Fintech is a true UK success story, providing 76,500 jobs, 1,600 firms, and £7bn for our economy. There was £4.1bn of venture capital investment in UK fintech firms last year. It is now up to all of us to ensure it remains so.
The importance of fintech is about more than just the hard numbers. Small innovative firms bring energy, ideas and growth to hubs across the UK, contributing to our society in many ways. People will of course understand that new tech-enabled services are transforming the way we buy, sell and manage our money. Indeed, many of these proved crucial as we adapted to the pandemic. But fintech firms are regularly first to embrace new approaches, like the flexible virtual working that businesses of all sizes are now considering well beyond Covid-19. Their dynamism and fresh ideas will now play an equally important role in driving forward the UK’s recovery.
The UK government has consistently championed and supported fintech. Earlier this year, we extended the funding for the Fintech Delivery Panel, a group of industry experts who work to protect the UK’s intellectual, technological and financial appeal to fintech. When the pandemic struck, we set up the Future Fund to help early-stage high-growth businesses secure the investment they need. So far, the fund has supported nearly 16,500 jobs across sectors and innovative financial firms have benefited from more than £80m of Future Fund investment.
We’ve also launched an independent review to ensure the UK remains the best place to start and scale a fintech business. The aim of the Fintech Strategic Review, led by Ron Kalifa, is to support growing firms and promote the integration of new technologies across financial services. It will explore whether fintech has the right resources and conditions to succeed, particularly in light of Covid-19, looking at skills and talent, investment, national connectivity, policy, and the international attractiveness of the UK. And the review’s findings will form the basis of a longer-term strategy to enhance fintech’s resilience and access to growth opportunities over the coming years.
But this cannot be achieved by government alone – and that’s why I am pleased to see some of the UK’s leading banks signing the new Fintech Pledge.
The Pledge, spearheaded by Tech Nation, sets new world-leading standards for bank-fintech partnerships. These can be challenging to establish, but successful partnerships are valuable for both sides: banks get access to new technologies that improve their services, and fintechs get the resources and experience they need to scale.
We know that many bank customers want new tech-enabled services too, with two-thirds already using a fintech service alongside their main account. By removing obstacles to collaboration, the Pledge will allow innovative new financial services to emerge, making it faster and easier to manage your money, and improving access to affordable products that promote financial inclusion. Importantly, more effective partnerships will also give small innovative firms the boost they need, support jobs across the UK and spur on our economic recovery.
As we look ahead, the industry, government and regulators each have a role to ensure UK fintech can succeed, at home and internationally. The UK-Japan free trade agreement is a significant step for the sector and will help UK firms who operate in Japan, like Revolut and Transferwise, to innovate and grow. Our homegrown fintech sector is a strategic asset and initiatives like the Fintech Pledge are important to protect and enhance the UK’s global leadership.
Fintech firms have faced challenges this year, but they continue to represent an exciting opportunity for the UK in the global economy – that’s something we should all be proud of.
John Glen is economic secretary to the Treasury and Conservative MP for Salisbury
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