Ron Kalifa fights for fintech sector in the wake of Brexit

Rick Steves

In 2020, investment into UK fintech stood at $4.1 billion in 2020, which is more than the next 4 European countries combined.

The United Kingdom is navigating through troubled waters as leaving the European Union is naturally resulting in uncertainty, including in the fintech sector.

This has called for an independent review to set out a plan to retain its leadership in fintech despite the new challenges in the aftermath of Brexit.

The independent review was already submitted and addresses the challenges of startups to scale up, access the talent and finance they need, and deliver better financial services.

Recommendations by the review led by Ron Kalifa include a ‘scale box’ for growing firms and changes to UK listings rules. The country has over 10 percent of the global market share in fintech and the sector is worth more than £11 billion a year to the UK economy. In 2020, investment into UK fintech stood at $4.1 billion in 2020, which is more than the next 4 European countries combined.

The strategy offered by Ron Kalifa aims to create highly skilled jobs across the UK, boost trade and extend a competitive edge over other leading fintech hubs. Recommendations include:

introducing a new ‘fintech scale up’ visa route for specialists from around the world
implementing a ‘scale box’ to provide regulatory support for growing firms
improving UK listings rules with free float reduction and dual class shares
creating a £1 billion-pound fintech ‘growth fund’ to help firms grow independently
establishing a private sector-led Centre for Finance, Innovation and Technology to support national coordination and growth in fintech across the UK

Rishi Sunak, Chancellor of the Exchequer, said: “Fintech is one of the UK’s great success stories and will help us seize new opportunities around the world. We must now build on our global reputation for fostering innovative start-ups and ensure firms can access the talent, finance, and support they need to scale up here in the UK.

“This review will make an important contribution to our plan to retain the UK’s fintech crown, create more skilled jobs, and deliver better financial services for people and businesses”, Mr. Sunak added.

Ron Kalifa OBE said: “Fintech has the power to change lives, both in terms of job creation and better wages that are so essential to our recovery; and making financial services more accessible and relevant to people’s lives. Britain has a proud record of starting-up and scaling-up some of the best-known fintech products, but we cannot rest on our laurels. The next powerhouses will not be created by accident.”

“We must continue to nurture our start-up culture, but crucially we must also give our high growth firms the support to become global giants. With the right reforms that encourage entrepreneurialism, investment and make it easy to attract and invest in talent, Britain can usher in a period of dominance that can help us build back better from Covid-19.”

This is a pivotal moment for the UK. There are significant opportunities offered by fintech, but it is vital to offer an environment that supports innovation. The independent review expects the plan to result in the creation of new digital jobs, inspire the next generation of entrepreneurs, and in turn enable the growth of global champions.

A number of high-profile names in the fintech world have shared their support for the review, including Checkout.com CEO Guillaume Pousaz and Wise CEO Kristo Käärmann.

John R. Bryson, Professor of Enterprise and Economic Geography at the University of Birmingham, has stated that London is unlikely to be ousted as the global financial center in the Brexit aftermath.

Mr. Bryson said that Amsterdam’s emergence as the primary center for European share trading suggests that the European Union will never develop a global financial center that displaces London for four reasons.

“First, the European Commission (EC), and the member states, would have to agree to focus all financial service activities in a single center. A decision would have to be made to position Amsterdam, Frankfurt, Paris, Milan, or Dublin as the emergent European Global Financial Centre. The politics within the EU would never enable such a decision to be made. Europe will continue to have several smaller competing financial centers”, said Mr. Bryson.

For the second reason, the Professor points to the major governance problem in the European Union. As a confederation, the EU does not have the flexibility of a country in matters in which there is a division of power between member states and the European Commission (EC). The EU is slow in decision-making and negotiations. The delays over the COVID-19 vaccination program prove the lack of agility.

In the Global Financial Centres (GFC) September 2020 index, London was ranked second to New York, with Amsterdam coming at at 22, Dubai at 17, and Singapore at 6. This is the third reason: “London needs to think and act globally rather than locally to maintain its position as one of the leading global financial centers. London has three advantages that are not held by any other European centre – existing scale and networks, a supportive legal system and ‘speedboat’ agility”.

The fourth and last reason for London’s top position as the financial center instead of Amsterdam is the UK legal system, which is based on common law. The EU and its member states are based on civil law, where codes, regulations, and laws can be applied to any conceivable circumstances. Common law develops as the socio-economy develops, which encourages innovation.

In conclusion, Mr. Bryson’s take is that the UK’s agile decision-making is a threat to the EU’s ‘tanker like’ speed as the financial industry positions itself in the post-pandemic.

Read this next

Digital Assets

Bitcoin price flash crashed to $8,200 on Binance.US platform

Bitcoin price briefly crashed to $8,200 (not a typo) Wednesday on Binance.US, the American outpost of the world’s biggest crypto exchange.

Digital Assets

FTX Trading lands $25 billion valuation after $450 million investment

FTX, the cryptocurrency exchange founded by Sam Bankman-Fried, said on Thursday its valuation had risen to $25 billion after a $450 million funding round that included a clutch of heavyweights from traditional finance.

Digital Assets

Nukkleus enters booming crypto ETF space with 5% stake in Jacobi

Jacobi is one of the first companies to offer Bitcoin through mutual funds in Europe. Most regulators restrict cryptocurrencies from being directly held in funds. Crypto-linked funds may be a workaround. 

Industry News

FX and Crypto trading fueled by competition among young investors, FCA

The regulator believes higher-risk investments are not compatible with these investors’ risk tolerance or comprehension. 

Digital Assets

FCA wants more power to supervise cryptoasset businesses

The FCA stated its concern that the registration standards it is permitted to apply under the MLRs are far less demanding than those applicable under FSMA.

Industry News, VOD

Interview with Match-Prime & Match-Trade Technologies at the iFX EXPO: The winning combination of liquidity and technology

FinanceFeeds went to Limassol, Cyprus, last week to meet the industry leaders. A key highlight was the interview with the executives of Match-Prime Liquidity and Match-Trade Technologies present at the show; Svetlana Kulikova, the Head of Match-Trade Cyprus, and Andreas Kapsos managing the Liquidity Provider. 

Industry News

Kikit & Mess charged with $3.9m FX and Crypto ponzi scheme

The scammer used the money to pay for travel costs, including chartering a private jet, renting a luxury mansion and cars, leasing a luxury automobile, as well as purchasing real estate, according to the CFTC.

Digital Assets

Ripple extends further in Middle East

Ripple has been quickly expanding its footprint in the Middle East. Earlier this month, it became official that the Qatar National Bank (QNB) plans to launch a remittance platform based on Ripple blockchain technology.

Digital Assets

Lukka acquires Blox Finance to expand data offering on crypto ecosystem

Lukka’s costumers rely on institutional-grade technology infrastructure with a breadth of coverage across blockchains, exchanges, wallets, and other venues and data sources.

<