UK's fintech sector received assurances from Rachel Reeves; delivery of promised support now expected
Ramming Down the Pipeline: UK Fintech's Court Date with Destiny
Time's Ticking for Rachel Reeves**, and the UK Fintech world will be calling the verdict. **
At the recent innovation summit climax, the Chancellor announced the Treasury's debut Financial Services Growth and Competitiveness Strategy, to be unveiled on July 15.
Reeves applauded the fintech sector's advancement and acknowledged victories by fintech frontrunners like Zilch and Allica Bank. She vowed to make the UK a utopia for fintech startups, scaling enterprises, and public offerings.
Given Revolut's CEO's prior contention that London listings were unreasonable, the Chancellor has her work cut out for her. The fintech community is keeping a sharp eye on July, as Reeves' fintech commitment will be put on trial, with fintech leaders acting as judge, jury, and - if dissatisfied - potential executioners.
'Hope Awaits Delivery'
Schachar Bialick, CEO of London-based Curve, told City A.M.: "Fintech demands attention - because it impacts every aspect of contemporary economic life. From expenditure to securing, financial well-being, fintech serves as the infrastructure bedrock of the digital economy. Currently, the vibe is optimistic albeit cautious. Firms are closely monitoring the government's intentions to convert policy into meaningful reform."
Bialick pointed out, "The consensus is crystal clear: optimism hinges on delivery." Curve, a rival to Apple Pay, was valued at £587 million in a 2024 financing round. However, the fintech has since withdrawn from the US market, trimming over 100 jobs, and reporting a £36 million loss.
The fintech's leader asserted, "The most transformative action the Chancellor can enact is to level the playing field - ensuring fintechs can compete fairly with Tech Titans. This starts with infrastructure access."
The Financial Conduct Authority (FCA) and Payment Systems Regulator petitioned the Competitions and Market Authority in February for fairer legislation concerning near field communication (NFC). The EU has mandated Apple to provide third-party mobile wallet providers, such as competitors to Apple Pay, access to NFC technology.
"If the government truly commits to backing British fintech, it must act decisively and align with Europe's approach," Bialick stated. “This one move would engage a wave of innovation in mobile payments, reinforcing the UK’s status as a fintech leader."
Reeves has 'Great Heights to Climb'
During her speech, Reeves touted Great Britain as the number one destination for fintech investment - second only to the US. However, an investigation by KPMG showed that investment dipped since 2021, hitting a four-year low in 2024 at £7.9bn.
Private equity titan Rami Cassis told City A.M.: "We'll require significant measures from the government for it to thrive. Presently, it's all talk, and we need to witness much greater action."
He expressed concern, "The UK's fintech industry still has significant peaks to conquer - obstructions that have been built taller by the government." Cassis, CEO of Parabellum Investments, referenced the government-inspired non-dom exodus, which "pushed out an essential group of investment banking professionals involved in the sector."
"Displacement has been substantial, with Zurich, Frankfurt, and Paris developing their fintech presence at London's expense." City A.M. revealed last month that Goldman Sachs' most senior banker outside the U.S., Richard Gnodde, was leaving the UK to steer clear of the government's crackdown.
The Call to De-regulate
As the government pledged to slash regulations, an essential hurdle for fintech's economic growth has been the regulation controversy. Allica Bank's CEO Richard Davies told City A.M. the firm is "hearing good things from the Chancellor," but warned, "We can't take fintech's success for granted."
Digital bank Allica, crowned Europe's swiftest-growing start-up by Sifted and the UK's fastest-growing private company by The Times Hundred, boasted pre-tax profit of £29.9 million, surging 86 percent in 2024.
Davies stressed, "To persist momentum, we need regulation that fosters competition and growth." He advocated that supporting UK SMEs was "essential" and requested a 'supercharge' to the Growth Guarantee Scheme, which provided approximately £500m of additional lending capacity to help smaller firms.
A report published by Innovate Finance disclosed that over 82,000 individuals are employed in the fintech sector, with the workforce set to surpass 100,000 in the coming years.
Reeves has a steep road ahead, sprinkled with challenges that will test her resolve. This summer, she will hear the industry's pleas for assistance, and her answers may either bolster fintech's force, or risk stagnation.
- The Chancellor's Financial Services Growth and Competitiveness Strategy, scheduled for July 15, is crucial for the fintech sector, as it will determine the UK's standing as a utopia for fintech startups and scaling enterprises.
- Schachar Bialick, CEO of Curve, believes fintech's optimism hinges on delivery, citing the need for meaningful reform and infrastructure access to compete fairly with tech giants.
- Rami Cassis, CEO of Parabellum Investments, emphasized the need for significant measures from the government to thrive, expressing concern about the government-inspired non-dom exodus and the resulting loss of investment banking professionals.
- Allica Bank's CEO, Richard Davies, called for regulation that fosters competition and growth, advocating for a 'supercharge' to the Growth Guarantee Scheme to support UK SMEs.
- The success of fintech and its workforce (which is projected to exceed 100,000 in the coming years) largely depends on the government's responses to the sector's pleas for assistance this summer.
