The UK is Europe’s leading country for global tech investors, with British tech firms attracting more venture capital funding than any other European country in the last year.
The UK, already arguably the world’s leading international financial center and a strong technology player, came to FinTech with substantial strengths. Then-Chancellor George Osborne accordingly set the UK Government’s sights high, aiming for London to be, ‘the global capital of FinTech’. As of early 2017, that goal appears to have been achieved, with the UK rated ahead of California and New York (separately) as well as of other global FinTech centers.
The UK is particularly highly regarded on the policy front, and its regulators are generally felt to be the most FinTech-friendly in the world. However, Brexit, which threatens the ability of UK-based FinTechs both to passport their products into Europe and to hire EU nationals, is a cloud over the UK FinTech scene.
Key initiatives undertaken by the government and regulators in the UK include the following:
- The FCA’s Project Innovate, which incorporates an Innovation Hub to help businesses bringing new products to market.
- A regulatory sandbox (safe place) to provide regulatory space for FinTechs to experiment with new business models.
- A clear structure within the regulator with responsibility for servicing FinTech.
- Efforts to level the playing field among financial institutions (eg compelling big banks to share SME credit data).
- A commitment to developing an open banking standard for application programming interfaces (APIs) to enable FinTechs to access customer data to provide services.
- Informal means of communicating regulatory and compliance issues to FinTechs, such as themed weeks and informal steers.
- Various specific regulatory guidelines, e.g. on Robo-advice.
The constructive attitude to FinTech is shown by all the UK financial regulators. Nonetheless, the sandbox and the Innovation Hub provide only limited relief: core regulations remain unchanged and require considerable compliance effort.