UK fintech review unveils how the government can help the country stay a fintech hub

  • The UK published its fintech review, unveiling how the government can help the country stay a fintech hub.
  • The report gives recommendations to help the country keep its fintech crown—and acting fast to make adjustments is vital in light of Brexit impacts.
  • Insider Intelligence publishes hundreds of insights, charts, and forecasts on the Fintech industry. Learn more about becoming a client.

Ron Kalifa, the nonexecutive director of the Court of Directors at the Bank of England and vice chairman of WorldPay, has published the Kalifa Review of UK Fintech, at the request of Chancellor of the Exchequer Rishi Sunak. The review aims to provide recommendations on how to make the UK the most open and dynamic place for financial services, and the government will now examine the proposals.

Kalifa’s recommendations span policy and regulation, skills, and investment—below Insider Intelligence examines four key developments from the report:

  • Establishing a single touch point for fintech strategy would simplify its implementation. Numerous stakeholders currently have responsibility to regulate the fintech sector, which makes it difficult to bring strands together and ensure coordination. The report suggests a single body to facilitate such conversations with fintechs during their growth phase, as resources wouldn’t have to be spent on dealing with various parties. It also says it’s crucial to have a clear focal point in government that deals with cross-cutting issues on digitization and digital finance.
  • Focusing on upskilling workers could help bridge the skills gap that fintechs may face. Ninety percent of the UK workforce will have to be reskilled by 2030, which will be necessary for a thriving fintech ecosystem. The report cites Singapore as an example of implementing government-subsidized courses to upskill citizens.
  • Brexit impacts could threaten the UK’s European fintech crown, but streamlining visa processes would help secure its position. London-based fintechs raised $36.7 billion from 2016 to 2020, making it the fifth-best-funded and only European city in the top 10, per Dealroom data. That said, the fintech segment was largely excluded from the Brexit deal. To mitigate negative impacts—42% of UK fintech employees are foreign—the review suggests that the UK should deliver a cost-effective way for fintechs to upend global competitor markets, such as by introducing a bespoke Fintech Scaleup Stream within existing visa routes such as Global Talent.
  • The report also recommends that the government create a £1 billion ($1.14 billion) Fintech Growth Fund and revise its IPO requirements. There is a £2 billion ($2.28 billion) fintech growth capital funding gap in the UK, and a dedicated fund could help homegrown startups scale and expand their businesses. Reducing free float requirements for UK listings could also make the market friendlier to local and foreign fintechs, as they would no longer have to issue at least 25% of their shares to the public at any one time. This is especially timely as the LSE has seen a 45% reduction in the number of listed companies on its platform since 1997, and more than a third of privately funded UK fintechs expect to undertake an IPO within the next five years.

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