Voice of the Industry

Insights from the Innovate Finance Global Summit (IFGS) 2024

Wednesday 24 April 2024 08:07 CET | Editor: Oana Ifrim | Voice of the industry

IFGS 2024 brought together industry leaders spanning innovators, fintech executives, institutions, regulators, policymakers, startups, and investors for two days of thought-provoking discussions in one venue.

Samantha Seaton, CEO of Moneyhub: It’s always an enriching experience to attend the Innovate Finance Global Summit and hear from the many experts and businesses leading the way in our financial services sector in the UK and beyond. I invariably walk away from the summit feeling energised and inspired by the fantastic work happening. 

Last week, The Innovate Finance Global Summit (IFGS) celebrated its milestone tenth anniversary at London’s Guildhall, drawing fintech leaders, policymakers, and investors to chart the sector's future. Prime Minister Rishi Sunak emphasised government support, lauding Innovate Finance’s Unicorn Council and championing tech's potential for societal betterment.

I had the privilege of attending the conference, so I'll share some key takeaways below.

Highlights of the IFGS

Throughout the summit, there was a resounding call for nurturing startup growth and fostering partnerships, be it between investors and SMEs or regulators and businesses. Optimism permeated discussions about the industry's next decade, anchored in collaboration between industry, government, and regulators.

Antony Jenkins, Founder Chair and CEO at 10x Banking It was clear from the conference that 15 years on much progress has been made. But there is still a huge opportunity to create a truly customer focused financial system which is radically more comprehensive, fairer, and cheaper. Fintechs, incumbents, regulators and the governments should seize this opportunity now.

The UK's fintech success demands unwavering government and regulatory support to propel scale-up firms towards becoming future FTSE100 leaders.

Richard Davies, CEO, Allica Bank, commented: The UK has established itself over the last ten years as a great place to start a fintech. However critically we must ensure there is a deep focus on enabling those fintechs that have reached true scale up size to grow further and become the FTSE100 companies of tomorrow. So overall whichever government is in power come next year, there needs to a strong and unwavering commitment from both government and regulators to ensuring scale up fintech firms thrive.

Bim Afolami , the Economic Secretary to the Treasury, emphasised the significance of the UK's fintech sector, pointing out that 86% of digitally engaged adults in the UK use fintech services or products regularly. He disclosed that HM Treasury is actively investigating regulatory measures for data sharing, aiming for fairness, commercial viability, and safety in the process. 

At the Summit, Afolami unveiled various initiatives highlighting the advancement of the Open Finance framework, with multiple ongoing initiatives across the market laying the groundwork for Open Finance.

A new Taskforce on Open Finance, chaired by Centre for Finance, Innovation and Technology (CFIT), aimed to unlock the full potential of Open Finance. The Taskforce will leverage several key recommendations outlined in CFIT's February 2024 Blueprint Report, focusing on prioritising additional use cases for Open Finance, pinpointing data sets for unlocking and APIs for creation to enhance SME finance accessibility, and devising commercially viable methods to encourage secure financial data sharing among businesses. 
Bim Afolami MP, the Economic Secretary to the Treasury: The Taskforce will develop a detailed set of recommendations, identifying the necessary data sets and commercial incentives to propel CFIT’s initiative on SME lending forward.

Speaking of the future of fintech and what will drive innovation, Ezechi Britton, CEO of CFIT, commented: From my perspective, it's the potential of Open Finance to drive significant change. It's the next frontier of innovation for financial services. As we've discussed, we're leading a task force activity backed by the Treasury to deliver key recommendations regarding data set prioritisation for Open Finance, applicable commercial models, and SME credit. Ultimately, unlocking data is the most critical challenge facing the financial services industry. Every core initiative, whether it's digital identity, APP fraud, blockchain, or AI and regulation, relies on data. We must understand what is needed to unlock that data in an equitable, fair, and principled way. This aligns with the Smart Data Roadmap, the Fintech Manifesto announced by Innovate Finance, and the overarching importance of information and data. I'm thrilled to be part of this Taskforce and eager to see our progress.

Open Finance commanded attention at this year's IFGS, showcasing its rising influence in the UK and worldwide financial spheres. 

Thomas Bull, EY UK FinTech Growth Leader, commented: Open Finance was a major theme at IFGS this year, and we are seeing it gather strong momentum across the UK and globally. At its heart, it’s about unlocking capabilities and data through Open Finance to empower customers and drive increased market competition – it’s undoubtedly a powerful driver of change.The announcement of an industry-led Taskforce on Open Finance is an important step forward for the UK, supporting cross-industry collaboration to tackle the particular challenges facing SME financing. The UK is a leading financial services and innovation hub, and Open Finance has the potential to become another successful export, helping both consumers and firms across the world safely and effectively share their data with potential lenders, financial management platforms and advisors.

The National Payments Vision

The UK Government is currently developing a National Payments Vision to provide clarity on its ambition for UK payments. IT will be published this Summer, before Parliamentary recess; this may either prioritise trust, stability, and resilience broadly, or it could be more impactful, charting a course for the UK towards offering genuine payment options both online and in physical stores. The objective of the National Payments Vision is to provide clarity on the government’s ambition for UK payments. It will seek to guide industry and regulatory activity through providing direction on the shared outcomes the government seeks to achieve to ensure a world-leading payments ecosystem. The Vision will serve as the government’s full response to the Future of Payments Review.

Jack Wilson, VP Policy & Research, TrueLayer: As usual, IFGS brought together a great mix of fintechs and policy makers. It was reassuring to hear commitments from the Government at the event on the Open Finance Taskforce and National Payments Vision. These initiatives will drive frameworks for future innovation in the space of data and payments.

Other key discussions revolved around:

The Unicorn Council for UK FinTech

Innovate Finance's Unicorn Council for UK FinTech published the Council members’ recommendations to help maintain and strengthen the UK’s leading global position in fintech. 

The key policy recommendations include rethinking the regulatory approach to foster innovation and growth in FinTech, broadening the scope of Business Asset Disposal Relief, addressing capital supply gaps, explicitly including fintechs in R&D tax relief schemes, correcting exclusions in EMI and EIS schemes, and implementing a VAT-rebate scheme for earlier stage fintechs to level the playing field.

Janine Hirt, CEO Innovate Finance, said: We were delighted to host the inaugural meeting of the Unicorn Council for UK FinTech this morning and to publish the Council’s policy recommendations. Our members have identified the key issues to maintaining growth in UK FinTech and, importantly, they have made specific recommendations to the government on how best to address these barriers. We look forward to working with policymakers in the coming months to drive adoption of these recommendations and position the UK strongly for the next 10 years of FinTech growth and investment.

Promoting inclusion: Project Nemo

Joanne Dewar introduced Project Nemo, a pioneering disability inclusion initiativey, urging the fintech industry to better serve the UK’s largest minority and accelerate disability inclusion efforts.  

Joanne Dewar, Project Nemo lead, says: What started as isolated conversations a year ago have rapidly gathered momentum and, in just a few short months we are launching at IFGS. I have long held the mantle on equity and inclusion in fintech and yet I have never received such unequivocal support and personal resonance around one issue - disability inclusion. It is a massive missed opportunity for fintech.  

Fintech thinks of itself as the future of financial services, and we have made great strides in streamlining, broadening reach and lowering costs. But if we ever want to truly achieve mainstream adoption beyond the digital natives, we need to ensure that our workplaces, all of our products and services fully consider accessibility. 

The forthcoming cryptocurrency legislation 

At the IFGS 2024, UK Economic Secretary to the Treasury Bim Afolami highlighted ongoing efforts to draft legislation regulating cryptocurrencies, which will encompass various activities including stablecoins, staking, crypto exchange services, and custody of customer crypto holdings, signaling a comprehensive regulatory framework.

The UK government plans to deliver legislation for its final proposals around the crypto regime in June or July, before the government’s summer recess.

Smart Data Roadmap

The UK government has unveiled its roadmap for integrating Smart Data into the national economic framework, supported by the Data Protection and Digital Information (DPDI) Bill, with a focus on five priority sectors: banking, finance, energy and road fuels, telecommunications, and transport. Payments, especially in banking and finance, will be pivotal, while the government has established the Smart Data Council and intends to introduce a Smart Data Challenge Prize to accelerate Smart Data implementation across these sectors.

This bill will empower ministers to introduce smart data schemes across industries, expanding Open Finance beyond banking and establishing legal frameworks for digital ID schemes to support Open Finance applications.
Expected to pass by summer 2024, the DPDI bill is a significant step towards a consumer-centric economy and thriving innovation. 

The Smart Data Council has been set up by the Department for Business and Trade to advise on leading, developing, and co-ordinating new and innovative schemes that utilise the power of Smart Data. The Council features representatives from Citizen’s Advice, Innovate Finance, Open Banking Limited, CFIT and other stakeholders to drive forward open data standards and use cases. It is helping Government develop a roadmap for smart data, and identifying the cross-cutting standards, infrastructure needed to support industry schemes and a framework for interoperability and consistency across various Smart Data initiatives.

The future Open Banking Entity 

The Joint Regulatory Oversight Committee (JROC) has published proposals for the future Open Banking entity (the Future Entity). This follows consultation with industry through the Future Entity Working Group, which presented its findings to JROC in December 2023.   

The proposals ask firms to comment on the Future Entity’s recommended structure, governance, and funding for both its interim and longer-term model. 

Stakeholders are invited to feed back by 20 May 2024.  

JROC – led jointly by the Financial Conduct Authority and the Payment Systems Regulator (PSR) – has set out its recommendations on the design of the future entity and the vision for open banking.

The Future Entity will be at the heart of the open banking ecosystem. It will continue to set the standards for open banking and ensure that the foundations laid under the CMA Order are retained and progressed.  

Project Perseus 

Project Perseus, spearheaded by Bankers for Net Zero and Icebreaker One, with backing from banks, fintech firms, trade associations, and small business collectives, is geared towards revolutionising sustainability reporting for SMEs. Leveraging smart meter energy data, it strives to streamline and make scalable emissions reporting at a lower cost. This endeavour will enable banks to evaluate carbon emissions within their lending portfolios and pinpoint avenues for emissions reduction among small businesses, thus aiding in the provision of transition finance.

Envisioning the future

Open Banking in the UK has served as a catalyst for innovation. With upcoming legislation poised to grant ministers the authority to expand open or smart data to additional realms within financial services, as well as other sectors like energy and retail, the groundwork is laid for the advent of Open Finance across various financial services domains, encompassing savings, mortgages, assets, credit, insurance, and investment. This evolution holds the potential to unleash significant economic and social advantages, empowering consumers and businesses to seamlessly access and oversee their financial affairs.

Open Banking in the UK has served as a catalyst for innovation. With upcoming legislation poised to grant ministers the authority to expand open or smart data to additional realms within financial services, as well as other sectors like energy and retail, the groundwork is laid for the advent of Open Finance across various financial services domains, encompassing savings, mortgages, assets, credit, insurance, and investment. This evolution holds the potential to unleash significant economic and social advantages, empowering consumers and businesses to seamlessly access and oversee their financial affairs.

Barry O'Donohoe, Co-founder & CEO, Raidiam, offered his insights: I believe the most exciting prospect for the future lies in leveraging the accomplishments of Open Banking in the UK to establish a robust Smart Data economy. This would not only provide the most secure and safest environment for digital finance but also serve as the optimal platform for the adoption of new technologies and financial services. This presents a significant opportunity for the UK, given our attained success and global leadership position. Furthermore, expanding the applicability beyond banking and finance into cross-sectoral data sets has the potential to unlock genuine cross-sectoral data propositions, creating substantial value.

Samantha Seaton, CEO of Moneyhub: The emergence of digital platforms, mobile banking apps, and online payment systems has fundamentally changed the way customers interact with their finances and the firms that service them. For too long, businesses have prioritised the product rather than the customer’s own needs, but with new Open Finance technology we are righting this wrong. At Moneyhub we work with our clients to deliver customer-centric experiences and outcomes that not only drive brand loyalty, but also positively impact bottom-lines. Those businesses that are embracing this new outlook, and the technology that drives it, will ultimately win-out.

4 reports launched for IFGS 2024:

About Oana Ifrim

Oana is a Lead Editor at The Paypers. Her expertise lies in the areas of Banking and Fintech innovation, with a particular focus on Open Banking, Open Finance, Embedded Finance, and Banking-as-a-Service. In her role, she manages content and conducts interviews with key experts in the abovementioned fields. Additionally, she represents The Paypers at various banking and fintech events, webinars, and panels. Moreover, she oversees trends research and content production, providing strategic planning and coordination for large-scale, industry-specific research, reports, and projects. If you wish to get in touch with Oana, she can be reached via email at oana@thepaypers.com or on LinkedIn.

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Keywords: fintech, financial inclusion, Open Banking, Open Finance, payments , regulation, financial data, cryptocurrency
Categories: Banking & Fintech
Countries: United Kingdom
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