By Jack Denton
Immigration reform and changes to stock-listing rules are among the key policies the U.K. must adopt to protect one of the crown jewels in its massive financial services industry, according to a new strategic review.
Fintech — the use of technology in advancing traditional financial services — delivers £11 billion ($15.4 billion) a year to the U.K. economy. The U.K. is home to 10% of the world’s market share of the fintech sector, including dominant players like Revolut, Monzo, and Wise, formerly known as TransferWise.
But overseas competition, the changing landscape after Brexit, and the impacts of the COVID-19 pandemic represent three existential threats to British fintech leadership, according to an independent review of the sector commissioned by the Treasury.
Significant policy changes and government-led investment into the sector are necessary to support and grow British fintech, the review said.
Immigration reform in the post-Brexit era is essential in continuing to attract skilled European workers, and the review proposes creating a new set of visas to streamline firms’ ability to recruit top tech talent.
In addition, the U.K. must create a dedicated Digital Economy Taskforce to ensure fintech priority alignments across government, as well as use institutional capital to create a £1 billion fintech growth fund to nurture startups, the review said.
But some of the most meaningful changes could come from changing stock-listing rules. The U.K. was home to just 4.5% of the 3,787 initial public offerings at major global stock exchanges between 2015 and 2020. To improve this, the review proposed amending U.K. listing rules with reductions to free float requirements and loosening restrictions on dual-class shares. In time, the U.K. could also host a family of fintech stock indexes to increase the sector’s global visibility.
The strategic review was led by Ron Kalifa, the former head of payments-processing group Worldpay. Kalifa was tasked in July 2020 with identifying key areas to support the British fintech sector by Rishi Sunak, the chancellor of the exchequer and head of the Treasury.
“Fintech is one of the U.K.’s great success stories and will help us seize new opportunities around the world,” Sunak said. “We must now build on our global reputation for fostering innovative startups and ensure firms can access the talent, finance and support they need to scale up here in the U.K.”
Other elements of the five-point plan outlined in Kalifa’s review include supporting firms scaling innovative technology, expanding research and development tax credits, and bringing fintech policy into the international sphere by making the sector an integral part of the country’s trade policy.
The British arm of tech finance powerhouse Silicon Valley Bank cheered the results of the review.
“The Fintech Strategic Review recognizes that despite the macro-headwinds from the COVID-19 pandemic, economic backdrop and Brexit, the U.K. remains one of the most attractive places to found and build leading fintechs globally,” said Erin Platts, the president of the bank’s U.K. branch and head of its Europe, Middle East, and Africa division.
“By putting into practice the recommendations laid out today in the final report, the U.K. can capitalize on this competitive edge and build on the momentum seen to date and encourage more companies to go public through U.K. markets,” Platts said.