Political Insider: Overview of the Innovate Finance Global Summit

Posted on: April 16th, 2024 by Morgan Arnold

The Innovate Finance Global Summit (IFGS) celebrated its tenth anniversary this week with leading fintechs, policymakers and investors coming together at London’s Guildhall to discuss the future of UK fintech. Yesterday – the first day of the two-day summit – saw the Prime Minister make an appearance, albeit via video message, to herald the ‘power of technology to make life better for everyone’.

One of the leading themes this year was innovation, and how to encourage technological development through a suitable regulatory environment that provides effective consumer protection. The keynote speakers from Westminster – Bim Afolami MP, the Economic Secretary to the Treasury, and Tulip Siddiq MP, Afolami’s Labour Shadow – certainly reinforced the theme throughout their presentations.

For Siddiq, her speech earlier this afternoon was another opportunity to showcase Labour’s vision for financial services, and to woo the sector. Labour’s positioning of itself as the party to be trusted with the economy was reflected in her call for industry to contact her with ideas for Labour’s first 100 days in office… although, it may also be argued this shows the Party is desperate for ideas on how a fiscally constrained Labour administration can achieve its central mission of economic growth.

Day one – 15th April

Bim Afolami, the Economic Secretary to the Treasury, gave the opening keynote speech of the day. He highlighted the might of the UK fintech sector, which attracted nearly $5 billion in investment in 2023 (second only to the US). With 86% of digitally active adults in the UK using fintech services, Afolami emphasised the government’s recognition of the sector’s potential to drive economic growth and job creation

To support innovation, the government is developing a regulatory framework for financial data sharing based on fairness, partnership, and safety, and is considering recommendations from the Centre for Finance, Innovation and Technology (CFIT) on open finance. Moreover, Afolami announced the formation of the Open Finance Taskforce (whose inaugural meeting took place at IFGS 2024), the upcoming publication of the National Payments Vision (due before the summer recess, in mid-to-late July), and the government’s focus of putting in place legislation for regulating stablecoin by July 2024 – while emphasising the Conservatives’ commitment to creating a regulatory environment that protects consumers while allowing firms to innovate

The keynote speaker Sarah Breedon, the Deputy Governor of the Bank of England, outlined how the Bank is preparing for the radical changes in money and payments that are being driven by rapid technological innovation, aiming to harness the benefits while ensuring consumer safety. This summer the Bank will publish a discussion paper on the payments landscape to gather input and encourage greater collaboration with industry players – the findings from which support HMT’s work in setting out a National Payments Vision.

In other headline news from the day, Innovate Finance’s Unicorn Council for UK FinTech published its six recommendations for policymakers which are designed to maintain the UK’s leading global position in fintech. Core recommendations include the abolition of Stamp Duty, a rethink to regulation, broadening of the tax R&D scheme and business asset disposal relief. The Council also called for updates to the EMI and EIS schemes, as well as the introduction of a VAT-rebate scheme for early stage fintechs.

Day two – 16th April

Today, Tulip Siddiq, Shadow Economic Secretary to the Treasury, outlined Labour’s vision for the future of the fintech sector, reiterating the commitments made in the Financial Services Review published in January. A Labour government would provide greater support for international firms to set up in regions across the UK, as well as a skills plan to support, among others, women in fintech.

On regulation, Siddiq echoed the sentiments made by Afolami the day before – that regulation must allow firms to innovate. An effective regulatory environment would help deliver regional growth and empower consumers, and a Labour government will seek to streamline regulation and update the Financial Conduct Authority’s (FCA) 10,000 page regulatory handbook. Moreover, Labour would establish a Regulatory Innovation Office to ensure accountability and transparency in regulatory performance, particularly concerning secondary competitiveness objectives, as well as identifying overlaps in the mandates of different regulators. Finally, Siddiq said Labour would introduce regulation for the Buy Now, Pay Later (BNPL) industry, reflecting the Party’s commitment to consumer protection.

Other leading news from the day is the speech from the chair of the Payment Systems Regulator (PSR), Aidene Walsh, who provided her reflections on the last year at PSR. She highlighted how 10% of all fintechs currently reside in the UK, outstripping the number in all EU countries combined. This is predicted to increase to 12% by 2030, provided the regulatory environment remains favourable. Ensuring regulation encourages innovation and growth is a core focus of PSR and it is working with industry leaders to achieve this.

Walsh discussed the substantial progress the UK has made on encouraging the adoption of Open Banking, such as HMRC recently making history by becoming the first tax authority in the world to integrate Open Banking into its systems. She also mentioned PSR’s work with FCA to promote change and innovation in the retail payment sector, noting her ambition for Open Banking to create effective competition to cards and retail payments. Walsh also stated her belief that the soon-to-be-published National Payments Vision will set the scene for innovation in the UK fintech sector.

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