Community
This year's election was a fractious confrontation that centres on huge policy considerations such as cost of living, the NHS and immigration. Dear PM, can you promise that your government won’t dismantle one of the UK’s few success stories – our global leadership in fintech?
Today, London continues to be one of the world’s leading international champions of fintech, with only San Francisco attracting more investment and unicorns. While Asian powerhouses like Hong Kong, Singapore and Dubai are growing fast, it’s not unreasonable to assert that post-Brexit, the UK – and London in particular – still faces no meaningful competition from continental Europe. For now.
Various factors have contributed to this regional dominance – but four stand out: a progressive regulatory environment, supportive tax policies, an innovation culture that encourages close collaboration between academia and business, and high levels of digital confidence among consumers.
This combination has made the UK home to around 2500 fintechs, while London alone has over 130 accelerators, incubators and VCs. This positive snapshot, however, is no justification for complacency. If UK fintech is to continue to shine, Westminster’s decision-makers must pull out all the stops to stave off dynamic global competitors. There can be no faint-heartedness in this pursuit.
This is particularly the case after a difficult couple of years for fintech entrepreneurs – largely due to the global downturn in fintech VC investment. UK-based platform SumUp recently raised $306 million, and UK digital challenger Monzo Bank has just closed a $400 million fundraise increasing its valuation to $5billion. But the overall picture is less healthy, with VC funding for UK fintechs dropping by nearly two-thirds last year. Along with the rise of potentially disruptive tech like generative AI, the UK needs to avoid taking its eye off the prize and waking up to discover it has lost ground to Paris, Berlin, Vilnius or Stockholm – the latter of which has cleverly managed to align its fintech and green ambitions.
Some might argue that the launch of a £1 billion Fintech Growth Fund by Mastercard, Barclays and the London Stock Exchange is evidence that the private sector has the matter well in hand. But, the fact remains that UK fintech has partially flourished so far due to public policy.
Worryingly, however, some fintech insiders have recently criticised the current UK government for a lack of clarity and vision in the UK payments landscape – perhaps a sign that it is tired or distracted.
Dear PM my view is that your new government must align itself closely with the financial services sector, creating a far more coordinated approach that prioritises risk, profitability, sustainability and inclusion. The goal must be a brave and creative blueprint for continued UK fintech leadership, encompassing the following priorities:
Final Thoughts
Access to Talent: In addition to all of the above, the UK needs to create the right conditions for talent to continue entering the UK fintech business. According to Innovate Finance, around 42% of UK-based fintech employees come from overseas.
Clearly, the global recruitment pool is critical to fintech’s continued ability to thrive in Britain. This, in turn, puts the development of a post-Brexit programme for foreign talent top of the new PM’s to-do list.
Yet, we also need to look at spreading our net in terms of homegrown fintech masterminds. This entails looking beyond the usual university recruits to other, non-graduate recruits (following the lead of Germany’s Berufsausbildung initiative); as well as making concrete efforts to expand fintech funding beyond its London stronghold.
Initially published in The World Financial Review
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
Nikunj Gundaniya Product manager at Digipay.guru
11 October
Priyam Ganguly Data Analyst at Hanwha Q cells America Inc
Fang Yu Co-Founder and Chief Product Officer at DataVisor
09 October
Alexander Boehm Chief Executive Officer at PayRate42
Welcome to Finextra. We use cookies to help us to deliver our services. You may change your preferences at our Cookie Centre.
Please read our Privacy Policy.