How regulators and a break from the EU can secure the future of UK fintech

In July of last year, John Glen, the Economic Secretary to the Treasury, launched a review into the UK’s fintech sector.

Led by Ron Kalifa OBE, former CEO of Worldpay, it aims to establish priority areas for industry, policymakers, and regulators to explore to support the ongoing success of the sector.

Due to be published later this month, it is focused on five workstreams: skills and talent, investment, national connectivity, policy and international attractiveness.

Importance of fintech to the UK

The fintech sector employs 75,000 people across the UK, contributes over £7bn annually to the economy and attracted over $4bn (£2.9bn)in investment last year.

Over the past decade, the sector has become a strategic asset to the UK and will play a vital role in its future outside of the EU and its post-pandemic recovery.

Of course, since the Referendum vote in the summer of 2016, there has been a chorus of commentators who have been predicting that the UK will lose its leading position in fintech and will be left behind by other countries such as France, Germany, the US, China, Singapore and the UAE – who all regard the sector as one which has strategic importance to their economies.

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However, even with the impact of Brexit on financial services, the UK benefits from several strategic advantages when it comes to fintech: a diverse pool of talent and expertise (four of the world’s top 10 universities are here), a world-leading financial centre, forward-thinking regulators, a sophisticated investor network and a framework of common law.

As a city, London is unique in that it is a financial services centre like New York City, a policy and regulation centre like Washington DC, and is home to thousands of tech companies like Silicon Valley. It is also home to world-leading professional services firms with a vast knowledge base to support the industry. This is a combination that is not easily replicable.

How to keep the UK’s leading role

But if we want the UK to maintain its position, we must not rest on our laurels. This is why Kalifa’s fintech review is so important – if we do not make the most of this opportunity, we risk undermining a successful industry.

The Government, regulators and the industry as a whole must collaborate to ensure that the UK remains the best place to establish and scale a successful fintech business.

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After leaving the EU, we have a unique opportunity to create more proportionality in the financial services sector and the regulatory environment.

Policymakers and regulators must ensure that effective innovation is enshrined in their work. We must not forget the painful lessons of the financial crisis, and create a well-regulated environment that is proportionate and risk-based. As an ex-regulator with over 20 years’ experience, I know this isn’t an easy task – but it’s achievable.

What we want to see

OakNorth was delighted to be invited to contribute to four of the five workstreams within the review. None of the pillars exist in isolation.

For example, positive changes in regulation would make it easier to attract investment and funding, and in turn make the UK a more attractive and competitive place to set up and scale a successful fintech. That would then have knock-on effects in terms of attracting and retaining top talent, as well as making the UK a more attractive market for tech companies to list.

We’re excited to see the outcome of the review and look forward to continuing to play our part to ensure the UK remains a global fintech leader.

Nick Lee is head of regulatory affairs at commercial bank OakNorth

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