The Kalifa Review identified five key ways in which the UK’s fintech industry can grow and thrive.
These include a focus on skills, national connectivity, investment, policy and regulation, and international collaboration.
Peer2Peer Finance News takes a closer look at these five key takeaways, and how they can aid the growth of fintech lending in the coming years….
1. Policy and regulation
Following the success of the Financial Conduct Authority’s various fintech sandboxes, the review has suggested implementing a new “Scalebox” solution which will support firms which are focused on scaling innovative technology.
The review also called for a new digital finance package that creates a new regulatory framework for emerging technology, and a Digital Economy Taskforce (DET) to ensure alignment across government.
The Kalifa Review noted the huge potential for the UK’s fintech sector to create jobs and aid in the post-Covid economic recovery.
It has called on the government to retrain and upskill adults by offering short courses in fintech subjects at low cost.
Attracting international talent has also been flagged as a priority, with the review suggesting that a new visa stream is created to attract global talent for fintech scaleups.
Ahead of the publication of his fintech review, Ron Kalifa OBE said that he would like to see the creation of a centralised fintech body, initially funded by the government, which would be used to finance the high-growth fintechs.
The review set out this vision in more detail, calling for a £1bn Fintech Growth Fund which will attract institutional capital and “act as the catalyst in developing a world leading ecosystem”.
Kalifa also suggested an expansion of R&D tax credits and the Enterprise Investment Scheme (EIS).
He pointed out that 97 per cent of founders have used tax-incentivised investment schemes including EIS, the Seed Enterprise Investment Scheme (SEIS) and Venture Capital Trusts, but 47 per cent were concerned about their ability to qualify for such tax relief if their business models switched from being unregulated to regulated in the future.
Peer-to-peer lenders such as Loanpad have been vocal in their wish to see the EIS and SEIS extended.
Kalifa also wants to encourage more fintech IPOs via free float reduction, dual class shares and a relaxation of pre-emption rights.
He has also recommended that a global family of fintech indices is created in the UK, to enhance the sector’s visibility.
The Kalifa Review hailed the success of the fintech bridges which are already in place, and said that it believes that the UK can be the leading fintech hub in the world.
In an echo of recent comments by UK Finance, the review called for the launch of an international “Fintech Credential Portfolio” and an international fintech taskforce to support international credibility.
5. National connectivity
Kalifa identified 10 key fintech clusters across the UK which should be nurtured.
These are: London, the Pennines, Scotland (especially the Edinburgh/Glasgow corridor), Birmingham, Bristol and Bath, Newcastle and Durham, Cambridge, Reading and the west of London, Wales (especially Cardiff and South Wales), and Northern Ireland.
The review said that it is vital to accelerate the development and growth of fintech clusters through further investment, and to drive a national national coordination strategy through the Centre for Finance, Innovation and Technology.