Mindset shift may be needed to embrace the riskiest but most rewarding new ideas
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Since the UK’s departure from the European Union, we have not been shy of reviews into the future of the City of London – and how to ensure the Square Mile is the most competitive financial centre in the world.
Chief amongst those are the Hill Review into listing rules, and the Kalifa review into the state of the fintech ecosystem. They predominantly concern themselves with technical matters, as you’d expect; changes to dual-listed company rules, more access to finance, that sort of thing. Both are well worthy of their (substantial) lengths, and our only criticism is a lack of ambition in their delivery.
More interesting perhaps might be though Ron Kalifa’s letter to the Treasury as a follow-up to the review. In particular he talks about a mindset shift amongst City investors that – presumably – is more open to risk and new ideas.
Delightfully, just such an opportunity has now presented itself. The change to Solvency II regulations which are forthcoming give insurers and pension funds the opportunity to branch out, using long-term capital to unlock growth across the UK economy. Doing so could be genuinely transformative, not least at the forefront of new technologies.
The question will of course be whether institutional investors are willing to take those risks, and whether the mindset around them is suitably growth-oriented.
Some time ago, Rishi Sunak told City A.M. that the City was on the crux of ‘Big Bang 2.0.’ History rarely repeats itself but it does often rhyme. The defining feature of the first Big Bang was more cultural than technocratic, for better or worse. Competitiveness and innovation saw the City not just catch up with New York but supersede it in many ways.
The competition now is different; today it’s nimble financial city states on the one hand and places with start-up and scale-up cultures like Tallinn and Berlin on the other. Can the City keep ahead of its competitors? It’ll need to embrace risk, that’s for sure.