A genuine commitment to putting the UK at the forefront of fintech, or just another political vanity project to rival that of his predecessor’s Northern powerhouse? With Jacob Rees Mogg and the rest of his backbench Brexiteers baying for cabinet blood, the latter is currently not a political option for this unusually understated Tory chancellor.
Unlike Osborne’s original utopic vision to rebalance UK economic growth beyond London, Hammond’s plans to build a “fintech bridge” between the UK and the rest of the world needs to have some substance behind it. The good news is that, beyond a few second-rate gags at the dispatch box at Budget time, Hammond is hardly one for using policy as a means to grab the limelight. And when it comes to his latest proposals to boost fintech, it is just as well.
A sector that contributes nearly £7 billion annually to the exchequer and employs over 60,000 people across 1,600 companies, will be looking for far more detail from the chancellors fintech strategy in the months ahead. Take the first element of the chancellor’s proposals – establishing closer links with the Australian government. The first question that immediately springs to mind, why Australia? In terms of market size for fintech investments, Australia lags well behind established markets such as New York. Secondly, would it not make more sense to start building bridges with nations closer to home? After all, 30% of the sector’s workers mostly come from EU countries. On the flip side, there is a growing trend towards UK-based fintech firms going down under to tap into the lucrative Asia-Pacific region. And there is no denying that this latest collaboration ties in nicely with the UK’s existing fintech links with the likes of Hong Kong.
Beyond new links down under, Hammond could do with putting a little more meat on the bones of this new “Crypto Taskforce”. On the face of it, it appears as if the government simply just wants to be seen to be doing something to mitigate against the risks to the end investor. The trouble is, the crypto genie is well and truly out of the bottle. The more the crypto space, the greater the competition, which will make it harder for the Taskforce to strike a balance between keeping up to speed with the latest risk, while also promoting the liquidity benefits. With wild price swings on an almost daily basis, perhaps the governments pending interim report on cryptoassets will shed more light into the governments understanding of this rapidly evolving market.
While it is too early to tell how effective Hammond’s fintech proposals will be, political rhetoric around previous well-meaning schemes that ultimately fizzle out should bring a degree of scepticism among the UK fintech community. As ever, the devil is in the detail. Which is why UK fintech firms will be waiting with baited breath for more specifics from Hammond in the weeks and months ahead.
Tim Focas is Director of Financial Services for Parliament Street
