UK fintechs send rallying cry as industry slips in global ranking
UK fintech leaders have sent a rallying call to policymakers after the sector slipped in global rankings.
A host of industry bigwigs have told Morning Wire the government must be bolder in growth-orientated reforms to bolster the sector’s standing against rivals.
It comes after Z/Yen’s 38th Global Financial Centres Index showed the UK’s fintech sector had tumbled to fifth place down from second in the previous edition.
Janine Hirt, chief executive of fintech industry body Innovate Finance, told Morning Wire previous successes provide “no guarantees for future growth”.
“Put simply, there can be no room for complacency, and we must continue pushing ahead farther and faster.”
The new data from Z/Yen showed Hong Kong had stormed to the top spot taking New York’s crown – a feat London had previously been tipped to do.
Whilst the other four members of the top five – Hong Kong, Shenzhen, New York and Singapore – all increased their ratings, London’s reduced by five points.
Rachel Reeves’ fintech mission derailed
The new data will mark a blow for Rachel Reeves who has attempted to champion the sector in the last year.
Just this week, at the opening of Revolut’s global headquarters, the Chancellor said the fintech industry was “leading the change” in boosting the nation’s productivity.
Reeves also announced a batch of policies catered towards supercharging the sector in her Financial Services Growth & Competitiveness Strategy earlier this year.
Deregulation pushes took centre stage as well as the creation of a new “Listing Taskforce” to attract “the best and brightest business from around the world”.
But firms are urging the Chancellor to take bigger swings in her mission to attract talent to the City.
Justin Basini, co-founder and chief executive of ClearScore, told Morning Wire: “More must be done to access the deep pools of capital available in public markets to convert those start-ups into globally consequential companies.”
Reeves has faced a chorus of calls from across the City to improve incentives for fintech firms to list on the London Stock Exchange
The Chancellor met with fintech bosses earlier this year, who called for stamp duty holidays and capital gains tax cuts.
Hopes for a fintech-powered London Stock Exchange revival were rocked this year after money transfer firm Wise ditched its primary listing in favour of the US citing access to deeper pools of liquidity.
Buy now, pay later giant Klarna also dealt a blow to the City after opting to list in New York.
Hirt said: “We need to send clear signals that leave no room for doubt about the UK’s credentials as the best place in the world to start, build, and scale a fintech business.”
Government must be ‘rapid’ in fintech progress
Following the fleet of fintech reforms introduced in July, the government has been urged to fast-track schemes in a bid to capture the rewards.
Richard Davies, chief executive of Allica Bank – dubbed the UK’s fastest-growing fintech – told Morning Wire: “To avoid the likes of Singapore and Dubai moving even further up on this list – and well ahead of London – we need to see rapid progress on the dedicated scale-up units announced by the government, and ensure that these create the change needed for the fastest scaling firms to have much greater speed and certainty in the regulatory environment.”
Hirt echoed these calls adding the threat of international competitors was “very real.”
“Countries around the world are increasingly vying to be the destination of choice for innovators,” she added.
The Treasury has said its new ‘Scale Up’ unit, led by the Financial Conduct Authority and Prudential Regulation Authority, will build on the regulator’s existing joint ventures including the New Bank and Insurer Start-Up Units.
The Treasury’s fintech shake-up also included reforms to “slow authorisation timelines” which were cited as making the UK less attractive to international firms.
The boss of Neo, a Barcelona-headquartered fintech with heavy presence in London, told Morning Wire whilst London remains a “great place to do business” it risks being “held back”.
“Long FCA approval delays are pushing many fintechs to set up outside the UK,” Laurent Descout, Neo’s chief executive and co-founder said.
“The UK would go a long way by streamlining approvals and restoring market access.”
City watchdog pledges to support fintech growth
The government has put regulators at the heart of its bid to drive economic growth.
The Financial Conduct Authority (FCA) wrote to the Prime Minister and Chancellor at the beginning of this year promising growth would “be a cornerstone” of its strategy through to 2030.
But the watchdog and government are facing calls to accelerate their push to avoid London slipping further in global competition.
A spokesperson for the FCA said: “Supporting growth and competitiveness is a cornerstone of our strategy to help maintain London and the UK’s position at the forefront of global finance across sectors such as fintech, banking and investment management.
“This year alone we are working at pace to deliver over 50 initiatives to support economic growth. This includes rebalancing our approach to risk to unlock innovation, attracting more inward investment, encouraging the export of UK financial services, and making it easier for firms to establish here and create jobs, while maintaining standards that underpin our global reputation.”
Hirt praised the “positive progress” of recent months “particularly with key regulatory announcements” but said there was “pressing need for further reform”.
“The time is now for London and the wider UK to fight for and cement its place as a global leader in Fintech and innovation – for the benefit of our financial services sector, but more importantly, for the benefit of our economy and the entire country.”