The long-awaited government-backed review looking into the UK fintech sector has been published, warning that the country is losing its dominance in financial services.
Ron Kalifa, former vice chairman of Worldpay, launched the Kalifa Review in 2020, with the aim of creating a roadmap to help boost UK fintech.
In recent years, the UK has spearheaded the fintech revolution – in 2019, UK fintechs made £11bn in revenue, representing 10% of global market share. Additionally, investment into UK fintech stood at £4.5bn in 2020, which is more than the next five European countries combined.
Despite this success, Kalifa warned that the UK is set to fall behind – of new financial companies selling shares to fund expansion and innovation in fintech, the US-based Nasdaq index attracted 40% of new listings compared to just 5% for the UK.
The review also outlined three threats that the sector must overcome to survive: competition, Brexit and the pandemic.
To tackle these threats, Kalifa has made a number of recommendations, including a £1bn fintech growth fund, a scale box to support firms, and a tech visa. The review also suggested setting up a new retraining programme to help workers develop new and essential tech skills.
The news has been welcomed by a number of major industry players, with many labelling it a step in right direction.
Nik Storonsky, founder of challenger bank Revolut, said the review highlights the importance of the UK remaining a world leader in innovation and growth. “As we start 2021, facing economic challenges across the globe, it is essential to preserve and strengthen the UK’s position as the first choice to launch and grow a fintech business,” he said.
“As Revolut’s founder I know the importance of the UK’s commitment to innovation and to being the best place to start and scale a fintech. I hope the Review gives us the pathway to ensuring that the UK retains this leadership.”
Adding to this, Mark Leaver, financial services technology leader at PwC, said: “We are seeing technology companies increasingly performing roles that have historically been done by financial institutions themselves. Opening up the legacy platforms of financial institutions, letting in more agile technology-led organisations and enabling incumbents and new entrants to collaborate will help the industry to better serve customer needs and become more efficient.
“At the same time, as industry and consumers navigate an increasingly digitised world accelerated by the Covid-19 pandemic, while competition from around the world is on the rise, it is hugely encouraging to see the recommendations in the Kalifa Review of UK FinTech published today.”
Oliver Prill, CEO of UK fintech Tide, also said that Tide welcomes the review and supports the recommendations made by Kalifa.
“Support for UK Fintechs scaling internationally is of particular importance,” he said. “With Tide beginning our journey in the India market and ambitions to scale beyond that in the long-term, we see that the introduction of a Fintech Credential Portfolio to support the credibility of UK Fintechs internationally has the scope to ease market entry significantly.
“We hope these recommendations are taken on board by Government and that Fintech can play a key part in post-Brexit trade negotiations.”
The report comes ahead of the Chancellor’s Budget next Wednesday, where innovation is expected to be highlighted.