If the government can deliver on Andrew Griffith’s CBDC speech, the UK might just have a bright future in fintech
London Fintech Week opened with a positive and content rich speech from the Economic Secretary to the Treasury Andrew Griffith MP. He covered a great deal of ground in relative short order: everything from over arching objectives, through open banking and open finance through to a new annual fintech census.
He began bullish about the UK’s opportunities for growth in the fintech sector, rightly, proud of the Governments recent intervention, with the Bank of England, to facilitate the private sector sale of the UK arm of Silicon Valley Bank to HSBC.
He emphasised the government’s objectives and the role the fintech sector can play:
“My objective is to ensure that the UK is the most innovative, most international and most business-friendly economy anywhere in the world.
I want the UK to prioritise growth, risk taking and wealth creation and to celebrate it for the moral good that it is.”
He also quoted data from Fintech Labs showing that almost half of Europe’s fintech unicorns are based here in the UK – and further evidence from Innovate Finance that found that last year, the sector attracted more investment than the next thirteen European countries combined.
He then set out the various steps the Government are taking to ensure that the sector continues to thrive in the years ahead – ranging from open consultations on cryptoassets and CBDC to regulating open banking through the Data Protection and Digital Information Bill, the AI white paper and the launch of a new annual fintech census:
“The Government will reflect on the submissions to the Payment Services Call for Evidence and introduce an agile regulatory framework for payments and e-money that promotes growth and supports an internationally competitive payments sector.”
“We’re also fostering innovation by making the UK a safe jurisdiction for cryptoasset activity.
“We set out plans in our wide-ranging consultation published in February, and we want to pro-actively support the use of distributed ledger technology and tokenisation wherever it makes sense.”
And, on that at a UK wide level, he spoke of his ‘Britcoin’ and digital currencies aspirations:
“I was pleased to launch the Treasury’s joint consultation with the Bank of England, on how to move forwards with a sovereign or central bank digital pound.
“Private wholesale digital currencies are likely to come to market first and we are already creating the legislation to enable those which are fiat backed and used for settlement in the current Financial Services Bill going through Parliament right now.
“One of the UK’s greatest regulatory successes in fintech has to be the original sandbox, if such success is measured in copying being the greatest form of compliment, then, well over 50 jurisdictions adopting this approach is certainly more than a positive tick in that afore said box.
It is for this reason and more that I believe we should be encouraged by the future FMI sandbox proposals:
“We have the upcoming Financial Market Infrastructure Sandbox, which will help industry adopt and scale digital solutions that could radically change the way markets operate. That will be up and running this year.”
Reflecting on his tenure as EST, he said:
“Since being appointed, I have upped the pace of delivery and a few weeks ago we launched the new Centre for Finance, Innovation, and Technology – CFIT – in Leeds, a city where fintech adds £710 million to the local economy.”
“I am delighted to announce today that CFIT’s first coalition will look at Open Finance and how unlocking financial data can benefit SMEs and consumers.”
On open banking specifically:
“There are over seven million regular active users of Open Banking in the UK and over a billion successful API calls every month. It’s spawned thousands of new businesses and products.”
“Those who are close to it, know that this is a key moment for the Open Banking regulatory regime.
“We’ve done a lot of work over the last year through the Joint Regulatory Oversight Committee to set out the next steps to ensure Open Banking continues to go from strength to strength.
“This morning, the Committee set out its recommendations, with a vision of a data sharing market which is competitive and scalable for the long term.
“To achieve this, we will move Open Banking on to a sustainable regulatory framework, which the Government intends to develop through the Data Protection and Digital Information Bill which has its second reading in Parliament today.”
“Open Banking will also transition to a new entity, with a broad-based, equitable funding model and high standards of corporate governance.”
In a highly positive statement Griffiths said:
“Let me be clear as I know some folk have been worried: this will be the year of delivery on the next generation of Open Banking.”
Moving on to AI:
“By analysing data on market trends, customer behaviour, and other factors, AI algorithms can identify potential risks and provide recommendations for risk mitigation strategies.
“It can help investment managers to make more informed decisions, driving better returns for savers.
“And AI can power new customer service features, such as chatbots, which can deliver personalised support quickly and efficiently.
“This technology has immense potential to transform the financial services sector.”
And finally, he announced the launch of the UK Fintech Census which opens today and will run for five weeks, aiming to reach all 2,500 firms in this sector in the UK. Do get involved.
Fintech week is a fine moment to focus across all that we do across the piece. If the Government can deliver to every word of Andrew Griffith’s speech, we will have a sporting chance to succeed in 2023 and beyond.