COMMENTARY: THE KALIFA REVIEW
HOW CAN EMBRACE THE WORLD Russell Curzon, General Manager, UK & Europe, for FS platform Nium, shares his thoughts on The Kalifa Review’s recommendations for advancing UK fintech at home and abroad
Worldwide, fintech is hailed as the future of finance. From the evolution of open banking platforms to the use of AI, fintech revolutionises the global economy by changing the way businesses and individuals bank, invest and make payments. Over the past decade, the UK has witnessed technology-led disruption across the financial sector. With more than 10 per cent of the global market share in fintech, this sector is today worth more than £11billion a year to the UK economy, according to government figures. High-quality talent, progressive and clear regulations, availability of capital and access to an innovative financial services sector, have established the UK as a global fintech leader. This trajectory, however, is at a crossroads – overseas competitors strive to match the UK’s success, Brexit causes regulatory uncertainty, and the pandemic has accelerated digital adoption. There’s also an immense opportunity to leverage technology, to ensure inclusive and sustainable growth for the economy. Commissioned by the UK government, The Kalifa Review Of UK Fintech, published in February, is an independent review, led by Ron Kalifa OBE, which aims to help the UK retain its leading global fintech position. It outlines a strategy to highlight www.fintechf.com
the opportunity for UK fintech firms to scale up, penetrate global markets, acquire highly-skilled talent, deliver improved financial services and gain competitive advantage over other fintech hubs internationally. The combination of world-leading financial services and a vibrant tech sector has created a fertile environment for the industry in the UK. The country’s groundbreaking open banking framework has fuelled increased innovation among large financial
The UK Government recognises the significance of the financial sector and encourages it through positive regulatory policy. This has led to several empowering measures, such as the establishment of an innovation hub that helps firms understand the regulatory framework, and a regulatory sandbox that provides a secure space for firms to test new products.
EVOLVED CONSUMERS The UK has a high proportion of tech-savvy citizens who demand top-quality financial services and products. Seventy-one per cent of the population is using the services of at least one fintech company, says Statista.
TALENT POOL The UK’s talent prowess is evident from the 76,500 people employed in the financial technology sector. Additionally, strategic actions such as the inclusion of fintech courses in education curricula and fintech-related programmes, are helping attract new talent to the fintech ecosystem. institutions, paved the way for the emergence of neobanks and other fintechs, and inspired similar regimes around the world. The UK has more billion-dollar startups than anywhere else in Europe, and enjoys ample demand for fintech products. Four factors, identified in the review, are crucial for the UK to retain its throne as one of the leading fintech nations:
ACCESS TO CAPITAL The UK has a well-rounded funding ecosystem, supported by robust infrastructure. Firms have easier access to funding here than in any other European market. According to Innovate Finance, $4.1billion of fintech capital was raised here last year, placing the UK second only to the US.
The Kalifa Review intends to trigger sustainable innovation and define considerations with reference to best practices in key international markets: India, the Middle East and North Africa, sub-Saharan Africa, and China. One of its key recommendations is to consolidate international operational support and increase the ease of doing business. Global connectivity – from the free flow of data to harmonised regulatory standards – is critical to success. The UK must focus on crossborder collaboration to maintain its reputation as a global fintech hub. The review therefore calls for the launch of an international Fintech Credential Portfolio, a Centre of Finance to drive international collaboration, and an International Fintech Taskforce. Issue 8 | ThePaytechMagazine