Fintech flourished in the UK due to a pro-competition, pro-innovation environment fostered by the government and regulators a decade ago. But where does it go next?
This report reveals UK’s fintech leaders’ views about the current regulatory landscape and how to boost competition while maintaining essential protections.
90% consider the UK leading the EU for innovation
Following Brexit, respondents view the UK more favourably than the EU as a place for developing innovative products and services, citing concerns about the region’s consumer protection-focused approach as less conducive to innovation. The UK benefits from several factors which are attractive to tech founders, including a range of skilled talent in with deep financial services expertise, a well-developed regulatory system, and a start-up eco-system of regulatory initiatives.
71% believe competition drives product innovation
Overall, four-fifths believe that competition delivers net benefits for consumers. There is a broad consensus of market practitioners (87%) who acknowledged that consumers enjoy a greater choice of products and services. It also helps to drive additional benefits including lower fees (74%), enhanced consumer experience (74%) and increased financial inclusion (61%).
72% believe the regulatory landscape hinders scaling
This suggests that while the UK is perceived as a good place to start a fintech and a destination for creating new products and services, there are concerns around assistance for scaling their businesses. Changing government sentiment shows it is aware of these concerns and is actively examining rules that support growth opportunities and enable innovative firms to seize commercial opportunities.
Six recommendations to enhance the UK’s competitiveness
The report outlines the fintech sector's strengths and highlights six areas for improvement that could enhance competition and assist firms in scaling domestically and internationally. Among these recommendations is the rapid implementation of stablecoin and smart data regulations, two of the three key foundations for the next wave of innovation.
"Fintech in the UK has flourished over the past decade in the pro-competition environment created by government and regulators, enabling us to bring to market in 2017 the first new clearing bank in over 250 years. However, the industry has voiced concerns that the regulatory environment has shifted too far from growth and innovation to risk. Regulators have recently started to review their risk appetite so the UK can realise its global ambitions. The recommendations in this report will support government and regulators as they strive to support scale-ups, removing disproportionate and often outdated requirements."
Discover what the industry thinks
Learn more about the six recommendations
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