Starting, owning or expanding a business is not just about profit – it is also about self-determination and autonomy. Getting a loan at a repayable rate for your first business venture, or to expand an existing one, can sometimes seem like an impossible task. You might have an innovative idea, and the drive to turn it into a success. But without competitive funding, or any sort of funding at all, the first rung of the ladder is sometimes just beyond reach.
The prodigious success of the British FinTech industry is solving this problem for many thousands of businessmen and women. However, awareness is still not as high as it could be. And crucially, awareness does not always translate into recognition. In the new world of FinTech funding is often within reach of entrepreneurs, but they aren’t aware of how to take advantage of the new opportunities. In business, when something sounds like it’s too good to be true, it normally is! But financial technology can be a win-win for business, banks and consumers.
That is one of the many reasons I am so pleased to see the progress that the FinTech industry has made in recent years.
Through progressive regulation, and the world’s first bespoke P2P funding regime, we have seen the AltFin sector grow from £600m in 2012, to over £3.2bn in 2015. In the post-crisis era of a retrenchment in bank lending, FinTech has sought to provide a plug a gap in much needed working capital for SMEs. Other supportive regulations include the IFISA and the mandatory referral scheme, so if a business is refused a credit from a bank they must be referred to a 3rd party platform. All of this shows the practical potential FinTech can hold for a business, as its starts it journey towards growth and innovation here in the UK.
As a Trade Envoy for the Prime Minister, I am acutely aware that Britain leads the world in many sectors. When it comes to FinTech there simply isn’t another country in the world that can compare for innovation. Not only are our regulators supportive, the culture of banking in the UK is far more open to innovation than anywhere else, as can be seen by the banks willingness to embrace Open Banking APIs that allow customers to share their data more easily. The close proximity of our ‘fin’ and our ‘tech’ in London, the City’s history of banking and London’s fantastic reputation for openness towards other countries and cultures are also advantages that should not be underestimated.
Whilst London’s profound agglomeration of talent and capital is beneficial for the entire UK, more needs to be done to ensure that the benefits of FinTech ripple across the entire country. Competitive lending to businesses is an essential component of this to ensure that rising incomes cascade across every region, not just London.
At the end of the day, the residual clog in the current lending system can be cleared with innovative thinking and sympathetic tax and regulatory approach. This is the key to Britain’s success and that I’m confident our success can continue once we have left the European Union. Indeed it may well be that the EU turns to the UK for Fintech guidance and services.