Home Policy & Governance UK fintech’s centre forward: a fireside chat with Ezechi Britton

UK fintech’s centre forward: a fireside chat with Ezechi Britton

"If you can get a sale into governments, wow, the investors are going to love you": Ezechi Britton in conversation with Ian Hall at the Global Government Fintech Lab 2023 in Dublin

GLOBAL GOVERNMENT FINTECH LAB 2023: FIRESIDE CHAT

The UK’s fintech ecosystem, particularly its ability to churn out cutting-edge innovation and attract investment, has long been well regarded globally. Authorities and advocates for fintech in the country are keen to keep it that way as international competition intensifies.

An HM Treasury (HMT)-commissioned study – the Fintech Strategic Review, led by Ron Kalifa OBE, a former chief executive of international payment processing company Worldpay – concluded a couple of years ago that while the UK’s position is ‘well established, its future is not assured’. Fintech’s trajectory had hit ‘inflection point of opportunity – and risk’, it warned.

The Centre for Finance, Innovation and Technology (CFIT) is a tangible result of what became known as the Kalifa Review. HMT and the City of London Corporation, the public authority for the Square Mile – the part of London where many fintech companies, as well as major financial services institutions, are located – have committed respectively £5m and £500,000 (£5.5 million total: about $6.84m) of seed funding over three years to launch the centre.

It is being overseen by chief executive Ezechi Britton MBE (widely known as Ez), who participated in a Global Government Fintech Lab 2023 fireside chat discussing the centre’s priorities, the potential of ‘fintech for government’ – and more – with Global Government Fintech editor Ian Hall.

RELATED ARTICLE UK fintech review presents recommendations – our article (26 February 2021) on the publication of the Kalifa Review

CFIT’s coalition approach

“The purpose of the Kalifa Review was to look at the [UK] fintech sector and ask ‘what’s the prize that’s on offer here? And what are the challenges preventing our fintechs actually achieving this?’,” Britton told the Lab audience, describing how CFIT came into existence.

During the course of last year a Ron Kalifa-led committee (which included representatives from HMT, City of London Corporation and the Financial Conduct Authority – FCA) worked with professional services firm EY, as well as more than 80 organisations and sector experts, to refine CFIT’s priorities and operational requirements.

Launched on 28 February this year, the centre currently has a “very, very small” core team of five (including chair Charlotte Crosswell OBE, a well-known figure in UK fintech), with recruitment underway for further senior directors. It has external support from EY and a further professional services firm (KPMG), as well as a marketing communications agency (Streets Consulting).

The economic secretary to the Treasury, Andrew Griffith, spoke in April of CFIT ‘bringing together industry players – entrepreneurs, policymakers, investors and academics – into coalitions to address some of the trickiest challenges facing the sector.’ These coalitions will be crucial to CFIT’s approach.

Each coalition will have its own terms of reference and be structured “appropriately based on the various skills around the table, organisations that want to participate and the specific problems that they’re focused on,” Britton explained. “We bring everyone together and say: ‘Right, here’s a core problem that you’ve all told us is a challenge… we can sit you in a room, throw in some pizza, lock the door and off you go…!”.

CFIT’s coalitions will be ‘time-bound’ to run from six to nine months – a timespan that he said has been “lowered-down” recently from the previously announced nine to 12 months.

Given the state’s (initial) funding for CFIT, is there an ongoing role for public officials? “We’re in constant communication with Treasury departments and the FCA as well,” said Britton. “There’s a lot of back and forth. And it’s absolutely our attention that individuals are involved in the coalitions as we go forward. We don’t want to just to be a bunch of fintechs or just the banks trying to solve the problem. It’s very important that in the coalitions we’ve got key stakeholders from across the entire ecosystem.”

RELATED ARTICLE Government-backed centre to boost UK fintech appoints first CEO – our article (3 February 2023) on Ezechi Britton’s appointment to run CFIT

Open finance in focus

CFIT’s first coalition, whose work gets underway in June, is focused on open finance and ‘how unlocking financial data can benefit small- and medium-sized enterprises (SMEs) and consumers’.

Britton acknowledged that open finance is “quite a large” remit – and also a field on which there is a “big focus” in governance terms in the UK at present. The UK’s Joint Regulatory Oversight Committee (JROC) published recommendations for the ‘next phase’ of open banking in April. Numerous unanswered questions prevail.

“We’re going to be really narrowing it down to about three use-cases: potentially around vulnerability, around consumer awareness, and around credit records or access to finance for SMEs. There are a few other potential [areas] that we’re exploring around cashflow, access, and the rest,” Britton said.

“This is where we’re really leveraging the [fintech] ecosystem: we’ve put out surveys, we’ve done research, it’s all data-driven,” he explained. “We’re doing some workshops, almost as a roadshow, across the country to really refine those use-cases, and identify the key members and partners who want to participate in those coalitions.”

Despite CFIT’s funding from the City of London Corporation, it is a nationwide initiative, as demonstrated by its launch event being held in the Yorkshire city of Leeds.

“It’s a very important part of the CFIT message: that we work with the regions, city by city, even with the roadshows,” Britton said. “I’m going to be in Bristol, Leeds and then I’m up in Edinburgh. We’re really trying to be massively inclusive and focus on different skills, as well as the opportunities, for those regions nationally, as opposed to just being London-centric.”

CFIT is establishing ‘financial innovation hubs’ around the country in partnership with Bruntwood SciTech (a property company). It is also working with universities to build a “placement pipeline” between academia and real-world jobs.

OPEN FINANCE: EXPLAINED Open finance, and its sibling concept ‘open banking’, are being encouraged by governments worldwide, in different ways and at different speeds, as a means of boosting innovation and competition in financial services. It is a reference to users sharing their data with third-parties (for example, fintech companies or fintech-powered products launched by established financial institutions). ‘Open’ refers to open application programming interfaces (APIs): software intermediaries that allow two machines to interact. ‘Open APIs’ are APIs made publicly available to software developers. Global Government Fintech’s focus is on its potential to improve public service delivery.

What is the planned output from the open finance coalition? “We’re still working this through,” Britton responded.

“Fundamentally, it’s actually for the coalition to really work out. We’re quite careful not to be seen [that it is] me deciding or [prescribing that] ‘these are the problems that are key to the industry and this is what we’re going to focus on and that’s what’s going to be the outcome’,” he said. “It’s great to really be in the centre of fintech in the UK but it’s very, very important that industry drives on this. We’re really there to maintain the guardrails (as it were, from a regulatory perspective) and keep that momentum going.”

It is clear: CFIT is providing the mixing pot (through its coalitions) but precisely what the ingredients will produce is to be determined. Nonetheless, CFIT’s head chef does have certain expectations in terms of the open finance coalition.

“I expect there’ll be some products. There may be some new APIs. It might be some stitching together of existing solutions. It might even be a few data-sharing agreements,” he said. “But – ultimately – what I want to be able to show is that if you take certain datasets (say, local council data) and you make it available to these types of organisations, and then you leverage that to, say, enable borrowing for SMEs, and then you test that out in a sandbox [test space], then that has this outcome for this group of users – and then to be able to package that up and demonstrate that back.”

RELATED ARTICLE UK government-backed fintech centre to focus on open finance – our article (19 April 2023) on CFIT’s first major area of focus

‘Helicopter view’ of innovation

Britton’s background is in the private-sector. He took up the CFIT position from a role as chief technology officer (CTO) of a venture capital (VC) company, Impact X Capital Partners, set up to support underrepresented entrepreneurs across Europe particularly the Afro-Caribbean diaspora. Among other previous roles he was a co-founder and CTO of a London-based fintech company called Neyber.

“I’m a software developer by trade – I actually studied computer science,” he said. “I was a Java developer then a .NET developer, starting off in the investment banking world: Lehman Brothers and Credit Suisse (in Switzerland). Fintech before it was called ‘fintech’. Then [I became] a fintech founder at Neyber. Then VC for about five years.”

He is a trustee to the board of homelessness charity Crisis and received his MBE (Member of the Order of the British Empire) in 2022 for services to diversity and to young people.

Asked for his view of whether he has (prior to CFIT, at least) perceived the public sector as an ‘enabler’, he responds that his career has given him a “helicopter view” of innovation.

“People often say: ‘innovators don’t want regulation’. Actually, not having any regulation when we were launching peer-to-peer [lending] in UK [at Neyber] was an absolute nightmare, because you didn’t know where you stood.” It took a while, he said, for “regulators to get their arms around” peer-to-peer lending while the sector was “really spinning its wheels really trying to do things and not really getting anywhere.”

“The regulator’s role is to protect consumers – 100 per cent,” he reflected. “But by creating an even playing-field, where everyone knows what the rules are, then everyone can play properly, everyone can start to show what [they] want to do. Who wins is [decided] by being the most innovative team on the pitch. That’s what we need.”

His experience with Neyber was some years ago. “I actually think the FCA is one of the most forward-looking regulators in the world,” he responded, when asked for his view of the regulator today. “And I don’t say that simply because we’re [CFIT] working with them – I genuinely believe that. If you look at how we [the UK] has led on the sandboxes [run by the FCA] – even [the European Union’s] GDPR legislation was driven out of the UK. Ultimately, I think regulators and government have a massive part to play.”

RELATED ARTICLE Fintech ‘rife’ with opportunities for governments, say UK MPs – an article (15 March 2021) based on a panel discussion about the Kalifa Review report

Ezechi Britton in conversation with Ian Hall at the Global Government Fintech Lab 2023 in Dublin on 18 May

Government procurement’s role

One obvious way that governments can support fintech is by investing in fintech solutions to improve their own operations and services.

“It’s got to be part of where the ecosystem plays, it makes absolutely no sense if we’re [fintech] not part of that,” Britton agreed. “We [fintech companies] talk about scaling [up] and everyone focuses on fundraising. One of the key barriers to scaling, as a start-up, is: ‘where are you selling this? Who are you selling to? Where are your contracts? What’s the stickiness? What’s that sales process? What does the sales network look like?’. If you can get a sale into governments, wow, the investors are going to love you. And that helps with that scale-up piece. So, the government can help directly by getting more involved in procurement.”

Global Government Fintech Lab 2023 included a session on ‘Government Payments’ that featured a senior representative from the UK’s HM Revenue & Customs (HMRC) describing how the department had procured a fintech solution to enable taxpayers to use open banking to make payments to the department (Global Government Fintech has published a sustained run of exclusive articles on HMRC’s procurement of a fintech solution to enable the department to receive payments via open banking since September 2020). 

“I love the example earlier [at the event] about HMRC and their work,” said Britton, acknowledging the HMRC example. “So, absolutely – government has a huge part to play.”

And yet the Kalifa Review made no explicit mention of the HMRC example nor the broader point about the potential of central governments’ procurement (or in-house development of) fintech solutions – both in terms of the potential benefits for government operations (and the taxpayer) and the potential benefits for a fintech provider winning a government contract.

“I think it comes directly under ‘access to capital’,” Britton said. “Because through building revenue, you drive fundraising. People always focus on product. Yes, product is important. But for most of the companies that fail to fundraise it’s rarely because they had a bad product. It’s usually because they couldn’t sell their product. So, if you can fix that problem, you solve a lot of the other issues.”

RELATED ARTICLE Fintech has ‘almost infinite’ potential for governments: Lord Holmes – a further article (3 March 2021) based on a panel discussion about the Kalifa Review report

One final question

The fireside chat concluded with Britton asked to draw on his experience in venture capital and background in the City: if, today, he had (just) one pound to invest in one of fintech’s growing number of sub-sectors, where would he invest?

“It’s such a hard one to answer,” he responded. “Obviously, you’d be foolish to ignore what’s happening with AI [artificial intelligence] at the moment, that’s where all the money seems to be going.”

However, that there’s “a lot of hype” in the AI space, he said, adding “I don’t even want to call it ‘AI’, frankly, at this moment in time.”

“ChatGPT really is very clever at creating textual output at this moment in time based on a historical corpus of information,” he continued. “But the piece that, to me, is really, really interesting about what we’re seeing with these LLMs [large-language models] and ChatGPT-style chatbots is the neural-language processing piece and the understanding of human intent. That is really interesting for me because it leads to an outcome whereby we start to see solutions that focus more on what people want, as opposed to what they need to know to achieve it.”

“For me, that starts to get us close to that future of: ‘I don’t want a mortgage, I want a house; I don’t want a loan or car finance, I want a car’. So, to be able to talk to a bot, to a system, and say ‘this is the outcome that I’m looking for’, and for it to then be able to interrogate and figure out ‘well, these are the steps that you then need to take’, that’s where it starts to get quite exciting for me.”

WATCH BACK

Watch the fireside chat (it runs from about 06:50:20 to 07:15:55 if clicking on the full-day event video) =>

https://www.globalgovernmentfintech.com/lab/live/