UK fintech is at critical juncture and needs support, says Innovate Finance
THE UK government needs to fulfil its election promises and ensure that the country’s fintech sector remains globally competitive in these uncertain times, Innovate Finance has said.
The fintech trade body has called on the government and political parties to pledge that we will have an efficient visa system, immigration policy and highly-skilled domestic workforce to make sure that the industry continues to have access to top local and global talent.
With Brexit negotiations only just started and no guarantee of access to EU staff after the UK leaves the bloc, Innovate Finance has called on the government to ensure that visa requirements do not adversely affect capitally-constrained start-ups. It also emphasised the importance of fast-track visa applications and of nurturing local talent.
“The UK’s fintech sector relies heavily on a highly skilled, and internationally diverse workforce,” said the trade body. “Indeed, much of the talent which underpins UK fintech is global in nature, for example our own research shows that 30 per cent of Innovate Finance’s (non-institutional) founders are non-British.
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“This trend is not confined to UK fintech, with one in five of the digital economy’s three million workers born outside the UK (with a third of those from countries in the EU).
“If we combine this with the lack of STEM skilled workers in the UK, which represents an annual shortfall of 40,000 according to the Campaign for Science and Engineering, with only 14.4 per cent of those in STEM occupations being women, there is a clear mandate to act.”
The UK’s fintech sector contributes £7bn to the economy and employs over 60,000 people. Last month, the government held its second annual fintech week to showcase the sector’s wares to the rest of the world and encourage global investment.
Chancellor Philip Hammond underlined the importance of the sector to the UK economy in his keynote speech and said that the UK must fight to maintain its competitive advantage as the world’s top fintech hub.
Innovate Finance also called on those in power to do more to support investment into the sector. Its figures showed that venture capital investment in global fintech rose by 10.9 per cent year-on-year to $17.4bn (£13.5bn) in 2016, but over the same period UK fintech saw a 33.7 per cent decline in investment, to $783m.
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“Parties must therefore ensure continued access to capital and markets, driving access to finance at all stages of companies’ growth cycles, incentivising investment from corporate venture capital, pension funds, and providing continued clarity over tax investment schemes,” it said.
“The UK fintech ecosystem is at a critical juncture, and therefore as we transition away European funding frameworks, such as the European Investment Fund – which between 2011- 2015 committed €2.3bn (£1.9bn) to 144 UK based venture firms – more will be needed to create a healthy capital ecosystem, which provides the engine for our digital economy.”