The UK’s change in government power has also brought mass changes and promises to sectors across the nation. Labour has recently announced its pledge to embrace FinTech, in a bid to deliver a £330bn boost to the UK economy over the next five years. This update comes after reports from FinTech body Innovate Finance saying FinTech firms could deliver £328bn in tax revenues to the Treasury by 2029, if ministers were able to unlock a wave of institutional investment and streamline data policy.
With FinTech being a huge source of potential growth for the UK, further investment needs to be carried out by the new treasury and oncoming government. Central to the body’s plans is a call for ministers to embrace so-called smart data, a form of “data portability” that allows companies to more easily transfer information.
Jeremy Baber, CEO of Lanistar, believes it is important for the UK to capitalise on FinTech, and emulate the successes seen in other parts of the world to maximise its potential impact. “Whilst this early commitment from Labour is a welcome one, meaningful action within legislation and government policy is needed to follow through on these promises. Labour has campaigned on a platform of change, and so bringing that sense of vibrancy and energy to its national FinTech plans has the potential to breathe new life into the industry.
“Since its exponential growth in 2022, FinTech in the UK has stagnated, although the UK remains 2nd globally and is far ahead of European competitors. Nevertheless, if we look at other places worldwide, we can see the exponential growth in areas hungry for business and new technologies. LATAM is an area of interest for many and is already bringing massive investments and opportunities as their FinTech sector continues to experience rapid growth. The gap between the US and the UK versus the rest of the world is closing with more competition – ultimately, great for the consumer, but if the UK seeks to stay ahead of the game, government investment in growth is sorely needed.”
Last year, a study from the Corporate Finance Institute reported that one in four UK citizens have limited access to financial services, due to being low-income individuals who in turn have limited access to financial services. Steep fees levied by banks in exchange for services combined with required minimum balances are a couple of the many factors excluding the unbanked or underbanked from the security and convenience a bank account offers.
“The agility of FinTech allows technologies to be leveraged to capture this untapped market share, whilst additionally catalysing financial inclusion. With the new government’s pledge to support such technology development and advancement, it not only provides support back to the government and economy but also wider consumer support for those unbanked or untrusting of traditional financial services. Labour has the opportunity to streamline and champion the regulation of services and continue legitimise this source of market revenue.
“I have every faith in the Labour government’s ability to work with top industry representatives and take steps to take advantage of the massive potential in economic growth. Regulation in the sector will help legitimise FinTech in the eyes of the wider public, not just those in the industry with the knowledge of key developments. But in any case, Labour’s embracing of its potential is a good sign; hopefully, meaningful action to showcase support can follow.”
Waseem Mirza, award-winning techie presenter
After years of reporting on British technology at the BBC, I remain excited about its potential. We have all the brains – from the chips that power Apple iPhones – to the gaming industry that continues to outstrip Hollywood. Innovation is thriving, supported by a mostly favourable regulatory environment. With Labour now in power, there’s plenty that FinTech can achieve too.
Open Banking has revolutionised consumer control and spurred innovative financial tools. Digital banks like Monzo, Starling, and Revolut have all set global standards. Yet, there’s room for improvement. Seamless and secure data sharing with users in control is in sight. The government can drive this by promoting open data, enabling personalised financial products that truly meet individual needs. Blockchain, AI and next-gen finance often resemble the Wild West, with unclear regulations. A collaborative approach is essential, where government and industry leaders create clear, responsible innovation regulations.
FinTech has the power to enhance financial inclusion, providing everyone with essential financial tools. The government should champion accessible financial products and services, perhaps through digital literacy programmes. New alternative lending models like embedded finance could be key: Imagine you’re shopping online and at checkout, you have the option to pay in installments without leaving the retailer’s website. That’s one example of embedded finance (EF) in action. Deloitte says there is no specific regulation for it yet. But it could be a game changer for many according to a new report by Finextra Research.
As digital risks grow amid geopolitical changes, cybersecurity is paramount. The government should invest in robust cybersecurity infrastructure and promote best practices within FinTech. Creating a secure digital environment builds confidence in new technologies, from cyberspace to the metaverse.
Britain boasts impressive diverse FinTech talent but needs more. A 2024 report by Gigged A.I. revealed that 34% of UK tech firms face significant tech skills shortages. The government must support STEM education, fostering partnerships between universities and FinTech companies to produce future experts.
In the past 14 years under Conservative rule, we’ve seen both achievements and setbacks. While technological advancements were significant, issues like regulatory uncertainty and skill shortages persisted. A Labour government has the chance to address these gaps, enhancing British FinTech’s position globally and ensuring a brighter financial future.
Rupert Brown, the CTO at Evidology Systems
At the moment we are in the honeymoon period of the new Labour administration and its clear focus is on macroeconomic growth. Thus in the short term, FinTech will probably get little attention from Nos 10 or 11 Downing Street. The Financial Conduct Authority is in the new government’s crosshairs but their focus is on the competency of regulation rather than significant changes to detailed rules.
FinTech players would probably rather be left alone for a while but there is a risk they will be paraded as examples of enabling Labour’s growth agenda. During campaigning Keir Starmer has stated that he has no problem with people getting rich as a result of their efforts so founders and investors will hope that there is no change in tax incentives. On the downside, he also stated that he believed that AI would remove the need for coding skills as part of the general education curriculum and so there is a risk that general IT skills will not be developed in the general populace in preference for simpler and cheaper arts funding.
Although the chancellor has already started to drive the relaxation of planning rules for housing and onshore wind farms FinTech and other IT players will also want to see support for improving UK network infrastructure and data centre capacity.
The report from the Post Office Horizon enquiry will land in the new government’s in tray in the coming months – it will be an interesting test to see whether attempts are made to better regulate complex IT systems development and operation or whether there will just be an effort to pay off all the subpostmasters and close the books.
There is also the possibility that Mike Lynch will become involved with future UK IT investment and accounting regulation after being cleared of fraud over the sale of Autonomy to HP.