Sponsored byInnovate Finance Spotlight 15 April 2021 Taking UK fintech to the next level The UK remains a hotbed for financial talent, technology, growth and investment, says Charlotte Crosswell, CEO of Innovate Finance. Shutterstock/ZGphotography Sign UpGet the New Statesman\'s Morning Call email. Sign-up The UK’s financial sector is often cited as one of its greatest technology success stories and a leading example of our world-class innovation capabilities – and rightfully so. The numbers speak for themselves. Year after year, when matched against other European countries, the UK resoundingly comes out on top as the lead investment destination, and globally ranks second only to the US in attracting investor attention. Capital follows great ideas – and the UK has plenty of them. Over the past decade, fintech has moved steadily away from being a fringe sector populated by start-ups to a world-leading, fast-growing part of the economy whose many technology solutions are now at the heart of innovation in financial services as a whole. Fintech has established itself as a key sector across the UK. Today, it employs hundreds of thousands and contributes billions to the economy every year. It has revamped the world of financial services, creating greater choice in how we manage our personal finances and significantly improved the customer experience. What’s more, fintech is helping to break down the “poverty premium” and financial exclusion that has impacted the financially vulnerable – something that has come to the fore during the global pandemic. Similarly, small businesses are benefitting from a wave of new players serving their needs – even in the most niche ways. From agile lenders that are providing crucial aid to a number of small businesses, to challenger banks that are transforming personal finance for millions, fintech is revolutionising the market at a mass scale. The UK’s success in fintech is in large part due to the long-standing strengths of our financial services industry. This has helped to shape an ecosystem, coupled with a supportive regulator and ready pools of substantial investment. We have also benefitted from the UK’s proximity to continental Europe, opening up access to talent and know-how from across the wider European financial services ecosystem. Fintech embodies the UK’s tech potential and its achievements spotlight our innovation globally. It provides other sectors with the blueprint for success, and the government has rightfully prioritised backing fintech as a major growth opportunity for the economy. While we hold a robust position as a global leader, our future in the driving seat of financial services innovation is not to be taken for granted. We are at a critical moment for securing our position on a global scale for years to come. Competition is fierce from the US, Singapore, Europe and other emerging markets. The recently published Kalifa Review serves as a vital first step in this direction. The review sets a new strategic direction for the sector to allow it to continue to attract entrepreneurs to start up innovative firms, but also provides support and guidance to the bigger, more mature ones as they scale up, look to international markets, and ultimately list on public markets. It is now absolutely crucial we meet its findings with action, or we risk losing much. Taking fintech to the next level requires a fundamental shift in the way we approach our talent pipeline, the rules governing investment, and balancing regulation in a way that enshrines good governance without impeding innovation. We are at a significant moment in time when fintech adoption is growing rapidly, to a large part as a result of the pandemic, and we must capitalise on the momentum created by the Kalifa Review to elevate the sector to the next level. The challenges presented by the pandemic provide an apt moment to reflect on the previous recession, from where fintech’s roots can be traced back to. Today, the confluence of the pandemic and Brexit has led to renewed focus on opportunities for the sector, and this time fintech can help to lead us out of the crisis. Fintech in the UK has proven itself as an industry, with the potential to be the innovation blueprint for other sectors of the economy to follow. In order for it to keep attracting global investment and talent it’s now on all of us collectively to ensure that we build on the success to date – it will in turn benefit us all. This article originally appeared in the Spotlight supplement on fintech. You can download the full edition here. › Enabling growth in green finance Subscribe For more great writing from our award-winning journalists subscribe for just £1 per month!