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The Kalifa Review of UK FinTech

What has happened?

In February 2021, the UK government published The Kalifa Review of UK FinTech, an independent review produced by Ron Kalifa, a Bank of England non-executive director, which is intended to identify priority areas to support the UK’s fintech sector.

What does the industry need to do?

The UK has become a fintech hub, and this has resulted in an impressive scorecard borne out by the following statistics;

    • Representing 10% of global market share and £11bn in revenue, the UK is a dominant force in fintech,
    • The total tech spend by UK financial services firms was £95bn in 2019,
    • SMEs and corporates are all keen users of fintech. UK citizens are becoming digitally active and 71% are now using the services of at least one fintech company, and
    • Investment into UK fintech stood at $4.1bn in 2020 – more than the next five European countries combined.

There are however three broad threats to the UK’s fintech leadership position, each of which points to three opportunities that must be grasped;

    • Competition: Overseas centres are seeking to emulate the UK’s success. Competitor jurisdictions such as Singapore, Australia and Canada are investing heavily across many of the areas the review looked at, including capital, skills and direct support for fintechs,
    • Brexit: Brexit has created regulatory uncertainty in specific areas relevant to fintech. Firms must navigate the immigration system for European Union talent for the first time – whilst rival jurisdictions are rolling out aggressive attempts to lure talent in, and
    • Covid: The pandemic has accelerated digital adoption globally in a way that marketing or policy never could. This is creating opportunities for jurisdictions that are quickest to diagnose what is happening and nimblest to capitalise on the opportunities for fintech.

The report identifies the three opportunities as;

    • Jobs: Fintech is embedded across the UK with the potential to create high-income tech-based employment, becoming an engine of the “levelling up” agenda, as well as playing a part in upskilling and retraining the existing workforce. The sector’s direct gross value added contribution to the economy is estimated to be £13.7bn by 2030, with job creation contributing to 70% of this,
    • Trade: Enabling fintechs to achieve global scale and reach via access to international markets, and continuing to lead on regulation and standard-setting in fast-moving tech, and
    • Inclusion and Recovery: Supporting citizens and small businesses to access more, better, and cheaper financial services – and doing so in a sustainable way.

Building on the current position, the review identified a Five-Point Plan of recommendations to deliver this approach – these are set out below.

Recommendations at a glance

One year from today, it is expected that both the public and the private sector will report on the progress they have made to deliver the recommendations in the review.

How can we help you?

If you’d like to know more about how we can help you with your fintech arrangements, or with any other aspect of compliance, our expert team is here to help. Contact us today on 0207 436 0630 – or email info@thistleinitiatives.co.uk.