A government-commissioned review called on the UK government to reform listings rules and visa applications to help fintech thrive.
The review, led by former Worldpay boss Ron Kalifa, revealed that while the UK enjoys the position of being a well-established hub for fintech startups and unicorn companies such as Monzo, it is at an inflection point of opportunity – and risk.
It highlights three broad threats to the UK’s fintech leadership position: Competition in overseas centres that are seeking to emulate the UK’s success such as Singapore, Australia and Canada, brexit, which has brought regulatory uncertainty in specific areas relevant to fintech and Covid-19, which has accelerated digital adoption globally in a way that marketing or policy never could.
The proposals suggested by the review include the creation of a new fast-tracked visa process to attract international fintech talent; a £1bn start-up fund (“Fintech Growth Fund”) backed by institutional investors; and a relaxing of rules around listings to encourage late-stage fintechs to go public.
Regarding public listings in the sector, Kalifa’s report called for a reduction in the percentage of shares in the hands of public investors to avoid diluting fintech start-ups’ early backers, as well as “golden share” or dual-class share structures that would allow founders to retain control of their firms and guard against hostile takeovers.
The review outlined a series of recommendations which will ensure the policy and regulatory approach continues to not only protect consumers but also creates an enabling environment that encourages growth and competition.
Among the recommendations it includes delivering a digital finance package that creates a new regulatory framework for emerging technology which prioritises new areas for growth and cross-industry challenges such as financial inclusion.
It called for the government to ensure that fintech forms an integral part of trade policy and for regulators such as the CMA to adapt its approach to the sector.
Catherine McGuinness Policy Chair, City of London Corporation said on the subject: “This is a pivotal moment for the UK. There are significant opportunities offered by fintech – an area in which London already has unmatched global appeal. But for the UK to retain its position as world leader and continue to attract investment into the sector, it is vital to offer an environment which supports innovation.”
UK fintech currently represents 10% of global market share and £11bn in revenue. The total tech spend by UK financial services firms was £95bn in 2019.
Investment into UK fintech stood at $4.1bn in 2020 – more than the next 5 European countries combined, said the review.