The UK government must prioritise the protection and expansion of the country’s fintech markets, according to Ron Kalifa and Charlotte Crosswell, co-authors of the Kalifa Review.
“It’s about domestic capital,” said Kalifa, who has speaking today at bobsguide’s west London studios. “There’s enough liquidity around but we’re not that interested in basically getting business funded by external sources – if you start doing that the business might start to migrate elsewhere with jobs and a head office going somewhere else, and that’s not the goal.”
The Kalifa Review of UK fintech was requested by UK chancellor Rishi Sunak as part of the 2020 budget, and has since seen a number of its recommendations inform the government’s policies as it extracts the country from the European Union. For Kailifa, the recommendations will boost domestic job markets and create forward-looking businesses.
On announcing the acceptance of a number of Kalifa’s suggestions, Sunak said the UK needed to “push the boundaries of digital finance”. Systematic and regulatory issues for listed entities have forced organisations to look elsewhere, said Crosswell.
“Different markets have different rules meaning we were effectively pushing companies away from the UK,” she said. “Is it right that we don’t give founders a choice of where to list and we’re effectively sending them overseas? What’s the impact of that going to be?
“We already face a valuation gap in the UK, but there’s a lot of advantages for a UK headquartered company for listing in the UK,” she said.
“We need to tell the founders that those decisions they make in the early lifecycle will have an impact later on.”
Among the review’s recommendations, the Financial Conduct Authority (FCA) is to launch a fintech scalebox or “regulatory nurseries” later this year. For fintechs looking to scale quickly the scalebox will help them through the authorisation process, and other onerous procedures.
“This is a substantive opportunity for businesses to get support from the regulator on a regular and direct basis,” said Kalifa.
“Businesses have to navigate Whitehall if they’ve got any questions to ask, which can be a challenge in itself. The sandbox is a mechanism to try and provide help via the FCA and via the regulators to help to know who to go to, to know what to think about, and to give them an environment in which they can ask questions.”
The FCA will also enter a second phase of its digital sandbox and the government will support the establishment of a sandbox specifically focused on distributed ledger technology (DLT).
Further, a central bank digital currency (CBDC) taskforce will be created, and support will be provided to fintech hubs while infrastructure providers will receive assistance around wholesale payments and settlements.
Widescale market reform is required in the UK, according to Kalifa, who said that over the past five years there have been 3,700 listings added to major exchanges. The UK has accounted for just five percent of that figure.
For Crosswell, it’s a global talent race, focused on engineering and data science.
“What we have is an amazing university system where people come into the UK to study, and we want to keep them here,” she said.
“It’s about how we adapt our education system for the future. And it’s not just coding – the robots will do the coding in the future – it’s about how we can deploy digital skills, management skills, finance skills, to help people understand what their future career will be.”
The full video interview will be available to bobsguide readers from Monday.