The UK is leading the way when it comes to fintech innovation and with government support, this can be further catalysed. In light of this, Startup Coalition and the Tony Blair Institute for Global Change (TBI) have published a new report outlining how to drive growth and inclusion in the UK.
These policy recommendations within the report, include the key opportunity of the introduction of an open finance framework within 100 days of taking office, building on open banking to unlock more data sharing and innovation. Open finance could drive growth by reducing barriers for UK fintech startups, while also enabling greater financial inclusion, literacy and investor empowerment.
Other key recommendations include regulating Buy Now Pay Later lending within 100 days, mandating financial education in primary schools by 2025, reforms to boost pension fund investment in startups, and a future government providing more substance to the consumer duty.
The report highlights that while fintech and financial services can play a key role in delivering a progressive agenda for a mission-driven government, the fintech sector faces serious challenges that a Government could help to support. This includes ensuring that firms face certainty with key timelines published bi-annually, and certainty on specific issues such as APP fraud with an APP fraud strategy within the first hundred days of a potential government.
Further findings:
- The report highlights that fintech is one of the UK’s most valuable startup sectors, raising nearly £40billion over the last five years and delivering the most tech ‘unicorns’.
- The sector faces challenges like regulatory uncertainty and growing international competition though, which could impede its growth if not addressed.
Achieving sustainable economic growth
The report argues that as a driver of innovation, fintech offers a powerful tool for a progressive government to achieve sustainable economic growth while also breaking down barriers and expanding opportunity across the UK.
Jeegar Kakkad, director of government innovation at the Tony Blair Institute for Global Change stated: “Fintech startups have a crucial role to play in breaking down barriers to financial opportunity across the UK. By developing a national financial inclusion strategy with fintech at its core, and delivering innovations like Open Finance, we can increase choice and competition in financial services. This will empower individuals and communities to take control of their financial well being like never before.”
Dom Hallas, executive director of Startup Coalition said “The UK’s world-leading fintech sector has been a crown jewel, creating thousands of high-skilled jobs and attracting billions in investment. The sector could fuel the next ten years of economic growth if set up for success. By optimising policies like R&D tax credits and providing regulatory certainty, the next government can unlock fintech’s full potential as an engine for sustainable economic growth across the UK.”
Fostering growth from within the UK
Founder of fintech CONCRYT, Ryta Zasiekina commented on the report saying: “I concur with the position of Mr Blair’s think tank when it says a potential future Labour government must pump more cash into financial regulators and ensure they are properly resourced. Without this, I’m afraid Jeremy Hunt‘s recent prediction of the UK becoming the world’s next Silicon Valley is unachievable. Whichever party wins the next election, more cash must be injected into regulators like the Financial Conduct Authority to ensure they can handle new sectors like crypto and buy-now pay-later.
“Funding for fintech across the board needs to be addressed. Despite the availability of early-stage funding, scaling up remains a challenge for tech start-ups in Britain, often prompting them to seek investment from the US and even relocate their businesses. This trend should serve as a wake-up call as we head towards a general election.
“There is a real need for more comprehensive support and resources to foster growth and innovation within the UK’s own investment ecosystem, ensuring fintechs can thrive and contribute to the UK’s economic prosperity.”
