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The U.K. is one of the global leaders in the financial services industry. In a recently published report, the Financial Conduct Authority (FCA) made recommendations aimed at helping the country cement its position as a global powerhouse in the emerging fintech industry.
The U.K. is already ahead of the curve when it comes to fintech adoption, according to Cointelegraph. In 2019 alone, U.K.-based fintech firms spent over $95 billion, which represents a 10 percent share of the global amount.
The country also ahead of other European countries by a wide margin as investments into the U.K. fintech firms reached $4.1 billion last year. The amount is actually more than the combined investments of the next five European countries.
Still, the country must not be complacent if it wants to maintain its edge. “If the UK is to retain its position as a global leader in financial services, then we must lead this technological revolution,” Ron Kalifa OBE wrote in the “Kalifa Review of UK Fintech” report. “Just as we led in previous industrial revolutions, we must do so again in this one.”
While the U.K. has a head start, the report identified three potential threats that could its dominance in the fintech industry. These are competition from overseas such as Singapore, Canada, and Australia, the Brexit, which has “created regulatory uncertainty in specific areas relevant to fintech,” and the coronavirus pandemic, which “has accelerated digital adoption globally in a way that marketing or policy never could.”
The FCA recommended a 5-point plan to help the U.K. maintain its position as the best place to start and grow a fintech business. The plan covers different areas such as policy and regulation, skills, investment, international, and national connectivity.
Under policy and regulation, the FCA recommends the creation of a new regulatory framework for emerging technology as well as the establishment of a Digital Economy Taskforce (DET) to ensure alignment across government. Under skills, the report suggests the retraining and upskill of adults by giving them access to fintech-related high-quality education at low cost.
Under the investment area, the expansion of R&D tax credits, enterprise investment schemes, and venture capital trusts could encourage investors to go into fintech. Under international, the report recommended the launching of an international “Fintech Credential Portfolio” (FCP) to “support international credibility and increase ease of doing business” as well as an International Fintech Taskforce to “drive international collaboration through the Centre for Finance, Innovation and Technology.”
Under national connectivity, the report proposed for the Centre for Finance, Innovation and Technology to come up with a national coordination strategy for the country’s fintech space. It is also recommended that the government must nurture the growth of the U.K.’s top fintech clusters, which include Edinburgh, Scotland, Cardiff, Wales; and Manchester, Leeds, and Birmingham in England.
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