Ron Kalifa’s independent review of UK Fintech, announced in last March’s Budget, was published on 26 February 2021. The aim is to 'identify what more industry and government can do to support growth and competitiveness, to ensure that the UK maintains its global leadership in this vital sector'.
The paper begins with some initial scene-setting: 'over the past decade, the UK has been quietly undergoing a fintech revolution – in jobs, innovation, improvements to people’s lives and in increased opportunities in global trade'. Today, the UK is 'envied around the globe as a hotbed of fintech activity – and its successive governments and regulators admired for building a supportive enabling environment that puts innovation at the top of the regulatory agenda' as borne out by some impressive statistics on market share, investment, tech spend and use. But there is a note of caution: 'the trajectory of UK fintech is at an inflection point of opportunity – and risk. While the UK’s position is well established, its future is not assured.'
Brexit is cited as one of the three broad threats to the UK’s leadership in this sphere (the other two being competition from overseas centres seeking to emulate the UK’s success and the COVID-19 pandemic), generating issues that require 'immediate action'. More specifically, the UK’s departure from the EU has created 'regulatory uncertainty' in areas relevant to the sector. In addition, firms have needed to navigate the immigration system for EU talent for the first time, while rival jurisdictions are 'rolling out aggressive attempts to lure talent in.
Numerous wide-ranging proposals are made in the Review to rectify these and other concerns. For example, there are changes suggested for the UK immigration system, including a new visa stream to enhance access to global talent for fintech scaleups. A well-timed recommendation is to make fintech an integral part of trade policy, just when the UK is pursuing and developing a web of trade agreements. Various other international-themed recommendations revolve around making 'a big statement about the international openness of the UK in a post-Brexit environment'. These include devising an International Action Plan for fintech to scale up the UK’s digital presence globally and an international Fintech Credential Portfolio to demonstrate a firm’s standing in identity verification, digital identification, regulatory compliance and investor backing.
We have previously referred to the possibility of the UK adapting its legal and regulatory landscape to reflect market strengths, both in the run up to the end of the Brexit transition period and thereafter. The Review pursues that direction of travel by proposing the creation and implementation of a new policy and regulatory strategy for emerging technology in the UK. Among other things, this will feature 'right-sized' regulation appropriate to the nature of, and risks presented by, relevant businesses and the implementation of a Scalebox to support growing, innovative firms.
We could continue to list the various recommendations made in the Review but it is perhaps more important to note what differentiates this project from many others. As well as setting an overall, ambitious strategy, the Review has a detailed plan for execution, with delivery to be masterminded by a government-backed Centre for Finance, Innovation and Technology. All this, we should hope, will enable the UK to move this thoughtful package from recommendation to realisation, ensuring the UK’s fintech ecosystem continues to develop and thrive.