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FinTech commitment continues in UK Budget

The UK financial minister, Chancellor of the Exchequer Rishi Sunak (appointed barely one month ago on 13 February 2020), delivered what might almost be described as a “wartime” budget on Wednesday 11 March 2020. He said the UK government would spend “whatever it takes” to support the country’s health service in the face of the Coronavirus pandemic. The budget committed to a review of the UK FinTech sector led by Ron Kalifa, former CEO of WorldPay, to “support growth and competitiveness”. Sunak said the review will “identify what more industry and government can do to support growth and competitiveness, to ensure that the UK maintains its global leadership in this vital sector.”

The budget talked about a central bank digital currency (CBDC) stating: “The UK will continue to take a leading role in exploring digital currencies, and the wide-ranging opportunities and challenges they could bring.” And on crypto, the budget said: “To protect consumers and support innovation in cryptoassets, the government intends to consult on a measure to bring certain cryptoassets into scope of financial promotions regulation. The government also intends to consult later in 2020 on the broader regulatory approach to cryptoassets, including new challenges from so-called ‘stablecoins’.”

While all attention is focused on the pandemic, among other measures the budget also included support for the UK’s Tech Nation Fintech Delivery Panel and Insurtech Board, which will both receive funding until 2022 to continue the critical work in identifying and removing barriers to nation-wide economic growth for the UK FinTech and InsurTech sectors. The Treasury has allocated £768,000 from April to April 2022 to fund the Fintech Delivery Panel until 2022.

These initiatives have brought together founders from leading UK FinTechs and InsurTechs including Funding Circle, Onfido, Monzo, Transferwise, Lendinvest, Revolut, BoughtByMany and Flock as well as incumbent players such as RBS, HSBC and Aviva, investors, regulators and the government to tackle problems standing in the way of tech growth. The Panel will continue to ensure it reflects representation from across the ecosystem and country.

Originally announced in September 2017, the Fintech Panel has had a number of successes including developing and launching the UK-wide FinTech for All competition and the creation of world-leading onboarding guidelines, downloaded more than 25,000 times. The InsurTech Board was created shortly after in February 2018, notably producing a series of free to use InsurTech contracts, including a confidentiality agreement, worth more than £25,000 to each InsurTech firm.

Eileen Burbidge, Chair, Fintech Delivery Panel, Partner at Passion Capital, Chair, Tech Nation said: “FinTech has changed dramatically since the FinTech Delivery Panel was first established in 2017, with UK FinTech firms raising a record £4.1 billion in 2019. This announcement of extending the FinTech Delivery Panel to 2022 couldn’t be more timely, confirming the commitment of the government to support the continued growth of the FinTech and InsurTech sectors in the UK.”

Gerard Grech, CEO, Tech Nation said: “With FinTech unicorns, Monzo, TransferWise and Revolut becoming household names, the ecosystem is rapidly maturing. As always, there is more work to do to ensure the continued growth of this valuable part of the UK tech ecosystem. Tech Nation is all about fuelling growth and is excited about supporting the FinTech and InsurTech sectors for another two years through the Fintech Delivery Panel, providing tangible and meaningful outcomes for the sector.”

Ed Leon Klinger, Chair, Insurtech Board, CEO Flock said: “The world is changing faster than ever; only by rapidly embracing new technologies will insurers be able to adapt to this change. It’s no surprise, then, that InsurTech is one of the fastest growing technology sectors in the UK. By bringing together startups, incumbents, and regulators, the InsurTech board is pioneering a collaborative approach that will help to keep Britain at the forefront of the industry.”

Alongside a big spending budget, HM Treasury also released, as part of its Financial Services Future Regulatory Framework Review, its Response to the Call for Evidence on Regulatory Coordination.  In July 2019, the UK government launched a long-term review to consider how the UK’s regulatory framework needs to adapt over the coming years to be fit for the future.

In this latest step, the government said it agrees that RegTech has the potential to reduce the burden of regulatory reporting whilst allowing data to be accessed and analysed more quickly and in greater depth by regulators. “However, there are implications – in particular for data protection and cyber security – which respondents highlighted, and which must be considered together with any potential benefits. Any move towards a greater use of RegTech must be developed and implemented in a workable manner, and in partnership with industry.”

Responding to the government’s announced FinTech sector review, a spokesperson for challenger bank Revolut said the bank “welcomes the government’s announcement of a major review of the FinTech sector to ensure that the UK remains the world leader, driving innovation and creating jobs. We look forward to contributing to the review and sharing some of the insight we have learned in developing innovative new services for our customers.”

The next phase of the Review will form part of government’s upcoming White Paper on Financial Services, to be published in the Spring.

The budget came on the same day as a 0.5% interest rate cut by the Bank of England to help the UK economy. Markus Kuger, Chief Economist at commercial data & analytics firm, Dun & Bradstreet said: “Today’s budget and interest rate announcement from the Bank of England both reflect a challenging outlook for the British economy. The interest rate cut, introduction of the £7bn support package for SMEs, and £30bn financial stimulus will be welcome support for households and businesses in a coronavirus-hit economy. However, given that interest rates are already low, the potential benefits could be limited. Increased fiscal stimulus is welcome news, but despite increasing the government deficit it is unlikely that today’s changes will be sufficient to prevent a slowdown in economic activity.”

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