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On 26 February 2021, Ron Kalifa OBE (Chairman at Network International and ex-CEO of Worldpay) published his independent review of the UK fintech industry identifying the opportunity for Britain to build on its success as a leading global centre for fintech.
Commissioned by HM Treasury, the review was promised by the Chancellor of the Exchequer Rishi Sunak in his first budget in May 2020.
The recommendations laid out in the review revolved around helping the UK fintech industry thrive and:
- Foster job creation and high-income tech-based employment across the UK, supporting the ‘levelling up’ agenda
- Better leverage the fintech sector as a core asset for Britain’s international competitiveness, by enabling more UK fintechs to achieve global scale and reach, and lead on regulation and standard-setting
- Help citizens and small businesses access more, better and cheaper financial services, creating a more inclusive, democratic and sustainable financial services sector
12 months later…
Now, 1 year on from the review’s first release, The Fintech Times has spoken to several key industry leaders to understand their thoughts on the past 12 months and the after-effects of review so far.
Joanne Dewar, Chief Executive Officer, Global Processing Services, said: “We were incredibly honoured to be invited by HM Treasury to participate in Mr Kalifa’s independent review of UK fintech to help shape the recommendations made to the Government. We at GPS are pleased to see the progress made in the last twelve months and thank everyone involved for their determination in starting to turn this ambitious blueprint into a reality.
“Britain’s openness to innovation makes it attractive to entrepreneurs looking to experiment and launch ground-breaking products. The UK continues to lead the world in the development of open banking too, which could be a future driver of economic growth through future job creation, trade and investment opportunities, as well as support financial inclusion initiatives that the industry could deliver with the right strategic support.
“The challenge Britain faces is ensuring it continues to stay agile and progresses quickly with the recommendations outlined. The Kalifa Review is highly regarded by industry participants around the world, many of whom who view it as a blueprint for the future of fintech. Accordingly, other governments recognise the economic potential for their countries and are investing in their fintech ecosystems too. It is important the UK continues to make progress in order for it to retain its number one position on the global stage.”
Positive output
Daumantas Dvilinskas, CEO and Co-Founder of TransferGo said: “Since the Kalifa Review was published one year ago, the UK fintech industry has seen lots of activity – a wealth of funding rounds, wave of IPO announcements, and many reports of huge valuations. There’s no doubt either that the Review has led to positive output like the UK Government’s support for a new industry-led Centre for Finance, Innovation and Technology (CFIT) and new FCA scale boxes, but the UK can do more to safeguard its title as a global fintech leader. One important area to focus on is attracting diverse talent.
“We eagerly await details of the fast-track visa for scale-ups that Chancellor Rishi Sunak announced last year which is due to come into place in Spring. Half (49%) of the UK’s fasted-growing start-ups have at least one immigrant co-founder, and as a migrant founder myself supported by several employees from outside the UK – I know all too well the benefit of an international team. If the Government wants to make the UK a global innovation hub by 2035 it will be imperative to continue attracting overseas talent – not only to London but other parts of the UK as they too focus on levelling-up.”
Can’t afford complacency
Mike Laven, CEO of Currencycloud, commented: “One year on from the publication of the Kalifa Review, it is encouraging to see some progress on skills, investment and exports. However, policymakers cannot afford to be complacent and must be more assertive if they want the country to remain globally competitive within the fintech sector. What the UK fintech industry needs more than anything else is easy access to talent and global markets, and policymakers are yet to make satisfactory progress on either of these points.
“In terms of talent, the industry is still struggling to access the skills that it requires. While many industries are facing similar challenges, the sector’s demand for advanced technical skills coupled with the value it creates for the UK means that getting leading fintech talent into the country should be an absolute priority. The introduction of the scale-up visa will be welcome in April, but the extent to which this will ease the industry’s requirements in the wake of both Brexit and the great resignation remains to be seen. On markets, it has been encouraging to see fintech included in trade deals with Singapore and Australia. However, these markets alone are not sufficient for a sector that looks to every continent for its customers and used to trade freely with the EU.
“Many in the industry – myself included – also believe that the Kalifa Review’s initial recommendations did not go far enough. Implementing the report’s noble but modest proposals alone will not win the day; if the British government doesn’t start thinking bigger, it will start losing opportunities and growth to those who do.”
The skills gap
Anders la Cour, CEO of Banking Circle Group, said: “A year ago, the Kalifa report revealed that the UK was at risk of losing its trailblazing position in the fintech world. Fast forward twelve months and the UK has held firmly onto its crown. Indeed, KPMG’s recent ‘Pulse of FinTech’ report showed investment topped an impressive £27.5bn. This is a massive win for not just the UK, but Europe and the rest of the world, as this sort of investment drives competition and innovation forward.
“Digital transformation in Financial Services is currently at a tipping point, with technology empowering Banks, Payments businesses and Financial Institutions all over the globe. In particular, the likes of Buy Now Pay Later, Request to Pay and using emerging technology such as AI are set to define the year ahead – it’s incredibly an exciting time to be in fintech right now. That said, the industry is facing a massive skills gap. In fact, recent research found 100% of fintechs had a skills gap in their organisation, according to CIOs. Upskilling will be an important tool for futureproofing businesses and to ensure the UK stays at the top of its FinTech game.”
An open letter
Leading up to the reviews’ anniversary, over 70 CEOs and founders from firms, including Moneyhub, Starling Bank, Monzo and Klarna, urged the UK government to do more to promote and support innovative financial services in an open letter, published by Innovate Finance – the independent industry body representing the fintech community in the UK.
While the letter acknowledges ‘considerable progress by government, regulators and industry in implementing the Kalifa Review recommendations over the last year’ it called for further collaboration between government, regulators and industry to ensure the UK is the best place to start, grow and build a fintech business.
It said: “Rather than resting on our laurels, it is imperative that we continue to build on this momentum and work together to establish an environment in the UK that is even more supportive of and conducive to innovation in financial services.
“The regulatory rule book requires further updating, and regulators must have the capability and culture in place to allow them to fully embrace innovation while protecting the consumer and financial stability.
“Now is the time for even bolder action to realise the Kalifa Review vision: to work together to maintain the UK’s coveted position as the leading hub for fintech creating solutions that strengthen our economy, foster greater financial inclusion and wellness, tackle climate change and build a more sustainable financial services sector for all.”
Wayne Johnson, CEO for Encompass Corporation, and one of the ‘fintech leaders’ to have signed the open letter, commented:
“As we know, since the start of the pandemic, there has been a shift in financial activity and a surge in fintech adoption, with many consumers, businesses and financial institutions adopting new payment methods and turning to technology solutions to support remote working and digital services.
“During the last two years, we have also seen the increasing emergence of cryptocurrency and blockchain technology as mainstream payments alternatives, with instances of these being used in connection with money laundering and other nefarious activity.
“Going forward, regulation, therefore, must address this pandemic-induced trend in financial activity, and adequately respond to new financial technology being deployed across the industry. Fortunately, the UK, and London especially, has an innovative, world-leading fintech community, and this should be capitalised upon to encourage a regulatory framework that both supports innovation and provides a secure environment to test and learn.
“We must work together to foster more conversations with financial crime and regulatory experts, while upskilling future generations so the UK can continue to be at the forefront of this innovation while protecting against financial crime.”
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