Over the last fourteen years, the fintech sector has emerged as arguably the UK’s biggest startup success story.
Innovation drives change, and delivers value for customers in every sector, but in financial services, we have seen how user experience has been transformed by digital-first providers: features we now take for granted every single banking app were first trailblazed by UK fintechs.
Customer service has been transformed through the power of competition. And the chippy upstarts who did it are now multi-billion pound companies.
And while fintech is a growth sector itself - raising nearly $40bn over the last five years alone - what is perhaps even more important is its role as an enabler of growth across the economy. So now, in an election year where refinding the growth Britain seems to have lost will be a critical issue, politicians of all stripes would be wise to crack on with measures that will support the fintech ecosystem to grow to the next level.
So today, we’ve outlined a blueprint for how to leverage fintechs to do it. To start with, growing a thriving fintech sector starts by getting the basics right.
That means optimising investment incentives to ensure that fintech founders at home and abroad pick the UK as home; ensuring that firms can attract the best talent through fit-for-purpose share option arrangements; and maximising support for fintechs ready to sell their wares abroad.
Beyond the sector’s economic success, however, fintech offers a different kind of tool to progressive politicians - a means to meaningfully break down barriers to opportunity across the UK. Financial inclusion is not just the right thing to do, it will further catalyse growth, and we’ve seen how fintechs serve parts of the market neglected by incumbent firms.
Driven by a mission to empower, alongside delivering value to their investors, fintechs creatively serve those previously underserved, and increase choice, access and quality across the UK. At the crossroads of these two objectives - growth and breaking down barriers to opportunity - sits a key prize for the next government.
One which will supercharge the fintech sector, and deliver huge value for people across the country: Open Finance.
Over the last six years, 8 million people in the UK have benefitted from the ability to connect their financial data to get access to products and services. From increasing their chances of getting approval for a loan, to getting rewarded for their shopping loyalty. From automatically saving with every purchase, to paying their taxes quickly and securely. Open Banking is a £4bn fintech ecosystem itself, which is world-leading and envied across the globe.
But it is just scratching the surface of how valuable the sector could be, and how much value it could deliver across society. For a progressive government driven by a desire to grow the economy and break down barriers to opportunity, unlocking the next stage of this technology is a no-brainer, particularly as the foundations are being laid in legislation right now.
Fintech is often called the jewel in the crown of the UK’s startup ecosystem, and this is true, but it is so much more than that. For a Government with the ambition to change the UK as a whole - it could be the key piece in the puzzle.
Charlie Mercer is Deputy Policy Director at Startup Coalition
