‘We must take opportunity to capitalise on fintech’
SOUTH Wales has been identified as a key fintech cluster ripe for further expansion in a new report aimed at further boosting the sector across the UK.
The Kalifa review of UK fintech, carried out by former chief executive of Wordplay Ron Kalifa, was commissioned by Chancellor Rishi Sunak.
As well as unlocking institutional capital to create a £1bn fintech growth fund, the report has identified Cardiff and south Wales as among 10 clusters across the UK with the potential to drive the economic recovery and creating a new wave of highskilled and well-paid jobs.
With Moneysupermarket in north Wales, the south Wales cluster’s strengthens in fintech and consumer data is underpinned by leading players such as Admiral and Gocompare. There is also an emergence of highgrowth potential fintech start-ups such as Delio and Yoello.
The report sets out a five-point plan:
■ Policy and regulation – ensuring an environment that protects consumers while enabling fintech to innovate and encouraging competition.
■ Skills – supporting the supply of domestic and international talent and the means to train and upskill current and future workforces.
■ Investment – developing the availability of funding from start-ups right through to flotation.
■ International – accelerating a targeted approach to exports and inward investment.
■ National connectivity – leveraging the output of fintech organisations across the UK and building on the existing connectivity and collaboration.
UK fintechs generated £11bn in revenues in 2019, up from £6.6bn in 2015 and represents 10% of the global market. However, the review identifies three main threats in the pandemic, Brexit and competition from overseas hubs such as Singapore, Australia and Canada.
Mr Kalifa said: “Fintech is not a niche within financial services. Nor is it a sub-sector. It is a permanent, technological revolution, that is changing the way we do finance. Its essence is in both fast-growing fintech companies, and the investment and use of technology by our incumbent financial institutions. It’s in the way we regulate previously unknown technology and set new standards.
“But most importantly, it’s about delivering better financial outcomes for customers, especially consumers and SMEs. We want to deliver these outcomes across the UK and export them to the world.
“If the UK is to retain its position as a global leader in financial services, then we must lead this technological revolution. Just as we led in previous industrial revolutions, we must do so again in this one.”
However, the UK Governmentappointed fintech envoy for Wales Richard Theo described it as a “missed opportunity”.
The fintech entrepreneur said: “Despite actively participating in the review, I can’t support its main recommendations. There are some good bits, but overall this is a missed opportunity with too many conflicts of interest and vested interests amongst the key participants which should have been ironed out from the start.”
He said it also lacked recommendations to ensure “good-for-all governance or goals” to level up the UK.
But welcoming the report chief executive of representative body for the sector in Wales, Sarah WilliamsGardener of FinTech Wales said: “There is a real opportunity to capitalise on fintech across the UK. The pandemic has undoubtedly helped to speed up digital adoption across so many areas of our lives, but we now have a moment in which to build on this and make sure that the UK remains at the forefront of fintech.
“The review recognises this and that, importantly, we must not be complacent while other fintech powerhouses gather momentum. It also highlights the power of clusters across the UK as powerful economic and social development tools that empower innovation and show more resilience – and how the clusters must work together to build a ‘whole that is greater than the sum of its parts’.
“Nurturing start-ups is an absolute must, but we must not forget the scaling businesses and the importance of vibrant leadership at a local level, which will ensure that those businesses continue to have the right environment in which to grow and flourish. In Wales alone, we have a huge fintech presence, with businesses such as Admiral, Yoello, Wealthify and GoCompare having a real impact on the way Britons manage their finances.”
Advisory panel member of FinTech Wales and chief executive of price comparison site Confused.com Louise O’ Shea said: “Wales is already a prominent place for fintech businesses, with companies like Confused.com, Wealthify and Delio having established long-term roots here. But the publication of the Kalifa report puts a spotlight on the fintech industry and acknowledges how important it is to support further growth.
“The review reinforces Wales’ position as a fintech hub within the UK and means that as businesses, we’re able to be even more active in developing innovations and skills, while creating additional jobs in the