The UK’s shadow City minister has set out the Labour Party’s commitment to supporting the country’s fintech sector, and highlighted ways that fintech solutions can help improve financial inclusion, in a keynote speech delivered in London’s Canary Wharf financial district.
Tulip Siddiq was speaking with Labour riding high in opinion polls as the Conservative government, led by PM Liz Truss, flounders in the wake of a ‘mini-Budget’ that triggered an ongoing political backlash and market turmoil.
Siddiq told the audience at a conference titled ‘Fintech As A Force For Good’, which was organised by the Innovate Finance trade association, that governments “should take an active role to make sure that we can take advantage of all the innovative technology and solutions that are coming forward”, specifying the fields of open banking and blockchain.
She was speaking just over 18 months since the presentation of the conclusions and recommendations of the HM Treasury-commissioned Fintech Strategic Review (known as the Kalifa Review) that triggered then-chancellor Rishi Sunak to proclaim fintech as ‘one of the UK’s great success stories [that] will help us seize new opportunities around the world’.
After referencing data from KMPG’s Pulse of Fintech report that showed that venture capital investment in UK fintech companies plummeted during the first half of 2022 to $9.6bn (about £8.5bn) – a fall of nearly two-thirds compared to the same period in 2021, Siddiq said: “We’re aware the market uncertainty could hit investment in the fintech sector and want to help protect you as much as possible. We don’t want to be complacent about it, we want to make sure that the UK remains the European hub for financial technologies.”
‘We should be leading the way’
Siddiq, who was appointed shadow economic secretary to the Treasury 10 months ago, did not reference the Kalifa Review but channelled its spirit of championing the UK’s relative leadership – to date – when it comes to the sector.
“I want the UK to be a leader when it comes to the fintech industry,” she said at the event, which was held on 11 October. “It’s not just about doing well or being ahead of the game, we should be leading the way for every other country to follow.”
Siddiq said that although the fintech sector is “very resilient…. that doesn’t mean that is completely immune to some of the factors that are going on in the economy worldwide”. She made reference to inflation, low growth and the fallout of the UK’s exit from the European Union (EU).
She and Labour leader Sir Keir Starmer had recently met financial sector leaders who had “expressed their concerns about the talent pool considerably shrinking, and also the skills shortage” – both issues flagged by the Kalifa report.
Siddiq said Labour was “largely supporting” the government on the relatively high-profile financial services and markets bill, which is intended to modify the UK’s regulatory architecture post-Brexit. “We thought EU regulation of financial technologies could sometimes be a bit too prescriptive, so we want to take a more outcomes-based approach,” she said.
“I also wanted to mention a bit about what the Labour Party wants to do in terms of the next [general election] manifesto,” she said. “One of the things we want to do is finalise a memorandum of understanding of regulatory co-operation with the EU. We also want to make sure that we negotiate for mutual recognition of professional qualifications for our service sectors.”
She also urged conference attendees to contribute to a review launched four months ago by shadow chancellor Rachel Reeves on helping ‘start-ups in the UK to reach their full potential’.
Fintech ‘equipping policymakers with tools’
Fusing the theme of the conference and the Labour Party’s broader policy agenda, she focused on fintech’s ability to help with financial inclusion, which she described as “becoming a real problem” in her London constituency (Hampstead and Kilburn).
“I don’t want to just celebrate the fintech sector for the work that they’re doing financially, but it’s also the fact that they’re actually equipping policymakers with the tools to deal with the everyday problems that we see our constituents facing as constituency MPs,” she said.
Describing “loan sharks and payday lenders” as “exploiting so many of [her] constituents”, she praised the fintech company Karma, which offers interest-free salary advances – support that can help people avoid “getting stuck in a vicious cycle of debt”; and Credit Kudos, a fintech company that builds credit decision products using alternative data, including open banking data.
“It’s just music to our ears as politicians,” she said about the latter solution. “It’s helping those with a clear credit history to access products from ethical lenders such as credit unions and to improve their credit score.”
She also highlighted fintech’s role in “driving forward green finance and embedding green finance in capital markets.” In this regard she referenced fintech company Funding Options, which last year created a ‘Green Finance Marketplace’ to help SMEs with funding towards ‘net zero’ goals; and CoGo, whose carbon-footprint tracker is embedded into the bank NatWest’s mobile app to help customers reduce the climate impact of their spending.
Reflecting the state of the economy and the conference’s title, panel sessions at the event included: ‘Financial Inclusion: A Financial Services System That Caters to All’; ‘Financial Wellbeing: Managing Consumers Through a Crisis’; and ‘Cost of Living Crisis – What Does It Mean for FinTechs?’.
