The Centre for Finance, Innovation and Technology (CFIT) brings together experts from various fields, including finance, technology, academia, and policy-making, to focus on specific issues hindering fintech growth. CFIT's Chair, Charlotte Crosswell,
shares her predictions for 2025.
Innovation in financial technology is a fundamental prerequisite for fuelling economic growth in the UK. Our inaugural industry-led coalition at the Centre for Finance, Innovation and Technology (CFIT) made that clear. It showed how technology and data can
be used in novel ways to empower consumers and enhance access to finance for SMEs, while demonstrating that delivering personal data mobility – the ability to securely transfer and store our information – could boost UK GDP by £30.5 billion.
With the continued development of AI capabilities, the advancement of policy initiatives such as the National Payments Vision and new approaches to harnessing financial data, 2025 has the potential to be a pivotal year for the evolution of the UK fintech
ecosystem.
The power of data
The fragmentation of data across different financial services providers has long acted as a drag on industry’s ability to innovate, and on economic growth more broadly. Currently in the Report Stage in Parliament, the Data (Use and Access) Bill represents
a tonal shift in the UK’s approach to delivering better economic outcomes through data-sharing and is poised to be a cornerstone of the UK Government's digital agenda for 2025.
The Data Bill is building on foundations established by industry. In the field of how secure financial data-sharing can benefit businesses, HM Treasury has already begun taking forward the proposals made last year by our SME Finance Taskforce, including
reviews of the Bank Referral Scheme and the Commercial Credit Data Sharing Scheme.
In terms of consumer applications, a lack of trust amongst consumers to utilise their own data has often proven an obstacle to adoption. However, by providing a long-term regulatory framework and government recognition of the opportunities presented by consumers’
financial data, we can expect the Data Bill to help Open Banking regain momentum, driving the growth of variable recurring payments, and to advance the wider Open Finance and Smart Data agenda.
A technology solution to power economic growth
Different – but closely related – technologies will be needed to tackle other key challenges facing the UK financial services sector. For example, advances in Digital Verification will be perhaps the single most important step to take in bringing the UK
closer to a fraud-resilient society.
In 2023, almost £1.2 billion was stolen from consumers alone; almost half of this through Authorised Push Payment (APP) fraud (£459.7 million in 2023), where victims are tricked into sending money to scammers for products or services that are never received.
On a macro-level, these statistics place the UK firmly in the centre of what now Foreign Secretary David Lammy described as the “global laundromat” of illicit financial activity. Looking closer, they reveal a harsh reality lived by the country’s most vulnerable,
who are disproportionately the victims of economic crime.
As the key mechanism to streamline and standardise the verification process, digital identities serve as a critical defence against fraud and allow for easier access to financial services for those typically classed as either vulnerable or excluded.
In December, we were pleased to release the
interim findings of our coalition on Economic Crime, providing valuable insights into its progress in developing a Digital Company ID. This innovation will help lock bad actors out of our financial systems and contribute to the estimated £600 million in
value that could be added to the UK economy annually from widespread use of secure digital identities.
A key milestone – for CFIT, and for proponents of Digital Verification solutions – will come in March 2025, with publication of the coalition’s final blueprint report, which will offer comprehensive recommendations for policy changes and innovative solutions
to further strengthen the fight against economic crime. The transformative potential of this work has been recognised by the Treasury, with the National Payments Vision welcoming the work of CFIT and its coalition partners to “explore the potential of digital
verification solutions to combat economic crime” and committing to “consider any findings that emerge”.
As with Open Banking and Open Finance, collaboration between industry and government is a mission-critical component of this drive towards making our financial ecosystem more open and resilient. The work being undertaken by our 70+ participant organisations
will set the roadmap for how the UK could implement Digital Verification services, beginning with Digital Company IDs, to drive forward better outcomes for businesses and consumers alike.
Looking forward
As we begin the new year, CFIT remains committed to driving innovation and creating a more inclusive, secure and transparent financial ecosystem.
In January, Matt Clifford, the Prime Minister’s AI Opportunities Adviser, introduced his AI Opportunities Action Plan, outlining 50 recommendations focused on key areas such as investing in secure and sustainable infrastructure, enhancing access to skills
and talent, and driving adoption in public services. The ambition of the AI Action Plan dovetails with CFIT’s broader mission of empowering economic growth and efficiency through greater access to data, and, as an organisation, we are fully supportive of
the measures and sentiment laid out by Peter Kyle, the Secretary of State for Science, Innovation and Technology, in his foreword.
Consumers want technological change that they can trust and that delivers real, tangible improvements in their financial lives. Businesses need products that streamline their access to capital and financial services. Industry wants to innovate to deliver
better outcomes for individuals and SMEs.
All this is only possible when industry has the right resources, access to capital, forums for discussion, and regulatory support behind it. 2024 has bought us closer to achieving this balance. If the UK is to regain its global lead in financial innovation,
we must take an even bigger step in 2025.