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Innovate Finance issues Statement Following Release of Autumn Budget

Statement from Charlotte Crosswell, CEO of Innovate Finance on the Autumn Budget 2018:

An innovative, responsible application of technology has the potential to drive better, faster financial services for individuals and small business; it has the potential to be a leading UK export and a key contributor to jobs and growth in the years to come.

There are three themes within today’s Budget that support aspirations for the UK to remain home to a thriving FinTech ecosystem.

Innovation

We welcome the government’s ongoing commitment to furthering UK innovation. We can see this today in the focus on artificial intelligence, with further funding and fellowships, to ensure the UK is at the forefront not just of AI development, but of important considerations around its application.

Specifically on FinTech, we are pleased to see another round of the FinTech Challenge launched with £2 million allocated to the Affordable Credit Challenge Fund, promoting innovative technological solutions to support social and community lenders. This follows the success of the Rent Recognition Challenge earlier this year, incentivising firms to put fast solutions to market to increase rates of financial inclusion. We are delighted the government continues to recognise that FinTech companies have a significant role to play.

On regulation, today’s Cryptoassets Taskforce Report identified the opportunity for future action to address potential risks often associated with cryptoassets. We welcome the conclusion that cryptoassets and distributed ledger technology has the potential to deliver significant benefits in both financial services and other sectors, as well as the intention of UK authorities to work together with industry to develop a comprehensive regulatory framework.

Funding

Patient capital is a key stream of funding for FinTech given the nature of the sector’s growth and continued scalability. It’s encouraging to see progress unveiled today increasing available sources of pooled patient capital from pension investments and plans to update the regulatory framework allowing this to take place.

It is also positive to see first steps in forward planning for funding sources post-Brexit, particularly given we are already seeing a sharp drop in European Investment Fund monies into the UK.  It is right that this has been identified as a gap which must be tackled in order to retain the sector’s ambitious growth rates.

An ecosystem supporting smaller firms

We are encouraged that the Digital Tax announced today will target larger companies, already successful at scale, allowing start-ups to continue to enjoy the impressive growth they have seen so far and to provide increased competition through disruption of more traditional sectors.

Finally whilst there is welcome prudence in increasing funds available to government departments to prepare for the event of no deal being reached with our European Partners, it is important to reiterate that it is the smaller companies who struggle the most with the uncertainty around future operating arrangements. To create the best possible environment for success, urgent clarity is needed so we can provide practical help and advice to the UK’s FinTech ecosystem.