How to make UK global fintech hub in 10 government-issued ideas

This report builds on the current work of HM Treasury and other parts of the government to provide a longer-term vision for the UK fintech sector. Its recommendations aim to provide a firm foundation to support and catalyse the growth of the sector out to 2025.

Recommendation 1
The government establishes a ‘FinTech Advisory Group’ with representation from the government, regulators, trade associations, academia and business.

Recommendation 2
The government should create a programme of grand challenges on fintech for academia, business and the third sector to answer. Those working in the area should play a major role in suggesting the topics for a grand challenge programme. Initial suggestions include:

• Setting fintech entrepreneurs the challenge of creating solutions that will have large effects on reducing financial exclusion.
• Creating a UK community that will use fintech to deliver new tools that will enable regulators to operate more effectively. This could create a whole array of important ‘RegTech’ tools and businesses.

The report identifies 4 key groupings of technology advancement that will enable the fintech sector both in the near term and over the next decade:
1. Machine learning and cognitive computing
2. Digital currencies and blockchain
3. Big data analytics, optimisation and fusion
4. Distributed systems, mobile payments and peer-to-peer applications

Recommendation 3
Research Councils and Innovate UK should support research in all areas of fintech, including big data, analytics, and the social and economic impacts of fintech.

Recommendation 4
Horizon scanning will be essential to anticipate, monitor and assist in the management of emerging risks and threats in fintech. There is an important leadership role for a FinTech Advisory Group working closely with regulators and the Bank of England.

Recommendation 5
Fintech modules should be included in relevant degree courses to expose students to the fintech industry and in turn to expose the fintech industry to an educated and work-ready body of students.

Recommendation 6
Government should consider developing action plans to harness opportunities to develop regional hubs for fintech outside London and the South East.

Recommendation 7
Government must be an expert strategic commissioner of fintech. It should encourage all entrants to market, from start-ups to established players.

Recommendation 8
A system should be developed and overseen by financial regulators, learning from sectors such as the pharmaceutical sector, that allows new ideas to be piloted, and new technologies and consumer propositions to be tested in virtual and real situations without the threat of destabilising financial systems or jeopardising consumer protection.

Recommendation 9
UKTI, working with BIS, should continue to develop the UK as a global hub for the fintech innovation community, in order to attract innovators to the UK, retain them, lead in the creation of new sustainable financial services models and promote UK solutions and innovations in finance worldwide.

Recommendation 10
Regulators should engage the fintech community in automating regulation and compliance to create a state-of-the art regulatory reporting and analytics infrastructure, called ‘RegTech’. The report suggests that initiatives such as Project Innovate could be used and adapted to find ways of commissioning, testing and adopting new innovative RegTech solutions.

In order for the government`s initiative to succeed, “it will be necessary to foster the best investment environment, the right tax system, the appropriate regulatory framework and the best infrastructure for fintech companies to flourish within the UK”, the report states.