Whisper it, but there is a quiet revolution going on in British banking. If you don’t work in the financial world, you may never even have heard of the UK’s burgeoning financial technology or “fintech” sector. And you almost certainly won’t know about the opportunities it offers.
So what is fintech? For me, it is a growing cluster of innovative tech businesses with connections to the financial world, with the potential to make that world a more efficient, easy and exciting place to navigate. Taken together, fintech could transform the way we, as customers, live our lives and do business.
Fintech encompasses a vast range of businesses and services; from the small-scale app developer, coding away in his or her bedroom, to the well-connected banking professional who recognises the potential of the fintech sector to transform their industry.
We now have firms like TransferWise and Azimo, providing people and businesses with a new way to send money overseas. We have Funding Circle and Zopa, allowing people to directly lend to small businesses in their community. And we have Paym and Pingit, helping people to send money to friends and family using just their mobile number.
Taking a wider view, fintech also provides a real opportunity for injecting greater innovation and competition into the UK financial services market.
This potential is what underpins the chancellor’s ambition, set out last August, to make Britain the global hub for fintech development.
The opportunity here is huge. Globally, fintech revenues already amount to £20bn every year. And the UK is leading the way, providing a home to almost half of all European fintech deals. According to a recent industry study, of the top 50 fintech firms in Europe, 24 are located in the UK.
But the government is keen to do more to build on this strength.
In June last year, we worked with the Financial Conduct Authority to launch Project Innovate, an initiative to help both startups and established businesses bring innovative ideas to financial services markets.
In August, the chancellor announced an additional £100m of British Business Bank funding via fintech platforms and new work to seize the opportunities of digital currencies.
This was then followed by further announcements at the Autumn Statement, for a strong package of measures to support our growing fintech sector including:
Acting to help alternative finance providers, including fintech companies, break into the business lending market.
Supporting peer-to-peer lending and crowdfunding, to help develop this new source of finance.
Exploring options for a new open standard for Application Programming Interfaces (APIs) in banking, to help app developers give us new opportunities to use our bank data in exciting ways.
I know the fintech community is delighted, and I’m looking forward to speaking to them at today’s Innovate Finance Global Summit, but we definitely won’t be stopping there.
We are in this for the long haul, so the government’s chief scientific adviser Sir Mark Walport is now looking at the opportunities and obstacles for UK fintech over the coming decades. His conclusions will be fascinating to see – peering into the future at what this quiet revolution could do for people and businesses in the UK.