UK: Industry leaders defend FinTech’s future despite recent bank failures

By Puja Sharma

The finTech industry will continue to play a crucial role in the UK economy, despite recent challenges such as the collapse of Silicon Valley Bank and Credit Suisse, according to industry chiefs.

Speaking at the Parliament Street FinTech summit last evening, which was hosted by Dean Russell MP for Watford and chaired by Steven George-Hilley of Centropy PR, a panel of fintech experts hit out at critics of the industry and outlined their vision for the future of the sector.

On issues such as regulation, MP Russell said: “If you regulate too soon you may kill innovation, but if you do regulate too late or incorrectly then there will be loopholes, this is a major challenge that the Fintech industry faces.”

In a shocking development for the financial world, Silicon Valley Bank has shut down operations. The bank failure is considered to be the largest since Washington Mutual collapsed more than a decade ago.

Jay Patel, Head of Product Management at RegTech provider Encompass Corporation added: “Regulators have a role to play in our society but ultimately we need banks to look and interpret these regulations and make sure they are compliant for their customer base.”

Several European banks have been adversely affected by SVB’s collapse, according to a report by Moody’s. European banks’ bond portfolios have been suffering from a sharp decline in market value as interest rates have risen since early last year. These declines in value are temporary and moderate for most large European banks. Smaller, deposit-funded banks can rely on the stability of their loyal depositor bases, which ensures they can wait for a recovery in bond values without incurring materially higher funding costs.

Meanwhile, Neh Thaker, Co-Founder of the financial toolkit HedgeFlows said, ” Around 7 out of 10 SMEs could benefit from international expansion but the reality is that only 1 in 10 achieve it. SMEs don’t currently get the support and tools to effectively break down the barriers to international trade.”

Recent data from the Centre for Monitoring India’s Economy (CMIE) shows that the labor force participation rate for women in India has been declining and currently stands at approx. 20%. While some of the decreases could be attributed to more women staying in education, however, the rate remains below global averages.

Fintech entrepreneur Fraser Stewart, COO of Lyfeguard raised the issue of the skills crisis facing the industry. “We need access to education, reskilling, and to show clear pathways through to Fintech. It’s also clear more needs to be done around diversity, just 2% of Fintech owners are female.”

When surveyed more than 250 UK banking and financial services firms, two-thirds (65%) agreed that UK regulators are not responding quickly enough to new trends, thereby hindering innovation. Meanwhile, an overwhelming majority (77%) said that the growing popularity of new fintech offerings must be supported with better regulation and companionate measures.

Samni Akinmusire co-founder of ImaliPay said: “Fintech entrepreneurs are usually creative wanting to solve real-time problems. Innovation should follow regulations, but it can be complex. What do regulators do to catch up when innovation falls outside of regulations?”