, UK must strengthen its position on immigration or risk a significant shortage in human capital
- Investment: Seeks to establish a market-led £1bn ‘fintech growth fund’ pulled from institutional capital to address a £2bn fintech growth capital funding gap. Also argues the expansion of R&D tax credits, Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT) is called for to level the playing field for fintechs relative to other technology companies. Improvement of listing environment also being eyed with a free float reduction, dual class shares and relaxation of pre-emption rights on the table
- International: Strengthen the international operational support offered in the UK by making a big statement about the international openness of the UK in a post-Brexit environment. To do so, Kalifa proposes the delivery of an international action plan for fintech, driving international collaboration through the Centre for Finance, Innovation and Technology (CFIT) and be launching an international “Fintech Credential Portfolio” akin to a quality stamp to bolster credibility perceptions in international markets
- National connectivity: To support and scale “regional specialisms” unique to the UK, especially intellectual property currently being created in UK universities, Kalifa proposes the delivery of a 3-year strategy to nurture nation’s top 10 fintech clusters, improved national coordination led by the CFIT, and growth of fintech clusters via accelerated development and investment in R&D
In the past decade, fintechs have largely gone from being seen as competitors to banks, to being partners to banks as both aim to achieve their goal of making life easier for their customers. With new products and offerings entering the market regularly, continued investment into UK fintechs from international firms, and interest from HM Treasury on how fintechs can best be supported, it’s clear there is a focus for the UK fintech scene to continue its lead.