Fintech is laden with opportunities that could help governments improve the delivery of citizen services – and help society more broadly – with financial inclusion among the most promising areas, according to UK parliamentarians.
Gareth Davies, who is vice-chair of the UK’s all-party political group (APPG) on financial markets and services, and Adam Afriyie, who is chair of the APPG on fintech, were speaking at a virtual panel discussion on the HM Treasury-commissioned Fintech Strategic Review. The six-month independent assessment delivered a stack of recommendations on how the government can best help the UK’s fintech sector.
“I think technology has a much bigger role to play across government, not just in the financial aspects of government operations but in edtech [education tech] and healthtech there are all sorts of opportunities,” said Davies in answer to a question from Global Government Fintech on the extent to which government departments and agencies could and should themselves invest in fintech solutions.
APPGs are informal groups established by backbench MPs that are able to exert influence on government. Describing fintech as “rife” with opportunities, Davies described HM Revenue & Customs (HMRC) – which has made various forays into using open banking technology in particular, most recently issuing a tender notice for ‘Confirmation of Payee’ services – as having “done a great job” of “digitising a lot of their services”, citing the example of online self-assessment tax returns.
Davies told the online audience that he “welcomed any opportunities as to how government can adopt new technology for areas such as DWP [Department for Work and Pensions] that we can champion from the backbenches.”
Fintech: set to fill MPs’ postbags?
Afriyie answered Global Government Fintech’s question by referring to the government’s ‘levelling-up agenda’ – an intention to address geographic inequalities through, for example, infrastructure development – which is explicitly mentioned three times in the 108-page Fintech Strategic Review report.
“When it comes to ‘levelling up’, there’s definitely a place for fintech when it comes to financial inclusion – it’s a huge space and there’s a lot of fintechs already in that space,” said Afriyie. “I can begin to see in the near-term future that actually our [MPs’] postbags will begin to fill up with [correspondence], I’ve had a few already, asking questions such as ‘why can the government not do ‘x’ through the ‘y’ fintech system that I use?’.”
Afriyie went on to suggest that fintech solutions could be used more significantly to help small businesses. “Around the small-business area, and the experience through coronavirus, it’s quite clear that fintechs can get to these small businesses very, very quickly – in some cases in a matter of 24 hours everything’s done and dusted without potentially any human interaction,” he said. “So, I think [that’s] another area where I think we as parliamentarians can begin to focus government attention on how fintech can lift those boats.”
But parts of government are yet to dip a toe into fintech solutions. “I think the other area that’s a little bit broader is to make sure that when government is thinking about designing its services for delivering [welfare] benefits or whatever it happens to be, anything financial, it does bear in mind the fintech sector and actually ask a few questions before they go ahead and use these traditional routes, just the question of whether there’s a fintech route,” said Afriyie. “I think it would make all the difference to the creation of those policies.”
Afriyie concluded by suggesting that “if the government were to acknowledge or recognise or give an imprimatur to some anti-money laundering bitcoin or cryptocurrency in some way, maybe in the [Financial Conduct Authority’s] sandbox or the scale-box [suggested by the Fintech Strategic Review as a way to provide regulatory assistance for firms that have moved beyond start-up status], then all of a sudden that whole avenue opens up for fintech and individuals.”
‘Window closing’ on UK’s fintech opportunity
The Fintech Strategic Review was led by Ron Kalifa OBE, who was also a panellist at the webinar, along with Charlotte Crosswell, chief executive of industry body Innovate Finance.
During the Q&A session Kalifa emphasised the UK’s international leadership in fintech but warned that the “window is closing” on what he described as the country’s “unique opportunity”.
“As we went round [during the review’s research period] and talked to different markets – we spoke to Australia, Singapore, UAE, Canada, France, etc – the question was always the same from us: ‘What are you doing in terms of fintech?’,” he said. “All said the same thing: ‘We basically watch what you [the UK] do, we copy what you do, but then we get on with it and we put real effort behind it: ministers, resource, whatever it is. But we get on with it. Whereas you [the UK] tend to be very British about it and it takes a while for things to get talked about’.”
Discussion also touched on the momentum that is building worldwide towards the introduction of central bank digital currencies (CBDCs).
“The one country that’s further ahead than anyone else [on CBDCs] at the moment is China,” said Kalifa. “Without disparaging anyone in any market, I don’t know if China is going to be the market that the globe will follow that standard, that protocol. But if we [the UK] were to set it up and we were the ones to drive it, then I suspect we would be able to establish that, not just as a leadership position, but set the regulatory standard for something that is going to be inevitable here.”
Kalifa applied the same sentiment to digital ID and in the data realm, urging that the country “should be the one that set the standards globally for many of these things”.
The webinar, held on 11 March, was jointly hosted by the APPGs on fintech and financial markets & services.
KEEN ON THESE TOPICS?
READ ‘Fintech has ‘almost infinite’ potential for governments: Lord Holmes – report on an earlier webinar also reflecting on the Fintech Strategic Review’s recommendations
ATTEND ‘Delivering Central Bank Digital Currencies (CBDCs): Exploring the Technology Challenge’ – upcoming Global Government Fintech webinar, supported by our knowledge partner Amazon Web Services, on 22 April 2021