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Shaping the future of finance

Read all about it: The Kalifa Review is out!

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I blogged the other day about Singapore-on-the-Thames in anticipation of the Kalifa Review of UK FinTech. Today, the review is released so, here it is:

Executive Summary

Over the past decade, the UK has been quietly undergoing a fintech revolution – in jobs, innovation, improvements to people’s lives and in increased opportunities in global trade.

Yet for many, the image of fintech is stuck in Shoreditch, an area of East London populated by start-ups and coffee shops catering to the mythologised young laptop entrepreneurs of “Silicon Roundabout”.

A look at the record of achievement helps project the true picture. Let’s quickly scroll back 10 years.

Back then, it took days to open a current account. Now you can be onboarded in minutes, and more safely and securely, leveraging regtech solutions and challenger bank innovation.

Back then, people had only a few options for managing their savings and pensions – using paper updates. Now there is more choice, pensions can be tailored to specific needs, easily amalgamated and they are online with immediate, accessible interfaces.

Back then, if you were a new business seeking SME financing, there was limited choice of providers on the high street with slow decision-making processes. Now, there is digital access to a wide array of lenders looking to leverage machine learning and AI tools, and provide immediate decisions on a new loan or refinancing opportunities.

Fast forward to today. Achievements like these have contributed to making the UK envied around the globe as a hotbed of fintech activity – and its successive governments and regulators admired for building a supportive enabling environment that puts innovation at the top of the regulatory agenda.

The Financial Conduct Authority’s (FCA) pro-competition mandate has helped support new fintech firms and ensure a more nurturing regulatory environment. In 2016, the FCA launched the world’s first regulatory “sandbox”, which was subsequently replicated abroad by regulators looking to follow the UK’s lead in innovation.

Similarly, the Bank of England and the FCA’s ‘New Bank Start-up Unit’ provides additional support and advice for firms looking to gain a banking licence.

This in turn is accelerating the digital transformation of banks, asset managers, and insurers, as they strive to meet changing consumer and business demand. Big Tech is moving into this space, highlighting the value of data-led solutions in financial services. Because of the strength of our incumbent financial services sector, fintech has found extremely fertile ground. Yet it has also created opportunities to cross-pollinate into broader technology solutions, leveraging cross-cutting applications like big data, AI and quantum computing. Combined, these trends create a pivotal moment to support fintech innovation.

This catalysed the UK into becoming the fintech hub of today, coupling it with the sophisticated financial services ecosystem of London, where so-called “unicorns” such as Wise, Onfido, and Revolut have based themselves.

This has resulted in an impressive scorecard:

  • Representing 10% of global market share and £11bn in revenue, the UK is a dominant force in fintech.
  • The total tech spend by UK financial services firms was £95bn in 2019.
  • SMEs and corporates are all keen users of fintech. UK citizens are becoming digitally active and 71% are now using the services of at least one fintech company.
  • Investment into UK fintech stood at $4.1bn in 2020 – more than the next 5 European countries combined.

However, the trajectory of UK fintech is at an inflection point of opportunity – and risk. While the UK’s position is well established, its future is not assured.

There are three broad threats to our fintech leadership position, each of which point to three opportunities that must be grasped through immediate action to create an economy that works inclusively and sustainably for its citizens while securing the ambitions for “Global Britain”.

  • Competition: Overseas centres are seeking to emulate the UK’s success. Competitor jurisdictions such as Singapore, Australia and Canada are investing heavily across many of the areas we have looked at, including capital, skills and direct support for fintechs.
  • Brexit: Brexit has created regulatory uncertainty in specific areas relevant to fintech. Firms must navigate the immigration system for European Union talent for the first time – whilst rival jurisdictions are rolling out aggressive attempts to lure talent in.
  • Covid: The pandemic has accelerated digital adoption globally in a way that marketing or policy never could. This is creating opportunities for jurisdictions that are quickest to diagnose what’s happening and nimblest to capitalise on the opportunities for fintech.

The prize lies in three opportunities:

  • Jobs: Fintech is embedded across the UK with the potential to create high income tech-based employment, becoming an engine of the “levelling up” agenda, as well as playing a part in upskilling and retraining the existing workforce. The sector’s direct GVA contribution to the economy is estimated to be £13.7bn by 2030, with job creation contributing to 70% of this.
  • Trade: Enabling fintechs to achieve global scale and reach via access to international markets, and continuing to lead on regulation and standard-setting in fast-moving tech. We see fintech as a core asset for Global Britain.
  • Inclusion and Recovery: Supporting citizens and small businesses to access more, better and cheaper financial services – and doing so in a sustainable way to help “build back better”.

Building on our current position, this Review has identified a Five-Point Plan of recommendations to deliver this approach and achieve our vision:

  • Policy and Regulation – dynamic leadership that protects consumers yet nurtures fintech activity and encourages competition
  • Skills – ensuring fintech has a sufficient supply of domestic and international talent and the means to train and upskill our current and future workforce
  • Investment – completing the funding ladder from start-ups right through to IPO
  • International – a targeted approach to exports and inward investment
  • National connectivity – leveraging the output of fintechs across the UK and facilitating connectivity amongst them Set out below is both a strategy for the fintech sector and a delivery model to help the UK realise it. This will enable us to move from being a global leader in fintech start-ups, to the best place to scale a business, and take solutions from IP creation through to widespread adoption. That is when the full impact and opportunity of a thriving fintech sector will be realised.
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Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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