Unless a strategic plan for the future of fintech is put in place, the entire sector could be in jeopardy, warns Sir Mark Walport, the government’s chief scientific adviser.
In his FinTech Futures report, commissioned by chancellor George Osborne, Walport said:
“There are dystopian scenarios for the evolution of FinTech, with the possibility of increased financial exclusion and exploitation of large numbers of people, new opportunities for financial crime, and destabilisation of existing mechanisms that provide monetary policy and stability.”
He has made 10 recommendations that could help to protect and promote the industry long-term, including the formation of a public-private advisory group to monitor risk, establishing dedicated university courses, and creating automated regulation and compliance infrastructure, or ‘regtech’.
Last year, nearly half of all foreign direct investment in European fintech was made in the UK and Walpot also emphasised the key benefits of Britain taking the lead:
“Innovations in financial technology have the potential to completely redefine the financial services sector. Wisely applied they could help to re-establish trust in financial services while opening up financial services to a vast number of un-served or under-served consumers.
“FinTech has potential for far-reaching impact, empowering consumers and businesses to play an active role in lending and borrowing through peer-to-peer networks, educating young people about personal finance through apps and games, helping consumers manage their own finances and freeing up surplus capital to invest in small businesses, good causes and venture philanthropy projects. In short, FinTech can democratise financial services.”
Lisa Moyle, head of financial services and payments at techUK, said that the trade body has consistently highlighted the “urgent need to modernise the complex legacy banking technology infrastructure”.
“This comprehensive review of fintech covers issues of importance across the financial technology sector, including employment, skills, the regulatory environment, globalisation and inclusion, highlighting both opportunities and potential challenges. It is a welcome assessment of an industry where the UK has the potential to be a global leader.”
Walport highlighted several crucial growth areas for UK fintech, including: machine learning and cognitive computing, digital currencies and blockchain, big data analytics, optimisation and fusion, distributed systems, mobile payments and peer-to-peer platforms.