The report, led by Network International chairman Ron Kalifa upon request by the Government, revealed that the UK fintech industry is at risk of losing its lead in the space worldwide, unless governmental investment in fintech startups is accelerated.
While the UK continues to lead Europe in new Fintech investment, of new financial companies selling shares to expand and innovate, the US-based Nasdaq index attracted 40% of new listings, compared to just 5% for the UK.
London was recently found by CBOE Europe to have been surpassed by Amsterdam as Europe’s biggest centre for trading European company shares.
Recommendations made by Kalifa in his report included the following steps:
- Launching a £1 billion Fintech growth fund, backed by institutional investors;
- Putting a new fast-tracked visa process in place to attract new talent;
- Setting up a new training programme, facilitated by further education colleges, to bolster development of relevant tech skills;
- Developing new Fintech “clusters” across the country.
“The UK needs a wake-up call,” said Kalifa. “There was a time that setting up new Fintech businesses in the UK was a no-brainer, but the UK is falling down the pecking order – in part thanks to Brexit.
“There will be major IPOs of shares coming up, which will be seen as huge UK successes, but the reality is these companies are 10 to 15 years old and were set up by non-UK founders.”
Speaking on the proposed growth fund, SFC Capital CEO Stephen Page stressed the importance of focusing on supporting Fintech startups at the earliest possible stage.
Page said: “Especially in the challenging aftermath of Covid, when private investors will understandably double down to protect existing investments, it’s all the more important to support companies at the earliest stage to preserve the innovation pipeline.
“We need long-term thinking, not short-term support for perceived quick wins. As an early investor in Onfido, I hope to see the £1 billion Fintech Growth fund proposed in the Kalifa report supporting the truly early-stage startups.
“We don’t need another Future Fund for companies that have already secured venture capital funding, which excluded the 99% of “true” startups that are still pre-VC.”
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Improvement to capital and talent access needed
Russ Shaw CBE, founder of Tech London Advocates & Global Tech Advocates, believes that the Kalifa report will help Fintech startups to continue navigating the post-Brexit and post-Covid landscape, and that access to capital and talent needs to be bolstered.
“This review outlines a way forward for expanding from ‘Silicon Roundabout’ to create ‘Silicon Regions’ that stretch the length of the country and make the term ‘UK Fintech’ synonymous with growth, dynamism and innovation,” said Shaw.
“The report’s recommendations will help businesses overcome the immediate challenges posed by Brexit and the pandemic. It is innovative British Fintech start-ups, scale-ups and unicorns which will need further access to sizeable pools of capital, diverse highly-skilled talent and the right regulatory environment to thrive in the face of an adverse economic climate and compete on the global stage with other Fintech hubs around the world.
“From new stock market listing proposals, to investment in digital skills and new visa schemes – this report is a clear testament of the Government’s commitment to bolster Fintech innovation and outline its clear ambitions for a digitally-driven economy and to work in collaboration with the private sector to make this vision a reality.”
Tech Nation recently launched its Fintech Pledge to boost the sector in the UK.