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Kalifa Review: Keeping British fintech at the front of the pack
While the UK now holds more than 10 per cent of global market share in the fintech sector its future lead isn't yet assured, says Nigel Verdon, co-founder and CEO, Railsbank.
Ron Kalifa’s Review has fed back its findings, outlining what the UK needs to do to retain its highly-prized fintech crown.
The report reveals the UK now holds more than 10 per cent of global market share in the sector, which is worth more than £11 billion a year to the nation’s economy. Powerhouses like Monzo,Revolut, and Transferwise (now simply known as Wise!) are headquartered in London, underlining the capital’s status as a major fintech hub.
However, the departure from the EU, which cut our ‘home’ market from 450 million to 60 million overnight, naturally raises questions about whether London will continue to attract top international talent.
The Kalifa Review, commissioned by HM Treasury, reinforces the fact that the government sees fintech as a key area of focus as it considers where to direct industrial strategy efforts in the aftermath of Brexit.
The trajectory of UK fintech is at an inflection point of opportunity - and risk. Britain needs to take the right steps to become a truly dominant global player in this market, especially with the rise of challengers such as Lithuania, which has over 150 fintechs and the vast EU talent pool to draw on.
The Review has set out a five-point strategy to keep the UK at the top of the world’s fintech league table, covering policy and regulation, skills and talent, investment, national connectivity, and international attractiveness. All the key ingredients.
Having founded three successful fintech companies in the UK, I gave feedback as part of Ron’s review, and I’m keen to stress that I see an 80/20 split of effort where the sector leads and the government supports where necessary.
The UK is still, and will remain, a great place to start a fintech due to its world-class ecosystem. It's a good base from which to grow globally, but we do need that crucial support from the Department for International Trade and Her Majesty’s International Trade Commissioners to grow into new markets.
London is also the smart place to float a fintech thanks to the global investor base still in the City, but let’s ensure the UK tax environment is attractive to founders so that the talent that starts fintech companies also remains.
Let’s use the lessons learnt during COVID-19 – after all, the pandemic has accelerated the use and acceptance of fintech models. Fintech companies have made the lives of millions of people easier, whether it’s paying for something at the flick of a wrist, sending money to friends and family around the world quickly and safely, or providing alternative finance for SMEs.
We should apply this type of innovative thinking when it comes to solving the post-Brexit challenges. In terms of skills, for example, we can look to fast track new talent visas with the same speed and integrity that we’ve seen powering the vaccine roll-out.
Going a step further, let’s harness what we’ve discovered with remote working. The past 12 months have shown that working from home can be efficient, successful, and even preferable. What’s stopping a British fintech from bypassing the need for a visa by hiring a home worker based in the Australian bush, so long as they have good broadband.
This is where collaboration with the government is vital – to underpin this type of innovative thinking. If we were to hire someone based in Australia through UK employment law, then what are the tax implications and so on. We need new thinking for a new world.
While the UK’s position is well established, its future isn’t yet assured. We’re at a pivotal moment to capitalise on the success of UK fintech and its position as a global leader. We have a unique opportunity to leverage a decade of growth, innovation, and talent. Let’s grab it by working together as an industry, and as a country.