Kalifa Review of UK Fintech
HM Treasury commissioned an independent review of the UK’s Fintech sector. Chaired by Ron Kalifa OBE, it was announced during Chancellor Rishi Sunak’s budget in March 2020. Innovate Finance have provided the secretariat alongside our colleagues at the City of London Corporation. Over the past decade, the UK has been quietly undergoing a quiet fintech revolution – in jobs, innovation, improvements to people’s lives and in the country’s ability to compete on the global stage – and today is a leading global fintech hub. The Kalifa Review provides a clear strategy and delivery plan to ensure the UK can capitalise upon the opportunities fintech presents. This will enable the UK to move from being a global leader in fintech start-ups, to the best place to scale a business, and take solutions from IP creation through to widespread adoption. That is when the full impact and opportunity of a thriving fintech sector will be realised.
Recommendations at a glance: 5 point plan
Policy and Regulation
- Deliver a digital finance package that creates a new regulatory framework for emerging technology
- Implement a “Scalebox” that supports firms focusing on scaling innovative technology
- Establish a Digital Economy Taskforce (DET) to ensure alignment across government
- Ensure that fintech forms an integral part of trade policy
- Retrain and upskill adults in support of UK fintech by ensuring access to short courses from high-quality education providers at low cost
- Create a new visa Stream to enhance access to Global Talent for fintech scaleups
- Build a pipeline of fintech talent by supporting fintech scaleups to offer embedded work placements to Further Education and Higher Education students and Kickstarters
- Expand R&D tax credits, Enterprise Investment Scheme and Venture Capital Trusts
- Unlock institutional capital to create a £1bn “Fintech Growth Fund” of sufficient scale to act as the catalyst in developing a world leading ecosystem
- Improve listing environment through free float reduction, dual class shares and relaxation of pre-emption rights
- Create a global family of fintech indices to enhance sector visibility
- Deliver an international action plan for fintech
- Launch an international “Fintech Credential Portfolio” (FCP) to support international credibility and increase ease of doing business
- Drive international collaboration through the Centre for Innovation, Finance and Technology, and launch an International Fintech Taskforce
- Nurture the high growth potential of the top 10 fintech clusters
- Drive national coordination strategy through Centre for Innovation, Finance and Technology
- Accelerate the development and growth of fintech clusters through further investment such as R&D
Views from the ecosystem
“I set up Checkout.com in the UK nine years ago because of the country’s clear, aligned and exciting vision for the future. We’ve grown from our London HQ to become one of the world’s largest fintechs, successfully providing other businesses with the payment solutions they need to innovate and thrive.
But competition from other fintech centres is now fiercer than ever. So I was pleased to contribute to Ron Kalifa’s Fintech Strategic Review, which sets out a pathway for our sector to stay at the forefront of global fintech, and become an engine room of economic recovery and growth in the UK economy.”
-Guillaume Pouzaz, Founder and CEO, Checkout.com
“There’s no doubt that the UK’s Fintech sector is highly regarded around the world – our combination of world-class talent, a supportive regulator and our renowned financial services industry is the recipe for success. We are growing fast at Thought Machine, and welcome further opportunities to discuss and shape the industry we operate in.”
–Travers Clarke-Walker, Chief Marketing Officer, Thought Machine
“The UK is the epicentre of financial innovation. Bringing together best-in-class infrastructure, talent and expertise we strive to to give businesses the best platform for global growth.
Investment in our thriving fintech sector is consistently the highest in Europe and second highest in the world, but our ambitions for UK fintech remain extensive. We want the UK to be the No 1 destination for fintechs from across the globe to startup, scale up and grow.
We welcome the Review and look forward to ongoing collaboration with the fintech sector. We will build on the success of our Fintech Bridges and FTAs, creating further opportunities for digital trade, and strengthening our operational support in the UK and targeted overseas markets.”
Gerry Grimstone, Minister for Investment
“There is a huge economic and societal opportunity to be seized by backing our nation’s scaleups. This report builds on the evidence base and sets out some practical steps to leverage institutional capital more effectively and connect investors to the growth opportunities within the scaling fintech sector. We look forward to progressing this important work.”
Irene Graham OBE, CEO, ScaleUp Institute
“FinTech has played a crucial role in the UK becoming a global leader in Financial Services over the last decade. For the UK’s financial services industry to continue to thrive, it is important that we are a destination for high growth financial technology companies by offering the opportunity to access capital and to build scale in the UK and beyond.”
Sarah Melvin, Head of UK, BlackRock
“The global investment community recognises the UK as one of very few places that combines world-leading technical talent with a deep pool of FinTech entrepreneurs who, having had venture capital experience previously, know how to build at the velocity and scale that is required”
Kevin Chong, Co-Head, Outward VC
“Fintech challengers will continue to play a crucial role in supporting economic recovery in the UK and beyond in the wake of the pandemic. The UK fintech ecosystem as a whole continues to mature and build recognition on the world stage, as demonstrated through increasing interest from established overseas investors who are becoming more active not only in capital but by hiring local teams on the ground.”
Tim Levene, CEO, Augmentum
“The UK fintech market has shown tremendous resilience. The strong 2021 start [in terms of investment] is a testament to the UK FinTech talent, that is here to stay and that thinks globally, with many companies raising to expand or further consolidate their international plans.”
Manuel Silva Martinez, General Partner, Mouro Capita
“We welcome the Fintech review findings, which highlight the great number of innovative founder-led fintech businesses in the UK. It’s important that we continue to develop the UK’s finance ecosystem, improving the route from private to public capital, in order to support these fantastic high-growth companies.”
David Schwimmer, Chief Executive Officer, LSEG
“The world changed in 2020 and the fintech industry experienced a further boom as a result. Companies have accelerated adoption of technology and revised how they operate to suit new working environments. Much of that focus has been on remote working and front-end digitalisation. In 2021 the regulator-driven challenge is to ensure appropriate oversight of risk and compliance across interaction channels to deliver great customer outcomes and experience. This requires firms to continue to tune and optimise their operating models and embrace and embed fintech at the heart of their strategies.”
Joe Norburn, CEO, Recordsure
“As fintech comes of age, the industry and its regulators must work hand in hand to ensure regulation can move at the speed of technology and fortify not just fintech’s future but UK Plc’s too. Banks and fintechs have never been under more pressure to demonstrate that the new technologies and business models aren’t just effective at improving the customer experience, they can improve operational resilience and financial protection as well. Innovate Finance’s fintech review will underpin the future growth, sustainability and prosperity of the sector across the UK, helping move the needle where it’s needed.”
Charles McManus, CEO, ClearBank
“It’s great to see the Treasury seeking to support and improve the UK’s position on the world stage as a growth platform for tech companies in financial services. This review, conducted by Ron Kalifa…is a brilliant opportunity to keep modernising the regulatory environment. This should lead to even more competitive products and better services for consumers, both here in the UK and beyond the borders.“
Kristo Käärmann, Co-founder and CEO, TransferWise
“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 industry. This will only accelerate the opportunity for positive change and help position us as being world leaders in fintech.”
Louise O’Shea, CEO, Confused.com
“The growth in UK Fintech has been one of the major success stories within the British economy over the last decade. Not just in London and the south-east, but across all of the regions and nations, and particularly in Edinburgh, where DirectID is located, we have seen the blossoming of a burgeoning sector.
The technology, products and services that have been developed by the sector are of the highest order, and have materially changed how business and consumers interact with their money. I am confident that with the right support and investment, that UK FinTech will continue developing the world’s best solutions for how we view and manage our money.”
James Varga, CEO, DirectID
“Atom is proud to contribute to the UK’s reputation as a global fintech centre of excellence. We bring a pedigree of banking creds, a truly innovative tech stack and a spirit for engagement and fun (that last bit comes naturally from being based in the North East). We’ve been on every journey that we imagined, and many that we didn’t, but it’s all been made possible because we believe that the UK is the best place to create banks! Ron Kalifa’s review is not just timely but essential to maintain momentum in this key part of our economy and to continue to drive better – and cheaper – outcomes for all of us.”
Mark Mullen, CEO, Atom Bank
“As the economy digitises, the UK’s FinTech strategy is critical to support the levelling up agenda. Financial services firms and their suppliers are large employers in many regions and devolved nations and the fintech strategy will need to ensure that as the sector digitises, these jobs stay in the regions and nations. This will involve dedicated focus on building digital skills and talent across the UK.”
Ian Price, Wales Director, CBI Cymru/Wales
“Fintech is already a UK stronghold, and in 2020 $4.6bn of VC investment went to UK Fintechs, including 44% of all European fintech unicorns which are based in the UK. I was delighted to lead the connectivity chapter of the Kalifa Review, alongside many FinTech Leaders from across the UK, identifying and examining the UK’s financial services strengths by geography and speciality, from WealthTech to RegTech.
Strengthening and complementing those capabilities is key to building a stronger UK Fintech sector, which will foster more targeted growth and development of new startups and scale-ups. We already have many examples of fantastic fintech scaleups across the UK, like Oaknorth, Wealthify, and Atom Bank, but we must support and strengthen local leadership in emerging clusters, and enable greater connectivity and collaboration between fintech hubs. The National Connectivity chapter of the Kalifa Review sets out a compelling vision to do just that.”
Gerard Grech, Chief Executive, Tech Nation
“One of the key reasons why the UK has been so competitive internationally has been London’s ability to attract global talent. A significant percentage of our London-based staff were born outside of the UK but have made London their home. To ensure this continue, an efficient, clear and stable visa system is essential.”
Charley Cooper, Managing Director, R3 LLC
“The Financial Services Skills Commission welcomes Ron Kalifa’s important and timely review into UK fintech. Skills are critical to the future success of financial services and it is essential that we invest in reskilling and upskilling to support growth, productivity and innovation. The review’s skills and talent recommendations highlight the importance of working together to build the skills of UK workers and attract talent”.
Mark Hoban, Chairman, Financial Services Skills Commission
“We have helped hundreds of thousands of UK customers to take control of their finances by building their credit score, saving money and learning as they go. Our growth plans don’t just focus on developing our existing proposition. We want to take our technology and innovation to the next level and do more to empower people. We recently launched LOQBOX in the US, the only free credit building solution (irrespective of where they bank) across 40 states. Now more than 80% of Americans have the chance to build their credit score while they save money without it costing them anything”.
Tom Eyre & Gregor Mowat Co-CEOs and Co-Founders, Loqbox
“For young people to understand the value of money and how to manage it they need real life experience of the digital economy to encourage healthy spending choices in later life. I am a firm believer that learning by doing is the best way to teach life skills such as money management. You can’t just teach the theory of swimming; you need to get into the water and do it for yourself. It’s the same with money management. But financial education isn’t as exciting to a child as swimming, so you need to find a way to make them want to get in the pool – to continue my analogy. This is where gohenry comes in.”
Louise Hill, Co-founder and COO, gohenry
“A vibrant FinTech sector provides the opportunity to address the UK’s very real problem of financial exclusion – made worse by the pandemic – by coming forward with products and services tailored to people’s needs and to the way they lead their lives today.
It can build resilience in these difficult times by helping people to manage their money more effectively, put aside savings or build insurance protection and even provide access to more affordable credit. It can protect people against scams and the predators of illegal lending or gambling. And it can help people, SMEs and the self-employed take greater control over their financial lives, increasing their emotional and psychological well-being. But, if FinTech is to make its full contribution in this regard, it requires investment to challenge digital exclusion: making sure all have the equipment, connectivity and capability to use it”.
Chris Pond, Chair, Financial Inclusion Commission
“Britain’s FinTech sector is admired across the globe and has a crucial role to play in supporting the economy as we look to recover from Covid-19.
Small businesses are the backbone of our economy – many have been hit hard by the crisis. I admire the resilience of so many business owners that haven’t thrown in the towel but found ways to keep their businesses going, and in many cases found new opportunities. I am proud that we could play our part by providing the necessary financing.
The recommendations within this Review will allow us to leverage the innovative technology we have built to support even more of our customers in the future.”
Christoph Rieche, CEO and Co-founder, iwoca
“As we start 2021, facing economic challenges across the globe, it is essential to preserve and strengthen the UK’s position as the first choice to launch and grow a fintech business. I welcome the Fintech Strategic Review and the Government’s commitment to ensuring that the UK remains a world leader in innovation and growth. As Revolut’s founder I know the importance of the UK’s commitment to innovation and to being the best place to start and scale a fintech. I hope the Review gives us the pathway to ensuring that the UK retains this leadership.”
Nik Storonsky, Co-Founder and CEO, Revolut
“The UK benefits from a diverse pool of exceptional talent (four of the world’s top 10 universities are in the UK), forward-thinking regulators with an open approach to innovation, and a sophisticated and active investor network – all of which help to develop a unique ecosystem for fintech companies to be born and thrive. However, if we want to maintain our position as a global leader, it’s vital that we don’t rest on our laurels and become complacent given the success that’s been achieved to date. This is why the Fintech Review is so important – we must grasp the opportunity now to ensure the UK continues to be the best jurisdiction globally to establish and importantly scale a fintech business. Going forward we must enable fintechs to grow and compete globally and for them to be world leaders in their fields of expertise.”
Nick Lee, Head of Regulatory Affairs, OakNorth
“The CBI welcomes the recommendations set out in the Review to ensure the continued success of the UK FinTech sector.
Having a proportionate, innovation-friendly regulatory framework will help support economic growth, facilitate access to global markets and enhance competition.
Working alongside policymakers, the financial services industry and its users, the CBI looks forward to engaging further in the conversation to help unlock this critical framework to maintain and grow the UK’s position as the best place in the world to start and grow a FinTech business.”
Lord Bilimoria, President, Confederation of British Industry (CBI)
“The Kalifa Review has the potential to be a seminal moment for the Fintech sector in the UK. It is time to re-invigorate the sector, and I know that fellow founders want to play their part in driving growth, innovation, and in the process, an economic recovery for the whole country.”
Christian Faes, Exec Chair & Co-Founder, LendInvest
“2020 was an unprecedented year for digital finance that will permanently change how people interact with their finances. That creates a wide window of opportunity for the UK fintech ecosystem to develop new apps and services that better serve people and small businesses’ financial needs.”
Keith Grose, Head of International, Plaid
“The UK is a fantastic place for FinTechs to set up and scale and PensionBee has been a huge beneficiary of the supportive environment. I’m delighted to be working with Ron Kalifa and other industry leaders to ensure the continued innovation and prosperity across the sector as a whole, at a time when this is much needed.”
Romi Savova, CEO, PensionBee
“We warmly welcome the Fintech Strategic Review. As the UK looks to forge its own path in the world, it is absolutely right that the Government explores how it can ensure the ongoing success of the UK fintech sector. We hope this review will help create the right conditions for UK fintechs to grow and succeed and look forward to working with the Government and the fintech ecosystem to ensure the UK retains its position as a global centre for fintech and innovation.”
Ashok Vaswani, CEO, Consumer Banking & Payments, Barclays
“Santander UK is delighted to have contributed to the Skills and Talent workstream of the FinTech Strategic Review. This review comes at an important time for the sector and will guide future growth to ensure the UK remains at the forefront of the global FinTech industry. With the accelerated trend towards FinTech solutions that has taken place over the last year, benefitting both businesses and individuals, it is essential that this sector is enabled to thrive, through an environment which will attract the best talent and investment.”
Nathan Bostock, CEO UK, Santander
“Some great ideas in Ron Kalifa’s report to help fintech deliver for clients and businesses – which augments the Future of Finance agenda for the Bank of England.
The pandemic has accelerated the adoption, and clients’ expectations, of digital finance by 3- 5 years. The Kalifa Review can help turbo-charge the transformation of finance in the UK to deliver for clients.”
Huw van Steenis, Senior adviser to CEO, UBS; former senior adviser to Mark Carney
“Fintech is a great British success story. We’re using state of the art technology to transform the way people manage their money, disrupting an industry in need of change and creating thousands of new high quality jobs,”
Anne Boden, founder and chief executive of Starling Bank
Watch the launch event
Watch the launch event of the HM Treasury commissioned Fintech Review led by Ron Kalifa.