Earlier this month, at the launch of the new UK FinTech trade body ‘Innovate Finance’, Chancellor George Osborne announced his plans to make the UK “the FinTech capital of the world”. These plans form part of the government’s long term economic strategy to place the UK at the centre of global finance and technology.
Osborne announced that - with government backing - the aim was realistic and achievable as the UK has “all the ingredients we need”. The Chancellor went on to highlight that the UK has the world’s leading financial capital; is a forerunner in scientific research; has one of the greatest technology hubs in the world; the highest density of start-ups and a “long history of leading the way in financial innovation”. Meanwhile Osborne recognised “fierce international competition” and set out the following government proposals to back this ambition:
- Introducing the right tax regime for the FinTech industry – with new incentives to encourage investment in start-ups, tax benefits for patents and peer-to-peer lending in ISAs.
- Focusing on investment – extending the British Business Bank’s funding of FinTech companies and investment in the FinTech industry by another £100 million.
- Creating a pro-innovation regulatory environment – including:
- Legislating to encourage new technologies and potentially requiring (through the Small Business Bill) large UK banks to pass on information on small businesses they reject for loans so that FinTech companies and alternative lenders can offer finance;
- The FCA committing to work with financial services firms to identify where regulation should adapt to new technologies; and
- Commissioning a study on the potential of virtual currencies and digital money (which Osborne recognised as “quick, cheap and convenient”).
- Improving digital infrastructure – rolling out 4G and broadband and launching a consultation on the future of our digital infrastructure to ensure we get the most out of 5G and fibre networks.
- Starting an international campaign to sell British technology and ensuring that UK Trade & Investment make this a priority.
On the same day as the Chancellor’s speech, UK Trade & Investment published a report, “Landscaping UK FinTech”, which contains research by Ernst & Young estimating that the FinTech market is currently worth £20 billion to the UK annually. The Chancellor’s plans are therefore exciting news for both the FinTech industry and the economy as a whole and it will be interesting to see how they help businesses to develop and thrive in the industry.