Fintechs want the government to do more to support them during the Covid-19 crisis, a survey from Digital Finance Forum has found.
The Summer Survey of Fintech Founders, with support from treasury minister John Glen MP, revealed that whilst 75 per cent of founders thought that the government has supported the wider economy well during the Covid-19 pandemic, only 25 per cent believe that the government had supported the fintech sector well through this crisis.
The survey from the fintech events and networking group found that the industry thinks the government should do more to ensure fintech start-ups can access early stage capital.
Fintechs criticised rules around Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) tax reliefs, which exclude investment in many types of financial services businesses, and said these should be removed. Fintechs also want EIS and SEIS to be made compatible with the future fund scheme.
The report also found fintechs believe non-bank lenders have lacked the support to help them fund liquidity for their ongoing lending and forbearance measures they were expected to provide to small – and medium-sized enterprises (SMEs).
Fintechs therefore want non-bank lenders to be given access to treasury funding lines, so that they can be on the same level playing field as the larger banks.
Meanwhile, 67 per cent of fintech founders believe the sector is not properly represented when it comes to policy and regulation.
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In response, fintechs have called for a more effective link between government fintech strategy and the regulator and more engagement by government with fintech firms.
Nine out of 10 fintech founders took the viewpoint that Covid-19 has made or will make it harder to raise finance in the next year and nearly half (46 per cent) believed limited access to capital is the most pressing challenge facing them, and the main impact of the pandemic upon their business.
Despite this, 37 per cent of fintechs seeking a government loan during this time were unable to qualify for one.
However, although fintechs want support and change from the government, some saw the crisis as presenting an opportunity, according to the report.
More than a third of founders were optimistic that Covid-19 would provide new opportunities as it accelerates digital adoption among businesses.
Furthermore, 20 per cent of founders said the pandemic presented an opportunity for fintechs to help people and businesses rebuild their finances and drive the economic recovery and two in five founders said that they are actively looking to grow and expand their business in the coming months.