FinTech: making sure the UK continues to be the global capital
Economic Secretary, Harriett Baldwin speaking at Innovate Finance's Global Summit.
Thank you for inviting me here today (11 April 2016). It is a pleasure to speak at this key event in the FinTech calendar – a chance to bring the entire industry together to celebrate UK FinTech’s achievements, and ensure we continue to be the best place in the world to be a successful FinTech business.
I’m delighted to see so many great speakers lined up for you today, covering such a broad range of subject matter – from blockchain and digital currencies, to alternative finance and expanding banking to the 2 billion unbanked people in the world.
What is clear is that there is huge excitement about the potential for FinTech to make profound changes to the way we go about our financial affairs. It is right that the UK continues to be at the very heart of that.
We are the global capital for FinTech. The recent EY report on FinTech, commissioned by HM Treasury, ranks us above other FinTech hotspots such as California, New York and Singapore.
The UK FinTech sector generated £6.6 billion revenue in 2015. With a workforce of over 60,000 employees, more people work in UK FinTech than in Singapore, Hong Kong and Australia combined.
This is a very strong start – but our ambitions are even greater. We need to ensure that the UK continues to be the best place in the world to be a FinTech company. That is why I am today delighted to be announcing a set of measures to deliver key FinTech initiatives.
First, to ensure that we effectively deliver on our FinTech commitments, we will create an industry-led FinTech panel, working with Tech City UK as well as Innovate Finance and other key representatives of the FinTech community.
This industry-led panel will oversee the overarching strategy for UK FinTech and ensure the delivery of key initiatives. It will also will have its very own delivery support function, which will monitor and drive initiatives to fruition. It will accelerate the time to market of government and industry initiatives, ensuring that they are targeted where they will add most value.
One initiative that we particularly wish to see delivered is the implementation of an open banking standard. This will be great news for FinTechs and other innovators – it will allow them to use bank data to provide a range of value-added services to consumers, and will really shake up the way customers can access and use financial services.
The Open Banking Working Group published its report on the open banking standard and we are now working closely with industry to agree the next steps.
Through the Financial Advice Market Review too, there was overwhelming support for a Pensions Dashboard that would allow people to access their pension data easily, viewing all of their pension savings in one place. This could help them gain a better understanding of what actions they can take to ensure a comfortable income in retirement.
That is why I am delighted to act as ministerial champion to support industry in designing and delivering the dashboard, and I hope that we can collaborate to bring this technology to consumers.
We recognise that government will need to play a critical role in ensuring that we have the right framework within which customers’ data can be safely shared. And I very much hope that you, along with other parts of the financial sector, will join us in making it happen.
As well as delivering key initiatives, we also want to take additional action to ensure that FinTechs thrive in the UK.
I know that talent matters. The government has already committed to ensuring that we have the exceptional talent needed in the digital technology field through the UK visa system.
After feedback from the digital community, The Tech Nation Visa Scheme was enhanced in October 2015 to include new qualifying criteria for digital experts. This will allow for a wider range of FinTech specialists to get a visa to work in the UK.
Regulation matters too. Government has a key role in ensuring the right regulatory environment in which FinTechs can thrive. As the EY report acknowledges, we already have a world leading regulatory system in the Financial Conduct Authority (FCA) – known for its simplicity, transparency and industry-led approach.
UK FinTechs have praised the role of the FCA in helping them to navigate regulatory complexity through Project Innovate. You know it must be working when regulators from around the world are replicating the innovative model of the Innovation Hub!
The FCA is also looking into how to support the development and adoption of new technologies that facilitate the delivery of regulatory requirements, so called ‘RegTech’, and we’ve announced the creation of a regulatory sandbox to allow innovative businesses a ‘safe space’ to test innovative products and services.
As I’m sure you are aware, the FCA announced that the sandbox will start accepting testing applications on 9 May, and Chris will be following me on stage shortly to take you through how the sandbox will work in greater detail.
But we aren’t just focused on the regulatory sphere. We recognise that FinTechs start-ups can find other aspects of the existing landscape challenging, such as trying to find basic professional services, be those legal, accounting, human resources or regulatory compliance.
To this end, we will make it easier for UK FinTechs to access the professional services they need.
Drawing on Tech City UK’s deep understanding of the tech community, industry will build an information hub that makes it easier for FinTechs to navigate through the range of services providers and find the help that will benefit their businesses.
We also recognise that professional services can be costly, particularly when FinTechs are first starting out. We will therefore work with industry to launch an initiative which will look to bring the major professional services providers together to provide FinTechs with practical and cost-effective basic services.
This could be similar to existing programmes, such as EY’s FinTech talent program in which high performing staff are seconded directly into FinTechs on a pro-bono basis.
We will look to ensure as many professional services firms as possible make their services available. EY have already indicated their interest in the programme, and I hope many more professional service providers will join up.
Last but not least, we want FinTech to reach every part of the UK and have success overseas.
The UK leads across a broad range of FinTech specialisms – from digital currencies to alternative lending, e-commerce and many others. There are few areas of FinTech that the UK does not have an interest in. But in a globalised world, there can also be benefits to specialisation. With specialisation comes a concentration of knowledge, efficiencies, and a potential market edge.
That is why I am keen to see the continued growth of regional FinTech hubs around the UK and would like your thoughts on what else the government can do to encourage this.
This could be about how best to encourage links between academia and industry, or to establish research hubs, or simply enlisting special envoys to further champion the development of FinTech in the regions.
So I am today asking you, the industry, to share your experience and your ideas for how we can best ensure continued and sustainable growth of FinTechs all across the UK.
Now one of the fascinating aspects of being a Treasury Minister is the sheer amount of jargon that comes across your desk. I’ve got used to the notion of research catapults and regulatory sandboxes – and it now gives me great pleasure to announce that the next way the UK will continue to maintain our leading global position is through the development of “FinTech bridges”.
HM Treasury will work with UK Trade and Investment to establish “FinTech bridges” with priority markets. These bridges will help UK FinTech firms expand internationally, as well as attracting international FinTech companies and investors to the UK.
This builds on the great work of the FCA’s Project Innovate, which promotes competition in the interests of consumers by helping put UK-based innovative business in touch with the right regulators, and also helps non-UK innovators in entering the UK market.
I am delighted that, just over a month after EY delivered their report during FinTech week, we are making real progress on delivering against many of their recommendations.
Today we announce a set of new measures: an industry-led FinTech panel; greater support to help UK FinTechs as they develop nationwide and FinTech bridges with priority export market.
I hope that you, the industry, will help us drive them forward.
But please be assured that this is just the start of our beautiful friendship – and that we will be announcing other ways we can help you help UK consumers.
In the meantime, I look forward to continuing working with you to make sure the UK’s environment for FinTech is the best that it can possibly be.
Thank you – and have a great summit.