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PwC response to Kalifa Review of UK Fintech

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The focus this week might be on the UK budget announcements, but those in Fintech and the wider Tech market will have been following the suggestions submitted by Ron Kalifa OBE as well.

PwC have submitted a thorough response to the Review, and we are pleased to be able to share them below:

Mark Leaver, Financial Services Technology Leader, PwC UK, comments:

“We are seeing technology companies increasingly performing roles that have historically been done by financial institutions themselves. Opening up the legacy platforms of financial institutions, letting in more agile technology-led organisations and enabling incumbents and new entrants to collaborate will help the industry to better serve customer needs and become more efficient.

“At the same time, as industry and consumers navigate an increasingly digitised world accelerated by the Covid-19 pandemic, while competition from around the world is on the rise, it is hugely encouraging to see the recommendations in the Kalifa Review of UK FinTech published today.

“Building on the strong foundations that the UK FinTech sector has laid, we look forward to working with the industry to support the proposed Centre for Finance, Innovation and Technology in the delivery of the five-point plan.” 

Access to Investment

Michael Magee, PwC UK Financial Services Deals Leader, comments:

“Despite a highly liquid investor market across the UK and an active FinTech Deals market that we expect to see the fastest recovery in as Covid-19 subsides, we know that many FinTechs still struggle to access the funding and support they need to grow and mature. 

“The proposed £1bn investment vehicle – the FinTech Growth Fund in Ron Kalifa’s report – would be transformative in addressing this challenge, with the potential to turbo-charge growth in the sector, assisting FinTechs of all shapes and sizes, and as a result unlocking innovation at scale across the financial services industry.

“Creating a fund owned and managed by institutional investors will provide access to more patient capital for FinTechs, giving them breathing space to realise their vision without investors seeking a shorter exit and giving those FinTechs that make their home in the UK a chance to grow in an inclusive, welcoming environment.”

Listing Transformation

Isabelle Jenkins, UK Financial Services Leader, PwC, comments: 

“Ron Kalifa has not shied away from recommending big changes to maintain the momentum of the UK’s FinTech sector. Reducing free float requirements and introducing dual-class share structures will encourage FinTechs to list in the UK by ensuring those who built the businesses retain more control of them, ensuring their success will have a great impact on UK economic growth.

“The current requirements for listing might discourage more mature Fintechs from seeking public market capital in the UK. Therefore, measures to put in place equity and hybrid financial capacity, and infrastructure to drive economic growth in the UK, will help the UK’s FinTech sector remain ahead of the global pack.”

Skills and Talent

Steve Davies, Partner, Digital Innovation in Banking, PwC UK, comments: 

“Talent, rather than technology, is the most critical enabler for successful digital transformation, and with FinTech driving the wave of digitisation through the financial services industry today, the focus on both global talent attraction and digital upskilling in Ron Kalifa’s report are welcome.

“The Kalifa Review seeks to move UK Fintech into the lives of businesses and individuals around the nation. We have a world class asset and the five-point plan is something the UK FS industry can all get behind.

“Although not referenced in the report, it is also going to be paramount to increase the diversity of the sector in order to ensure no unintended biases in the technology solutions and products developed, and we are proud to be a signatory of the FinTech for All Charter in support of this imperative.”

National Connectivity

Claire Reid, Regional Leader, Scotland; Head of Technology, Data & Analytics, PwC UK, comments: 

“Areas such as central Scotland and Wales have a proven record of nurturing FinTech ‘unicorns’ and the creation of FinTech clusters throughout the country would promote this even further, supporting nuanced specialisms across specific regions and supporting scale while making FinTech a more inclusive industry.  

“As well as unlocking opportunities for innovation across the regions, the proposed clusters will ensure talented workers are able to remain closer to home, keeping talent within the region and contributing towards the government’s levelling up agenda while creating the right conditions for an industry that has an important role to play in the economic recovery across the regions.

“Importantly, the clusters will also allow regional bodies to begin to deliver on the proposals in the Research and Innovation for UK FinTech report published last month, helping FinTechs in all corners of the UK to leverage local strengths and networks to create jobs, deliver innovative solutions and drive economic growth.”

Policy and Regulation

Conor MacManus, Director, Financial Services Risk and Regulation, PwC UK, comments:

“As the FinTech ecosystem matures, with challengers and big technology players coming to the market and FinTechs becoming increasingly embedded across the financial services value chain, it will be critical that our UK regulators continue to innovate to ensure consumer protection while fostering the right environment for competition and growth.

“We therefore welcome steps to build a regulatory environment in the UK that drives FinTech innovation. Further support for FinTechs as they scale up will be an important part of this. The creation of Digital Economy Taskforce (DET) will also help coordinate the delivery of the Government’s vision of the UK as a leading FinTech hub.”

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