The government has launched an independent review of the financial technology (fintech) sector, aiming to help ensure that the sector continues to grow and succeed.
The review, which was first announced by chancellor Rishi Sunak in the 2020 Budget, is being led by former Worldplay CEO Ron Kalifa, who will look to identify what industry and government can do to ensure the UK remains a leader in the fintech sector.
The fintech sector is worth about £7bn to the UK economy, and employs 60,000 people across the country. John Glen, economic secretary to the Treasury and city minister, said the UK is “one of the leading places in the world to start and grow a fintech firm”, and that he is determined “to ensure this continues”.
Glen added: “The sector is worth around £7bn to our economy and will therefore be vital in ensuring both that the country bounces back post-coronavirus, and continues to be at the forefront of financial innovation now we have left the EU.
“This independent review will help us to uphold and enhance our global reputation, support growing firms and promote the integration of new technologies across financial services to the benefit of businesses and their customers.”
According to a report by recruitment firm Roger Walters and market analysis expert Vacancy Soft, investment in the UK’s fintech firms has grown by 500% in the past three years, but the market remains very London-centric.
In 2018, for example, 45 of the UK’s 50 fintech deals worth over £1m involved London firms. Although the UK’s total deals nearly doubled to 96 in 2019, bringing in $48bn worth of investment, only eight of these involved regional businesses.
The review aims to establish several priority areas for industry, policy-makers and regulators through five workstreams – skills and talent, investment, national connectivity, policy and international attractiveness.
Read more about the fintech sector
- Huge increase in UK fintech investment over the past three years has seen the sector explode, but most of the activity is still concentrated in London.
- The coronavirus will wipe out some fintechs, but those that get through it will share in the next growth phase of the industry’s development.
- PayPal introduces QR code payment functionality to its mobile app to support social distancing.
Kalifa said the review will “ascertain what is required to accelerate this change, to create a financial services ecosystem that is, above all, sustainable, inclusive and world-leading”.
He added: “Tech-based solutions in financial services have experienced widescale adoption in the UK, with growth fuelled by a favourable startup environment that supports entrepreneurship and innovation.
“Technology has a vital role to play in the UK’s Covid-19 economic recovery. The fintech review will ensure that we can leverage this innovative technology to help consumers and businesses, through a joined-up strategy that combines investment, skills and policy to deliver it.”
The review is expected to report back to HM Treasury at the beginning of 2021.