Overview of the UK Fintech success story
The UK is a leading Fintech capital, with over 2500 Fintechs working across 23 sub sectors of Fintech. Fintech activity is spread across the UK with notable hubs in Edinburgh, Leeds and London. The sector has now grown from disruptive roots into an industry in its own right.
The Kalifa Review of the UK Fintech scene commissioned by the government in 2019, has further sought to reinforce the appeal of the UK as a base for launching innovative and inspiring financial solutions. Total investment into British Fintechs increased by 217% in 2021 to $11.6bn (according to Innovate Finance) a 217% increase on the previous year. This figure represents 11% of the global capital investment in the sector and in Europe 45% of the total invested in the sector.
The Kalifa report has provided a “clear regulatory roadmap for strengthening Fintech in the UK, and both Fintechs and investors are taking note of that.” Janine Hirt, CEO Innovate Finance.
The report recommendations across five key areas:
Policy and Regulations:
- Deliver a digital finance package that creates a new regulatory framework for emerging technology
- Implement a “Scalebox” that supports firms focusing on scaling innovative technology
- Establish a Digital Economy Taskforce (DET) to ensure alignment across government
- Ensure that Fintech forms an integral part of trade policy
Skills:
- Retrain and upskill adults to meet the needs to UK fintech by ensuring access to short courses from high-quality education providers at low cost
- Create a new visa Stream to enhance access to Global Talent for fintech scaleups
- Build a pipeline of fintech talent by supporting fintech scaleups to offer embedded work placements to Further Education and Higher Education students and Kickstarters
Investment:
- Expand R&D tax credits, Enterprise Investment Scheme and Venture Capital Trusts
- Unlock institutional capital to create a £1bn “Fintech Growth Fund” of sufficient scale to act as the catalyst in developing a world leading ecosystem
- Improve the listing environment through free float reduction, dual class shares and relaxation of pre-emption rights
- Create a global family of fintech indices to enhance sector visibility
International:
- Deliver an international action plan for fintech
- Launch an international “Fintech Credential Portfolio” (FCP) to support international credibility and increase ease of doing business
- 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
- Drive national coordination strategy through Centre for Finance, Innovation and Technology
- Accelerate the development and growth of fintech clusters through further investment, such as in R&D
