UK Fintech Review: The steps for the future of the UK fintech scene

Ron Kalifa’s UK fintech review has been greeted relatively well across the market. Kalifa’s review identified many of the foreseen headaches that are anticipated by the fallout from Brexit and the pandemic, as well as identifying steps to solve them. Ahead of what is shaping up to be the UK’s most important budget for some time, the findings and recommendations of the review has allowed the fintech community to breathe a sigh of relief.

Following Brexit, a lot has been speculated about London losing its place as the centre of the fintech world. As a fintech based in Barcelona but with also a presence in London and Cambridge, we don’t anticipate this being the case.

The balance between innovation/challenger companies and traditional financial institutions will continue to be the driving force behind London being a fintech hub of the world. To date, there is nowhere in Europe that compares to the investment, competitiveness and innovation present in London, and this report signals an intent for that to remain.

Both from an investment standpoint and job creation, the review identified two of the major key areas that the market would’ve been concerned about. Kalifa’s Review seeks to establish a £1 billion “Fintech Growth Fund” pulled from institutional capital to address a £2 billion fintech growth capital funding gap. The report explains this would be a market-led fund funded by domestic institutional capital holders and would (where feasible) utilise existing regulatory concessions. By encouraging investment from participants in the know, the review is paving the way for many more UK fintech’s to spring up in the next few years and ensuring that the market remains proactive and agile.

The UK has always been full of some of the most innovative and talented workers in the space and an attractive home for people from across the world with similar talents. With the proposed new visa route to the UK announced, it shows that the UK is still looking to attract some of the best talents both within and outside its borders. This should be a priority for the government to ensure that it remains open for business.

Finally, a recommendation that we at Neo were personally very pleased to see was the proposed creation of different fintech ‘hubs’ around the UK. To support and scale “regional specialisms” unique to the UK, especially significantly intellectual property currently being created in UK universities, the Review proposes the delivery of a three-year strategy to expand the nation’s top 10 fintech clusters.

We welcome this recommendation in particular. Our own innovation labs are based in Cambridge and we have recognised the need to sometimes look beyond London and to the amazing talent that is being cultivated in the nation’s universities and this recommendation addresses that directly.

There is no doubt that the next few years are set to be very important for the UK’s fintech space. Nowhere in Europe rivals the scale of the fintech industry in the UK and Kalifa’s review has clearly shown the intention of the UK to keep that the same. How the government reacts to it will be interesting to see and Rishi Sunak’s budget this week will give us some indication. The UK should look to continue its openness and connectivity with other fintech hubs across Europe and the world, which will help cement its position as one of the most dynamic and welcoming places to start and grow a financial technology business.