Recently, during the United Kingdom’s Fintech Week, Chancellor of the Exchequer Rishi Sunak revealed new plans to enhance the UK’s competitive advantage in the Fintech Industry. This announcement included the promise of regulatory support and reforms in helping firms grow a new task force to lead the UK’s work on a central bank digital currency.
The new plans have been released following an independent review on UK Fintech led by former Worldpay CEO Ron Kalifa, which laid out a plan to help the government boost employment, growth, and economic output in the fintech sector. Building on opportunities generated since the UK’s departure from the EU, the Chancellor confirmed the UK would be taking forward many of the recommendations made by Kalifa and recommendations from the Listing Review, led by Lord Hill.
The UK Fintech Sector, as it currently stands, employs around 76,500 people in the UK and is worth more than £11bn to the economy. The UK is already considered a world leader in the Fintech Marketplace, owning more than 10% of the global market share, and home to approximately 1,600 FinTech companies, making it a solidified base for a diverse talent pool and innovative practices. To improve upon this, a new Department of Trade Fintech Champions Scheme is planned to be established, helping businesses tap into FinTech’s talent pool and work alongside industry leaders to elevate the UK’s status as a Global Fintech hub whilst promoting expansion around the world, helping businesses scale-up and up-skill.
What measures are now being put in place to maintain the UK’s competitive edge?
- The Scale Box
Along with the £1 billion support fund and the previously revealed fast track visa scheme for Fintech workers, the Financial Conduct Authority announced it would be bringing forward a ‘scale box’ which will include a package of measures designed to enhance its already established pioneering regulatory sandbox, which has been invaluable for allowing start-ups to test new propositions, and to provide a one-stop-shop for growth.
To support this new initiative, the FCA will also be launching the second phase of its Digital Sandbox to enable firms to test concepts that tackle sustainability and climate change-related challenges, helping to deliver a greener financial sector supporting the transition net zeroth stage firms.
These initiatives build on announcements made at Budget 2021 to help fintech firms access the talent they need, which included a new ‘scale up’ visa stream allowing skilled people with a job offer at a recognised UK ‘scale up’ to qualify for a fast-track visa without sponsorship or third party endorsement.
- The Export Academy
Chancellor Rishi Sunak’s announcement also included a new bespoke Export Academy promise that will give businesses free advice on legal, tax, regulatory, accounting, and market entry, making their exporting journey shorter and smoother.
- The Taskforce
A new Taskforce, bringing together HM Treasury and the Bank of England, will be established to explore a possible UK central bank digital currency (CBDC). Two new forums will also be established to engage technical experts and key stakeholders (including financial institutions, merchants, business users, civil society groups, and consumers) through the process.
- A New Sandbox
To support private sector innovation, firms exploring how to use distributed ledger (DLT) to improve financial market infrastructure will have access to a new sandbox. This new regime will be inspired by the FCA’s sandbox, and HM Treasury will work together with the Bank of England and the FCA to deliver this. In addition, the Bank of England has launched a new ‘omnibus’ account to allow access to innovative financial market infrastructure providers that can support the delivery of faster, cheaper, 24-hour wholesale payment and settlement using central bank money.
Many in the industry have welcomed the expected changes, with leading executives from several well-known financial technology corporations.
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