HM Treasury Issues Report on Independent Review of UK Fintech Sector
HM Treasury published a report on independent review of the fintech sector in UK. The review was formally launched in July 2020 to support the growth and widespread adoption of UK fintech and to maintain the global fintech reputation of UK. The report sets out a series of proposals for how the UK can build on its existing strengths, create the right framework for continued innovation, and support UK firms to scale. The review has identified a Five-Point Plan of recommendations related to policy and regulation, skills, investment, targeted approach to exports and inward investment, and leveraging of the output of fintech firms across UK and facilitating connectivity among these firms.
The report sets out a strategy for the fintech sector as well as a delivery model to help the UK realize it. The review highlights the foundational capabilities to scale successful fintech firms across the UK and explains how enhanced connectivity and increased collaboration could drive growth further and faster. The key recommendations mentioned in the report include the following:
- Deliver a digital finance package that creates a new regulatory framework for emerging technology. UK must prioritize new areas for growth and cross-industry challenges, such as financial inclusion, and adopt specific policy initiatives that will help create an enhanced environment for fintech, such as digital identification and data standards.
- Implement a “Scalebox” that supports firms focusing on scaling innovative technology. This would include enhancing the Regulatory Sandbox, making permanent the digital sandbox pilot, introducing measures to support partnering between incumbents as well as fintech and regtech firms, and providing additional support for regulated firms in the growth phase.
- Establish a Digital Economy Taskforce. Multiple departments and regulators have important fintech competencies and functions. The Digital Economy Taskforce would be responsible for collating this into a policy roadmap (the digital finance package). It would provide a “single customer view” of the government’s regulatory strategy on technology and a single touchpoint for private sector engagement.
- Deliver an international action plan for fintech. The action plan represents a combination of public- and private-sector priorities and identifies sectors and markets with the highest potential to scale and build leading positions for UK fintech companies. The action plan includes certain focus areas: increasing the practical and commercial support available to international fintech, promoting of UK as a fintech growth country of choice, and launching an international fintech brand strategy.
- Drive international collaboration through the Center for Finance, Innovation and Technology and launch an International Fintech Taskforce. This would be led by government with the purpose of gathering fintech and industry input to achieve progress against the “international plan for fintech.”
- Launch an international “Fintech Credential Portfolio” to support international credibility and increase ease of doing business. UK should launch an International Fintech Credential Portfolio, which will provide easy access to the credentials required to drive overseas expansion, including identity verification, digital identification, regulatory compliance, and evidence of partnerships with incumbent financial institutions and backing from recognized investors. It is recommended that HM Treasury should appoint a private-sector body to design, build, launch, and administer the International Fintech Credential Portfolio.
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Keywords: Europe, UK, Banking, Securities, Fintech, Fintech Action Plan, Regulatory Sandbox, Regtech, Digital Finance Strategy, HM Treasury
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