An independent review of the UK’s fintech sector has highlighted the important role the sector can play in driving a post-Covid economic recovery by creating jobs, developing global trade and enabling financial inclusion.
HM Treasury commissioned the review, chaired by former Woldpay Group chief executive Ron Kalifa, as part of last year’s UK budget.
FinTech Scotland contributed to the Fintech Strategic Review recommendations, which sets out a five-point plan to leverage innovation through a positive regulatory environment, developing diverse skills, facilitating investment to scale enterprises and accelerating a targeted approach to inward investment.
The report recognised the momentum of the FinTech Scotland cluster, which included growing expertise in open finance, payments, regulatory innovation and ‘fintech for good’.
The Fintech Scotland cluster model was noted as a driving force since formation in 2018, progress over three years which has included increasing number of fintech SMEs from 26 to 155 today; engaging with 27 strategic partners from private, public, academic sectors; and gaining European cluster centre of excellence accreditation in 2020.
Stephen Ingledew, executive chair of Fintech Scotland and a member of the FSR working group, commented: “Fintech innovation is fast growing right across the UK and offers great potential for Scotland through investment, innovation and jobs.
“We believe the Review recommendations will support further progress in developing a growing fintech ecosystem and build on successes of home grown and international fintech firms already rooted in Scotland.”
Linda Hanna, interim chief executive of Scottish Enterprise, said: “This independent review supports Scotland’s growing worldwide reputation as a leading fintech location.”
Deloitte co-led the FSR National Connectivity Chapter with Tech Nation, undertaking a data- driven analysis of the sector across the UK.
Kent Mackenzie, Deloitte’s head of fintech in Scotland, added: “The detail and data contained in this review will underpin and support what we’ve understood for a long time – that fintech across the UK is alive and kicking, and primed for next stage of scaling.”
Among the recommendations in the five point plan were:
- Implementing a ‘Scalebox’ that supports firms focusing on scaling innovative technology.
- Establishing a Digital Economy Taskforce to ensure alignment across government.
- Creating a new visa stream to enhance access to global talent for fintech scale-ups.
- Expanding R&D tax credits, Enterprise Investment Scheme and Venture Capital Trusts.
- Unlocking institutional capital to create a £1bn Fintech Growth Fund of sufficient scale to act as the catalyst in developing a world leading ecosystem.
- Improving the listing environment through free float reduction, dual class shares and relaxation of pre-emption rights.
- Creating a global family of fintech indices to enhance sector visibility.
- Launching an international Fintech Credential Portfolio to support international credibility and increase ease of doing business.
Claire Reid, regional leader for Scotland and head of technology, data and analytics at PwC UK, said that areas across Scotland have a proven record of nurturing fintechs, supporting nuanced specialisms across specific regions and supporting scale.
“As well as unlocking opportunities for innovation across the regions, the proposed clusters in the Kalifa review will ensure skilled workers are able to remain closer to home, keeping talent within the region and contributing towards the government’s levelling up agenda while creating the right conditions for an industry that has an important role to play in the economic recovery across the regions.
“Importantly, the clusters will also allow regional bodies to begin to deliver on the proposals in the Research and Innovation for UK FinTech report published last month, helping fintechs in all corners of the UK to leverage local strengths and networks to create jobs, deliver innovative solutions and drive economic growth.”
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