Fintech week: Greg Hands' speech at the opening of the London Stock Exchange
The Chief Secretary explains how the UK can remain at the cutting edge of financial innovation.
Good morning – it’s great to be here with you at today’s market opening; thank you, Xavier Rolet for your invitation.
For those of you who don’t know me, I’m Greg Hands, Chief Secretary to the Treasury.
I myself used to work at the cutting edge of finance: designing models for financial derivatives, back in the early 1990s. Some of my former derivatives colleagues have now become fintech entrepreneurs themselves.
So, in me, you find someone absolutely convinced of the boost that technology can give to competitiveness.
My Ministerial role is largely to manage the UK’s £700-odd billion portfolio of public spending – because a significant part of this government’s long-term plan for securing Britain’s economy is about being sensible on public spending.
But that is merely one side of the coin; the other is, of course, going for growth.
I am a big believer that one of the best ways you secure long-term growth is by making yourself home to exciting, fast-growing industries.
Financial technology firms – Fintechs for short – are precisely one such industry.
I am delighted that this week, an independent EY report has ranked Britain first amongst the world’s seven leading Fintech hubs, from Silicon Valley to Hong Kong.
Our ambition is to maintain, and to consolidate, that position.
Because Fintech is good news; and the economic case for supporting UK Fintechs is nothing if not compelling.
Britain’s Fintech market generated over £6.5bn in revenue last year. Our Fintechs attract significant global investment, with around £550m in capital invested in 2015. Our Fintech industry employs over 60,000 people. Indeed – and this gives me some pleasure to say – more people work in UK Fintech than in US Fintech, or in Singapore, Hong Kong and Australia Fintech combined.
And aside from the positive economic effects, Fintech also promotes greater competition in financial services. That means better products, better services, a more efficient market – and, of course, it makes people’s lives easier too.
In the early days of eBay, you had to send people cheques in the post before they sent you the item you’d won. Now we have Paypal.
Ten years ago, the Guardian was saying that this new-fangled idea of music on a mobile phone would never catch on. Now every high street bank has mobile banking; Barclays has even developed Pingit to transfer money instantly.
While firms such as Funding Circle offer Britain’s businesses a smarter way to access alternative sources of finance.
What we have seen in recent years is a mixture of new market entrants, and established, more traditional companies, both developing Fintechs, and in many cases joining forces to do so.
I believe there are two ways in which the UK Fintech industry can continue to go from strength to strength.
The first is great regulation: that is, regulation which, while protecting the customer, helps new technology to start and grow and succeed.
The second is great collaboration: between Government, regulators, academia, investors, start-up firms, and established businesses.
There’s lots that the Government, working with partners such as the Financial Conduct Authority has done on the “great regulation” front.
The FCA’s Project Innovate Innovation Hub do excellent work in helping innovative businesses understand the regulatory framework and apply for authorisation.
The “regulatory sandbox” – a wonderful piece of jargon there – is helping innovative firms test new ideas at an early stage with real customers.
And our work on the creation of an open banking standard could revolutionise the way people manage their financial information.
“Great collaboration” is equally important. And the events which have taken place all over London this week – Fintech Week – have forged some excellent relationships.
I hope that today’s Fintech Investor Forum brings yet more people together, to throw around ideas, discuss new opportunities, and hopefully create some productive partnerships.
There is palpable excitement about what Fintech can achieve here in the UK.
Our ambition is simple: to consolidate our position as the global Fintech hub, and to keep ourselves at the cutting edge of financial innovation.
It’s win-win: for our businesses, for our consumers, and for our economy.