Over the last week I’ve been out in the City actively showing my support for businesses reopening after lockdown, including getting a long overdue haircut.
Local shops, barbers, pubs and restaurants are of course the backbone of places like the Square Mile. But as we look to kickstart a strong, sustainable recovery post-pandemic, what’s also essential is building on the UK’s leadership in technological innovation.
That’s why I’m hugely excited about the start today of UK Fintech Week featuring IFGS 2021. Over the course of five days some of the biggest names in finance, government and tech are taking part in online events to discuss and debate some of the key issues affecting the sector both now and post-COVID.
One thing certain to dominate discussions at this year’s event is the Government’s Kalifa Review of UK Fintech, a report published in February which underlined the valuable role of our financial technology industry.
The figures speak for themselves. Despite the pandemic, the UK fintech sector has held up extremely well, retaining its role as the top-ranking investment destination in Europe. Innovate Finance data shows $4.1bn was invested across 408 deals in 2020, putting the UK second only to the US in total capital raised, and showing the continued importance of the industry to the UK economy.
The Kalifa Review set out a plan for how the UK can retain this global leadership in fintech by assisting firms in the sector to scale up, access the talent and finance they need, and deliver better outcomes for people and businesses. It put forward recommendations that we hope the Government will take forward, including introducing a new visa stream to enhance access to global talent for fintech scaleups, creating a £1bn fintech “growth fund” and amending UK listings rules. It also showed the huge potential to grow fintech hubs outside London, building on the success of existing ventures in Birmingham, Manchester, Edinburgh and Belfast.
But while fintech is an essential part of the UK financial ecosystem, it’s important to remember that RegTech companies have also played a crucial role in helping firms navigate the challenges posed by COVID-19.
RegTech is an emerging industry with potential to add value, not only to financial services, but to the wider UK economy. Innovative technologies provided by the RegTech industry can help financial services to better meet their regulatory obligations, enabling real time surveillance of the financial markets and even predicting where risks and problems will emerge. This will be key to combat issues including financial crime, identity theft, fraud and terrorist financing activity.
However, if this blossoming industry is to grow further, urgent action is needed to address barriers to growth and help achieve a ‘paradigm shift’ in how it is viewed across the financial services sector, as a report published by the City of London Corporation last Friday shows.
Produced in partnership with RegTech Associates, the report draws on data from hundreds of global RegTech firms, sector roundtables and interviews with global financial institutions to provide a comprehensive and fascinating overview of challenges and opportunities currently affecting the industry, and I urge all readers to have a read.
So when you use your phone or card to pay for your post-lockdown haircut, do remember the huge amount of financial innovation that’s taking place behind the transaction.