LONDON — The minister charged with looking after financial services says the government is “absolutely committed to fintech” and believes it could be a core part of UK financial services post-Brexit.
City Minister Simon Kirby told Business Insider at his Westminster office last week: “There will be changes. Some of them will be positive changes. There are things like insurance-linked securities — huge potential for us to do well on that. Green finance, Islamic finance, fintech — these are all growth areas that we’re at the cutting edge of.”
Fintech — financial technology — has exploded globally in the wake of the financial crisis, with scores of startups springing up applying new technologies to everything from lending and credit scoring to core banking and clearing. London has become a particular global hot spot, home to world-leading businesses such as online money sending business TransferWise and peer-to-peer lending platform Funding Circle.
Former Prime Minister David Cameron and former Chancellor George Osborne championed fintech while in Downing Street, appointing a fintech envoy and leading trade delegations overseas. Current Chancellor Philip Hammond recently publically praised Funding Circle and Nutmeg, two London-based fintechs, during their funding rounds and called the UK a “global fintech capital.”
Kirby said Theresa May’s government is “absolutely committed to fintech and financial services,” adding: “It’s hugely significant, we’re global leaders without a doubt.”
He added: “London and the UK has a huge number of advantages — it has the language, it has a highly-regarded regulatory system, it has an independent legal system, it has the geography that you can do business with Asia in the morning and America in the afternoon, it has the links to universities. It also has the advantage of a critical mass. The latest figure, there are 61,000 people employed in fintech. I suspect that’s over 100,000 now.
I’m saying Brexit is an opportunity as far as fintech is concerned and we will be doing as much as we can, as a government, to support it
Kirby’s predecessor as City Minister, Harriet Baldwin, set up several fintech “bridges” with Asian markets in a bit to foster global expansion. Kirby says he will continue this policy and is considering links with Hong Kong and Korea.
He said: “It was quite interesting, recently I was at the Asian Financial Forum in Hong Kong. There was a sophisticated audience of 3,000 people involved in financial services there. They were asked what the biggest threat was from an Asian perspective. Brexit was 3% — so I’m saying Brexit is an opportunity as far as fintech is concerned and we will be doing as much as we can, as a government, to support it. I’m very optimistic about the future.”
Kirby added that the government is also supporting fintech through friendly regulation and freeing up funding from the British Business Bank, a state-backed lender that supports SMEs. The BBB recently committed to lending an extra £40 million on peer-to-peer lending platform Funding Circle.
‘We need to make sure we don’t rest on our laurels’
Kirby is leading the Treasury’s first-ever fintech conference in April, which has now been extended to a full week. It will bring together startups from across the UK, international investors, and companies from around the world to try and forge international links.
He says: “We like in a smaller and smaller world which is becoming more and more global, more and more competitive. We need to make sure we don’t rest on our laurels here in the UK and we support where we’re world leading, move forward and innovate.”
Despite Kirby’s overtures to the fintech sector, many in the industry have concerns that Brexit will damage UK fintech. One of the biggest concerns is that talented EU workers may be put off coming here to join startups or, worse still, may be blocked from doing so by an immigration crackdown.
Kirby says: “I can tell you this morning I had a roundtable with the immigration minister and fintech companies to discuss that very issue, how we can maintain access for very skilled people. I don’t think anyone can pretend that we want to disadvantage businesses.
“Having said that, the British people were very clear that they want to control immigration. But we had a sensible and constructive conversation that we’re going to take away, not just from a Treasury perspective but also a home office perspective, to see if we can come up with the best possible deal. But clearly access to talent as one of the ingredients required for successful businesses and we’re very much in listening mode.”
Kirby also told Business Insider in the same interview that he believes the UK is in “a strong position” for Brexit negotiations and the government will push to “maximise the access” to the EU market.
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