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.
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.
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.
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.
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.
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.
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.
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
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.
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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