Regulatory Obstacles & Funding Woes Put UK’s Fintech Stature at Threat

The UK has produced among the world’s most profitable and progressive fintech firms and has lengthy been heralded as a number one world hub for monetary know-how. However there are rising issues that the UK is shedding its fintech edge.

This week noticed the discharge of the most recent Fintech Founders Summer season Survey – an annual sequence gauging the views of greater than 300 founders throughout the UK fintech sector – which revealed overwhelming pessimism concerning the financial outlook and falling confidence within the UK fintech scene.

Since its earlier survey, there was a big fall within the variety of founders who assume that the UK is presently the world chief in fintech – from 56 per cent agreeing final 12 months to 38 per cent this 12 months.

Eighty-seven per cent of founders stated they had been both not very, or under no circumstances, assured within the outlook for the UK financial system over the subsequent 12 months.

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Entry to funding stays the one most-cited barrier for founders as they appear to develop their firm.

Within the first half of 2022, UK fintech funding dropped to $9.6billion, down nearly threefold from $27.8billion in the identical interval in 2021, based on KPMG’s Pulse of Fintech, a bi-annual report on fintech funding tendencies.

A lot of founders surveyed have known as for the Authorities, below the brand new Prime Minister Liz Truss, to enhance entry to grants and funding notably for fintechs at early stage and progress stage, with progress capital being made accessible both straight or by means of organisations just like the British Enterprise Financial institution (BBB).

Regulation issues

One other widespread frustration raised by founders within the Fintech Founders survey, is that “regulators are nonetheless all too unresponsive to the challenges confronted by fast-growing tech firms”. Virtually a 3rd (30 per cent) of founders stated regulation is stopping additional progress. Whereas greater than 1 / 4 of founders (25.9 per cent) known as for higher resourcing on the Monetary Conduct Authority (FCA).

A lot of founders really feel the FCA is “understaffed and…sluggish”, whereas one respondent stated that “higher useful resource is required for the FCA to chop ready occasions for permissions purposes”.

That is echoed by the Westminster assume tank Parliament Avenue, which warned this week that the UK’s “overly complicated regulatory atmosphere” has suffocated the power of economic companies corporations from gaining a aggressive edge.

Parliament Avenue’s CEO Patrick Sullivan stated: “The monetary companies trade is the lifeblood of the British financial system, and we can not proceed to permit extreme paperwork and compliance guidelines to suffocate its progress.”


Fintech entrepreneur Khalid Talukder, co-founder at FX markets specialist DKK Companions, shares Sullivan’s issues. He suggests the constraints of the 2008 world monetary disaster have stored the “metropolis of London on a leash for much too lengthy”.

Talukder says: “Overwhelming quantities of regulation and pink tape has successfully chloroformed entrepreneurs and bold monetary companies corporations, whereas rival cities have been let loose to develop and develop with out interference.”

Their feedback observe the announcement by the Prime Minister that she deliberate to reform laws in order that “when enterprise arrange they’re not hit by mountains of pink tape, they’re capable of get on to rising the nation”.

Thought-about method

Nonetheless, Daniel Layne, founder and CEO of fintech QV Methods, says adjustments to regulation needs to be “proportionate and thought of” to keep away from unintended hurt to the long-term way forward for the monetary companies trade.

“It’s necessary to recognise that regulation performs an important position in defending shoppers and companies from poor practices corresponding to mis-selling, knowledge loss and fraud,” he stated. “Whereas proposals to roll-back a few of these insurance policies to liberate town and drive financial progress are admirable, nice care must be taken to mitigate any damaging points which will come up from these measures.”

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