Innovate Finance Global Summit (IFGS) returned for a second day of jam-packed content at the historic Guildhall in the heart of London. Celebrating its 10th anniversary, the event shines a spotlight on the global financial ecosystem, bringing together key players from across the industry.
The second day of the event kicked off with a welcoming address from the stage host, Sasha Qadri, a moderator and presenter, who reminded the audience of the Fintech Time Capsule launched by IFGS to capture how the summit “reflects the state of fintech in the UK and around the world”.
The historic time capsule will be sealed in a discrete location in the City of London following Innovate Finance’s 10th birthday celebrations in September, to be opened in 2034 immortalising a decade of fintech innovation.
Qadri said “It will effectively freeze the fintech ecosystem in time so that in the future, we will be able to see fintech as it was in 2024. Looking at those who have joined us across these two days, the strength of this ecosystem is clear for all to see.”
Backing the London ecosystem
Sririam Krishnan, UK general partner at venture capital giant a16z sat down in conversation with Simon Lewis, founder of Lewis Advisors to discuss the company’s recent move to London, their first office outside of the US, to bring investment to the crypto and start-up ecosystem in the UK and Europe.
After relocating to London to head the office, Krishnan spent the majority of the session singing the UK’s praises: “The UK has a unique opportunity post-Brexit which is a catalyst for us coming here. There are two areas that are really interesting in the UK, one is decentralisation and Web3, the other is AI.
“The regulatory clarity is going to make the UK the capital for Web3. It’s going to unlock a lot of the ecosystems here, as well as pull in a lot of companies to move to the UK instead of going to Paris, Berlin, Singapore or Dubai. That’s the opportunity in front of us.”
After a show of hands to vote on which football team he should support now he’s in London (with Arsenal potentially gaining another fan) Krishnan added: “The UK has what AI really wants: talent… there is amazing talent here that we really want to invest in.”
Keep calm and carry on
With the UK on the countdown to a general election, one question on everyone’s mind is how do we make the voice of fintech heard in policy debates? Lord Iain McNicol of West Kilbride and Rt Hon the Lord Phillip Hammond of Runnymede debated the role politics plays within fintech and how the government can promote growth in the sector.
As Hammond said: “I think fintech is going to be an important part of the future of financial services in the UK. We left the European Union, which in economic terms was a pretty cataclysmic decision for the British people to make, and we have financial services as our largest single industry sector. So the question post-Brexit is: how do we sustain this oversized financial sector that contributes such a significant amount to our economy?
“The answer has to be technology. The history of financial services in the UK has been around developing and adopting technologies ahead of other people and being agile in the way we apply them. What I see in the next few years is an accelerated coming together of traditional financial services and the technologies being developed in fintech so that London becomes the place where new financial technology is deployed.”
To catch a thief
Elsewhere at IFGS, panellists gathered on stage in the Livery Hall to discuss how fintechs are fighting fraud. Adam Gagen, global head of government affairs at Revolut, detailed the extent of the issue fraud presents, as well as a lack of resources to tackle it: “In the UK, about 40 per cent of all crime is related to fraud in one way or another. However, only about one per cent of our policing resources are devoted to tackling it. Is this balance right? Us in the finance industry would probably argue no.”
Gagen also suggested the UK should adopt practices that are already common across Europe: “In places like Europe, they’ve been very clearly using a financial incentive to prevent fraud. They say that if someone sees a Facebook ad by Martin Lewis saying ‘buy this crypto coin’ and it turns out to be a scam, this should create a liability on Facebook to refund that customer – or at least partially refund them.”
Neelesh Pal, global head of strategy, solutions and transition, banking and financial services at WNS, said: “We need more adoption of multi-factor authentication. While this can be irritating, it is important in preventing fraud. Digital identities are also being used. For example, India has done a fantastic job of implementing digital IDs, and is being adopted by other governments across the globe as well. This is something which is helping to prevent customers falling victim to fraud.”
Priya Guliani, CEO of EarthID, also said: “We are at an intriguing place in fintech as well as fraud. Eight out of 10 adults in the UK are using fintech tools every day. But fraud is becoming more and more sophisticated – and often starts with identity. So identity verification plays a crucial role in this space.”
Regulation, regulation, regulation
Regulation dominated discussion in the morning, as representatives from challenger banks pondered the future of banking regulation. Valentina Kristensen, director of growth and communications at OakNorth Bank, said: “There’s a lot of regulation that’s designed to help challengers do more to help support SMEs. But on the other hand, a lot of regulation or fiscal penalties that make it so much harder.”
Cordelia Kafetz, director of financial risk at Starling Bank, also explained: “I’m a big believer that regulation in the financial sector is important, but it’s about how it’s implemented. But it’s not clear what the regulators want to achieve with their competition objective. Competition is a means to an end. If regulators are clear about their objectives and their end goal, it would be much easier for them to measure their success.”
Conrad Ford, chief product and strategy officer at Allica Bank, urged regulators to enable innovation and growth: “The regulators have done a brilliant job of allowing start-up banks – but it now needs to do a brilliant job of allowing banks to scale up.”
Later, Aidene Walsh, chair at the Payment Systems Regulator (PSR), discussed implementing regulation while continuing to enable innovation: “We recognise that the requirements we have set out for APP scams are challenging for some companies.
“However, innovation, such as the digital ID, should play an important role when combating fraud. Firms that are better at managing fraud should have an advantage and attract more customers.”
Walsh also said: “Big tech companies are playing an increasing role in payments. We already have one of the highest global numbers of users of Apple Pay. And the role of big tech is all but certain to grow. Collaboratively adapting to meet these opportunities and challenges will be critical for the UK payments ecosystem.”
Plot twist: open banking’s next chapter
Pace and progression emerged as key talking points, as Helen Child, founder and CEO of Open Banking Excellence, moderated another discussion centred around the next chapter for open banking.
John Penrose MP, explained the need for quick progression in the open banking space: “We currently have a leading position internationally, but there are an awful lot of other countries that want to eat our lunch. If we rush it and get it wrong, that will be disastrous, but we have to move really quickly – otherwise, we will be overtaken.”
Justin Basini, co-founder and group CEO of ClearScore, said: “If you look at the competition order, which was focused on encouraging current account switching and competition between the CMA9 banks, that hasn’t changed all that much. But what has happened, is we have become a leader in the ecosystem that has been created. I think if we can take the continuation of growth, with new companies disrupting, into open finance, that’s going to be very exciting.”
Jan van Vonno, head of industry and wallets at Tink, added: “There were around 14.4 million monthly payments using Pay by Bank technology last month. We’re reaching a stage where nearly one in six people are using open banking technology every single month. There’s a lot of momentum already in open banking, but with a lot more potential for innovation over the next couple of years.”
Wrapping up the conversation, Charlotte Crosswell OBE, chair at CFIT, turned to look into the future and revealed where she hopes the space will be in one year: “It’s time for implementation right now – which requires governance and conversations. But we’re still talking about the theory of this, and it’s time to move onto the next phase.”
Is BNPL finally getting regulated?
The long debated topic of buy now pay later (BNPL) regulation was discussed on stage at IFGS, with a panel of key industry players discussing how, despite industry feedback, BNPL regulation is still on hold.
The panel began by comparing the UK to the Australian landscape, with Michael Saadat, international head of public policy at Clearpay explaining: “It has proven a little less challenging for the Australian government to create a new category of legislation that will regulate buy now pay later. The government has made a decision to create a tailored framework that’s going to be proportionate to the product, and we end up with something quite beneficial for the industry but also provides a level of consumer protection that’s needed. I think that shows that it is possible and it can be done, but the work needs to be done around getting the detail right.”
Later in the discussion, Flora Coleman, global director of policy and government relations at Klarna added that regulation would benefit consumers who rely on BNPL products to manage their finances.
She said: “I see time and time again my fellow parents saying that they don’t want to go to traditional credit. It makes the solution really important for solving the problem that is fairer and more sustainable credit, and that’s cutting through to the consumers that need it…”
“It’s the uncertainty for the consumers. I’ve seen people who want to know how to manage their finances, who to go to when they have a complaint or an issue and want to deal with a regulated firm, so we’ve got to tackle the regulation.”
