An independent strategic review of UK financial technology (FinTech) has been published in line with the emerging prominence of this sector and the UK’s highly regarded fintech reputation.
Also known as ‘The Kalifa Review’, its purpose is to aid the adoption and growth of Fintech in the UK. The review illustrates a strategy and delivery model, designed for the UK to maintain its position within the Fintech space, focusing around a five-point plan of recommendations. These include the creation of a Government-backed Centre for Finance, Innovation and Technology (CFIT) which is to be mandated and supported by the Government but led by the private sector.
Historically, new businesses seeking SME financing were restricted by a limited choice of providers and a gradual decision-making process. In the modern day, digital access to a wide assortment of lenders creates immediate access for those seeking to leverage AI tools and provide instant decisions on refinancing opportunities and new loans.
The HM Treasury comments:
“The Kalifa Review of UK Fintech highlights the opportunity to create highly skilled jobs across the UK, boost trade, and extend the UK’s competitive edge over other leading fintech hubs. It sets out a series of proposals for how the UK can build on its existing strengths, create the right framework for continued innovation, and support UK firms to scale.”
The Five Point plan of recommendations:
Policy and regulation:
- Deliver a digital finance package, forming a regulatory framework for emerging technology in areas such as data standards and digital ID.
- Introduce a ‘Scalebox’ that supports firms focusing on scaling innovative technology – this means enhancing the Regulatory Sandbox and implementing the Digital Sandbox pilot as a permanent feature.
- Establish a Digital Economy Taskforce (DET) to pave the way for a clear roadmap for technology and digital issues, creating a ‘single customer view’ of the Government’s strategy.
- Ensure FinTech is at the heart of the UK’s trade policy.
Skills:
- Provide ‘short courses’ from high-quality education providers at a low cost, in order to retrain and upskill adults in support of UK Fintech.
- Introduce a new visa stream to improve the UK’s access to overseas talent.
- Build a pipeline of FinTech talent by supporting FinTech scale-ups to offer embedded work placements to Further Education and Higher Education students and kick-starters.
Investment:
- Expand research and development (R&D) tax credits, Venture Capital Trusts and the Enterprise Investment Scheme.
- Backed by institutional investors such as private pension schemes – Establish a £1 billion Fintech Growth Fund. Providing support to firms in the Series B to pre-initial Public Offering Stages (IPO)
- Improve the listing environment through free float reduction, dual class shares and relaxation of pre-emption rights.
- Create a ‘family’ of FinTech indices – once enough UK FinTechs have listed and formed a sub-sector, an index could become a bellwether for UK FinTech stocks.
International:
- Launch an international action plan for FinTech.
- Introduce an international FinTech Credential Portfolio (FCP) to provide easy access to the credentials required to drive overseas expansion, including identity verification, digital ID, regulatory compliance, and evidence of partnerships with incumbent financial institutions and backing from recognised investors.
- Drive international collaboration through the Centre for Finance, Innovation and Technology, and launch an International Fintech Taskforce
National connectivity:
- Nurture the high growth potential of the top 10 FinTech clusters, facilitating connectivity between them and supporting ‘regional specialisms.’
- Form a national coordination strategy through the Centre of Finance Innovation and Technology.
- Accelerate the development and growth of FinTech clusters through further investment.
