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2024: A critical year for fintech regulation… if policymakers step up

More delays, uncertainty and U-turns are sadly on the horizon this year

Rishi Sunak / ©UK Parliament/ Jessica Taylor

©UK Parliament / Jessica Taylor

Launching a fintech venture in 2024 is more challenging than ever. The landscape is marred by a tough fundraising environment, plummeting valuations, and frequent financial losses. 

In this climate, a robust regulatory framework is not just beneficial, but critical. It provides a stable foundation for founders to strategise and investors to commit funds without the fear of shifting regulatory sands.

However, the regulatory environment, particularly in the UK, has been anything but stable. Key sub-sectors like buy now, pay later and open banking are mired in legislative ambiguity, making it impossible for innovators to plan ahead.

Take buy now, pay later. In February 2021, then-Economic Secretary John Glen promised swift regulation. Fast forward to 2024, and we're still in a limbo of consultations, unfulfilled promises and U-turns, with only minor modifications achieved through historic legislation.

The expansion of open banking into open finance saw some progress with a roadmap in 2023, but many milestones have already been missed or postponed

Other less glamorous areas, like the UK's Making Tax Digital project, have seen significant delays, affecting numerous accounting startups. The ongoing pensions dashboard debacle is on track to arrive a decade after launch.

These instances underscore a trend of regulatory inertia or a lack thereof. With 2024 being an election year, it's reasonable to expect that the political will behind these initiatives may further shift or stall entirely.

While speed isn’t the essence of effective regulation, a thoughtful, yet agile approach is crucial. This is necessary to keep pace with rapid fintech innovation.

Speed isn’t the objective of regulation, and nor should it be, but we do need a thoughtful and agile approach to consulting, decision-making and implementation that makes progress in months and years, not decades.

Sadly I predict that by the end of 2024, we may well find ourselves with the very same question marks over the future of open banking and buy now, pay later that we have today.

Financial regulation may not be glamorous, but if politicians want to continue heralding fintech as a beacon of UK innovation, they must show real commitment to delivering the progressive regulation they've long promised.

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