"Hardly anything has been done by UK government" to plug fintech funding gap, say industry leaders

“Hardly anything has actually been done by the UK government" to plug a £2bn funding gap in fintech, say the bosses of UK fintech.

Leaders from the likes of LendInvest,Thought Machine and ComplyAdvantage say that recommendations made in the Kalifa Review one year ago, which pinpointed a £2bn growth capital gap in the fintech sector, have not been acted on.

In a strongly-worded report, fintech leaders say that UK fintech will be “irrevocably damaged” if the government does not step up to the plate.

The group, called Fintech Founders, have now laid out a series of recommendations, including extending existing tax incentives to firms and making available more sources of capital to address the funding gap.

Christian Faes, co-founder of LendInvest and chair of Fintech Founders, said: “The UK currently has a strong international position when it comes to fintech, but we risk throwing this away.

“If the government is serious about fintech it needs to act to make sure that UK fintech companies can access the funds they need to grow and compete.

“The Kalifa Review was promising but a year on and hardly anything has actually been done by the UK Government. The government needs to stop talking the talk and start walking the walk if we are to retain our status as a fintech hub.”

The leaders have published an eight-point plan, which they say will allow fintech firms to grow and help the UK maintain its position as a fintech powerhouse.

The fintech leaders said there was no “silver bullet” about plugging the funding gap, but, as an example, have recommended changing the rules around pension funds as one remedy, which could allow pension funding to move into fintech firms via venture capital funding.

The call from fintech leaders follows research undertaken by members of the Fintech Founders, which found that just one in five fintech founders thought the Kalifa Review would make a positive difference to their business while more than two-thirds said the government is not interested in acting on its recommendations.

Ralph Rogge, CEO and co-founder of Crezco, said the Kalifa report wasn’t “revolutionary” but said it didn’t need to be as the UK had a “strong” track record in building a fintech ecosystem.

He said: “The report isn’t revolutionary. It doesn’t need to be because our track-record in building a strong fintech ecosystem is positive.

"But we cannot rest on our laurels or past successes. We must continue to innovate and evolve with progress, highlighting key areas of focus for the government, such as policy and regulation, skills, and investment."