There’s no time for us to dither on creating sensible rules for artificial intelligence tech
From artificial intelligence to fintech, we must go further. Competition is fierce, so we need flexible but strong rules to ensure innovative companies can prosper in the UK in both fields, writes Nicholas Lyons
Geopolitical tensions, rising interest rates and other global economic pressures have served to put a spanner in the works of the globally increasing presence of fintechs. Funding concerns have cast a shadow over the vibrant industry and have left many once keen investors changing their behaviour to the pain of start-up founders.
In the backdrop of these temporal pressures lay even stronger concerns in the way of artificial intelligence (AI) and digital currencies such as crypto. Recent reports on AI have turned from celebrating its ground-breaking successes to now heavily warning of its life-threatening risks. And in the case of crypto, fears of money laundering and fraud threaten to put a muzzle on the prospects of these new products.
In the face of these concerns, however, the UK is rising above its competitors as a global leader in fintech. Andreessen Horowitz, one of the largest tech investment firms in the world, recently announced it had chosen London for its first international office, looking to Britain as a hospitable climate for digital currency start-ups. The government is also backing this surge as Prime Minister Rishi Sunak announced we would host the first global summit on AI safety aiming to make Britain the home of AI safety regulation.
Our competitors even look to us for inspiration as French officials seek to create their own version of the Enterprise Investment Scheme (EIS) and Seed Investment Enterprise Scheme (SEIS) programmes, which provide early-state tax incentives credited with helping to make us Europe’s undisputed entrepreneurial leader.
The world is taking our lead for solutions to the very real threats to fintech innovation. But we must address the day’s concerns with a robust plan and not with apprehension and dithering. There is a reason there are 135 unicorns in the UK and why in 2022 the we had more fintech investment than Japan, Singapore, Hong Kong, France and Germany combined. It’s because for so long Britain has provided a dynamic ecosystem that allows start-ups to build and become successful.
Competition is still fierce. If we want to be the home for fintech companies to list and grow, we must go further. It’s fantastic that eight out of the top 10 areas for tech are in London, as a new report found, but we need a network of vibrant regional clusters across the country – an objective already underway as the research notes continued start-up growth outside of the Golden Triangle of Oxford, Cambridge and London.
Initiatives like Canada Corporation’s Finance for Growth, set to be unveiled this Autumn, will provide a road map for how new regulations can support the growth of fintechs here in Britain.
UK fintechs can also look forward to seeing what the Centre for Finance, Innovation and Technology (CFIT) will produce, which was one of the key recommendations from the 2021 Kalifa Review of UK Fintech. This private-sector led body will create a designated group committed to identifying and addressing opportunities and barriers to growth for fintechs. This will not be a secluded group of individuals speaking into a silo, but a “coalitions” approach bringing together individuals and organisations from across the ecosystem.
We leave behind a risk averse attitude if we want the innovation that powers our competitive edge. Without it, we will fail to see the full and exciting potential of British fintech and forfeit the opportunity for impact far beyond our shores.