Plan to make Britain global centre of financial innovation set out by Government
The Chancellor today (Wednesday 6 August) announced a series of measures to support the growth of the country’s emerging FinTech sector and encourage innovation in finance, including supporting alternative finance providers and exploring the potential of virtual currencies and digital money.
Re-stating the government’s commitment to cement Britain’s position as the centre of global finance, the Chancellor declared his intention to make Britain the global centre of financial innovation, benefiting consumers and businesses.
One of the steps the government will take is to start a programme of work looking into how virtual and digital currencies could or should be regulated in Britain.
The government will look at the potential virtual and digital currencies have for achieving positive change and for encouraging innovation in our world leading financial sector, as well as the potential risks.
The Chancellor also confirmed that the government will also encourage the growth of alternative finance providers, which are a major part of the FinTech sector, by introducing legislation to help small and medium-sized businesses access alternative sources of finance if they are turned down for finance by their bank.
Under the new rules, banks that reject SMEs for finance will be required to ask these firms whether they want their information to be shared with designated online platforms that can match firms with challenger banks and alternative lenders, including FinTech lenders such as crowd-funders, peer-to-peer lenders and invoice financiers.
Britain’s alternative finance market is growing fast, with one estimate that it expanded by 91 per cent in 2013, to almost £1bn. The market is expected to be worth £1.6bn in 2014.
Other measures that were announced today include:
– consultation on a new strategy for Britain’s digital communications infrastructure, to ensure we remain a world class digital nation and are equipped to harness the emergence of new sectors like FinTech. The consultation seeks views on the likely demand for digital communications and technology from business, consumers and public bodies, and what infrastructure will be needed to meet this demand.
– major new review examining how the technology that serves the financial sector will evolve in the future, to be lead by the Government Office for Science. Industry and academic experts will look at the technologies, enablers and barriers that will shape the future of the FinTech sector up to 2025, and the policy implications for the government.
– £100 million extension of the British Business Bank’s successful Investment Programme, which addresses long-standing gaps in the finance market for smaller businesses and promotes a greater choice in their supply of lending, including in the FinTech sector. The British Business Bank has already committed over £100m to FinTech firms through the complete range of its programmes.
– proposal for a range of new awards and prizes to promote the development of innovative finance solutions that help small businesses access finance, co-sponsored by the British Business Bank and Innovate Finance. The prizes will be offered to participants who are best able to provide solutions to meet either a particular challenge or problem that has been set.
– significant new push by UK Trade & Investment (UKTI) in overseas markets to promote Britain as the best place in the world to set up and develop a FinTech firm, and attract inward investment to the sector. This will be backed up by a programme of trade missions to key markets to help UK-based FinTech companies seize global growth opportunities.
Chancellor George Osborne said: “Key to the government’s long term economic plan is cementing Britain’s position as the centre of global finance.
“It’s only by harnessing innovations in finance, alongside our existing world class knowledge and skills in financial services, that we’ll ensure Britain’s financial sector continues to meet the diverse needs of businesses and consumers here and around the globe, and create the jobs and growth we all want to see in the future.
“That’s why I’m delighted to announce a series of major steps today to help our FinTech firms continue to grow and succeed.”
Business secretary, Vince Cable said: “Forcing banks to refer businesses to alternative lenders is something I’ve been determined to make happen. It’s good that more SMEs are making use of alternative finance but the big banks still dominate and small businesses often give up if they’re turned down for finance by their bank.
“The UK needs a diverse and competitive business finance market like Germany and the US if our SMEs are to thrive, and that is why the Business Bank is so important.
“Money is already reaching small businesses, but my ambition for the Business Bank is to radically alter the overall market landscape.”
Chief secretary to the Treasury, Danny Alexander said: “It is important that we continue investing in our digital infrastructure so that we remain at the cutting edge of innovation.
“Our new strategy for digital infrastructure should enable us to capitalise on the benefits to business of technologies such as 5G and make it easier for communities across the UK, particularly in remote rural areas, to stay connected.
The government will publish a strategy document later this year setting out in detail how we intend to make the UK the global centre of financial innovation.