Over the past month or so, the Digital Finance Forum has been carrying out its second annual Summer Survey, which aims to gauge the opinion of founders across the fintech sector.
Unsurprisingly, this year’s survey was concerned primarily with Covid-19 and how it has affected founders and their companies. It paints a stark picture.
To begin with the good news, three quarters of respondents believe that the government has done a good job in supporting the economy during the coronavirus pandemic, and many have taken advantage of the various Covid-19 support programmes.
However, despite these positive views on the overall response, three quarters also told us that they thought the government’s support for the fintech sector specifically had been lacking.
This sector has felt overlooked by the Treasury in a number of ways, and has faced issues that the available support hasn’t been able to alleviate. This ranges from liquidity solutions for fintech lenders, through to problems with the Coronavirus Business Interruption Loan Scheme (CBILS) itself — most banks have rejected fintechs from obtaining loans through the scheme. It was not surprising to hear that nine out of 10 fintech founders believe that Covid-19 will make it harder for them to raise finance in the next year.
This lack of support in Britain does not compare well with other countries. In Australia, for example, the government put in place the Structured Finance Support Fund within days of the crisis unfolding, providing significant liquidity to Australia’s technology enabled non-bank lenders. In the US, the government was quick to include fintech lenders as a part of its economic support package, recognising that they are extremely well placed when it comes to deploying funding to customers.
Unfortunately, in the UK the government decided not to provide any liquidity support to lenders, and the British Business Bank is still processing the accreditation for many fintech lenders to deploy CBILS loans.
Fintech non-bank lenders could be forgiven for looking at the government’s response to this crisis and thinking that the system is substantially weighted towards the traditional banking sector. The review being led by Ron Kalifa for the Treasury on the future of fintech in the UK is now anxiously awaited, but as our survey shows, there is clearly more to be done if the UK is going to retain its leading role in the global fintech community, as well as across financial services more generally. The government needs to move fast if it doesn’t want this sector to lose its competitive edge.
It’s not all doom and gloom. In the sea of concern, a number of our survey respondents expressed a characteristically entrepreneurial optimism. More than a third of founders believe that there will be significant opportunities for fintech arising from this crisis, which has clearly accelerated the move by businesses to a more digital world. Indeed, the traditional bank branch probably seems even more out of place today than it did even six months ago. The UK’s fintech companies have a huge role to play in helping to drive our economic recovery, and in many respects the sector is just getting started.
Even more reason for the government to provide the right support to the fintech sector and ensure we remain a world leader.
Main image credit: Getty