Last month was a busy one in the world of fintech with the publication of the long-awaited Kalifa review, almost a year after it was first promised in Rishi Sunak’s first budget as Chancellor of the Exchequer.
Ron Kalifa OBE, chairman of Network International and a non-executive director of the Court of Directors at the Bank of England, was tasked with spearheading the review into the UK’s fintech sector – representing 10% of the global fintech market.
The aim was to identify priority areas to support its growth, adoption and, ultimately, to maintain the UK’s global leadership and competitive edge as a thriving fintech hub.
Key recommendations included setting up a ‘Fintech Scaleup Stream’ to automatically provide tech visas to global fintech talent, creating a regulatory fintech ‘scalebox’ to provide support to growth stage fintech firms, and building a £1bn Fintech Growth Fund to help UK firms scale.
Other suggested reforms include nurturing ten regional fintech hubs to ensure national connectivity and establishing a Digital Economy Taskforce (DET) in charge of collating a “policy roadmap” for parties to engage with government.
A key element of the review was the importance of using fintech to support the financial inclusion agenda – a big focus for many of Seven’s clients – highlighting the need to improve financial services for individuals and small businesses, particularly in terms of accessibility, quality, and affordability.
To address the issue, Kalifa proposed better incentives for fintechs to focus on target demographics and areas and an encouragement for incumbent banks to engage in a retail lending referral scheme, to ensure that struggling businesses turned down for funding by banks can borrow from alternative finance firms.
Overall, the review has been well received by UK fintechs as a welcome focus on nurturing and harnessing the UK’s ever-growing fintech industry, many of whom noted the importance of embracing a new regulatory vision.
However, concerns surrounding the fallout of Brexit continue to prevail despite the review, with several fintechs pointing out the significance of international equivalence.
Other thought leaders expressed that this focus on fintech must not overshadow other areas of innovation that need our attention, such as artificial intelligence, recommending a comprehensive cross-industry tech and innovation strategy.
Several of our clients were keen to see the detailed and broad scope of the Kalifa review, with Credit Kudos welcoming “the recommendations to create coalitions to progress Open Finance and support fintechs to further support small businesses, as well as ensuring fintechs and incumbents prioritise financial inclusion”.
Freddy Kelly, CEO and founder of Credit Kudos, and member of industry group Fintech Founders, said:
“Fintech is the lifeblood of the UK start up and scale-up sectors and it can play an integral role in the post-pandemic recovery – not only for the economy but by providing alternative innovative solutions to support individuals and small businesses struggling financially.”
Another of our clients, Cushon, a fintech focused on creating greener pension and savings options, including the world’s first Net Zero pension, commented on the issue.
Fintech Finance quoted CEO and founder Ben Pollard, who praised the review’s “focus on skills and talent to ensure the fintech sector can continue to thrive”.
However, Ben cautioned that we mustn’t use ‘old school thinking’ with a focus on visas: “It’s not just a matter of attracting global fintech talent to the UK but attracting global talent to UK-based companies regardless of where the talent resides.”
From Seven’s perspective, the long-anticipated review meant an early start for the team, who were working quickly to get reactive lines out for our clients soon after the report was published at 7am.
Having been in the pipeline for nearly a year, the review was eagerly anticipated by a number of our clients and responding quickly was crucial to be a part of the debate.