The Kalifa Review Marks a New Age for UK FinTech

The Kalifa Review highlights a new strategic approach for the UK FinTech sector. But what is its Five-Point Plan for maintaining the country’s competitive advantage? We took a look at the full report to bring you the essential takeaways…

An independent strategic review of UK financial technology (FinTech) led by Ron Kalifa OBE, former CEO of Worldpay, was published on 26 February 2021 by HM Treasury (HMT). The long-anticipated Kalifa Review has undoubtedly marked a new era for UK FinTech and has received an overwhelmingly positive response from across the financial services industry.

Described as “thoughtful”, “ambitious” and “comprehensive”, the report details a strategy and delivery model for the UK to maintain and reinforce its leading position in financial innovation. Many across the FinTech community are pinning their hopes on Kalifa’s roadmap to help the UK sustain its position as an attractive home for FinTechs and a global leader in financial services post-Brexit.

UK FinTech currently represents 10% of global market share and £11bn in revenue. In 2020, investment into UK FinTech stood at $4.1bn — more than the next five European countries combined, according to the report.

However, the report warns that although “the trajectory of UK fintech is at an inflection point of opportunity”, it is also at an “inflection point of risk”, with Kalifa writing that while “the UK’s position is well established, its future is not assured”.

Citing competition, Brexit, and Covid-19 as underlying threats to the strength of FinTech in the UK, the Kalifa Review identified a Five-Point Plan of recommendations which must be followed in order to maintain the UK’s competitive advantage:

• Policy and Regulation – Dynamic leadership that protects consumers yet nurtures FinTech activity and encourages competition
• Skills – Ensuring FinTech has a sufficient supply of domestic and international talent and the means to train and upskill our current and future workforce
• Investment – Completing the funding ladder from start-ups right through to IPO
• International – A targeted approach to exports and inward investment
• National connectivity – Leveraging the output of FinTechs across the UK and facilitating connectivity amongst them

Within these five areas, the Review has set out a number of concrete proposals, including:

• Implementing a “scalebox” to support FinTechs scaling new solutions
• Improving UK listings rules with free float reduction and dual class share
• Launching an international Fintech Credential Portfolio and an International Fintech Taskforce
• Fostering 10 FinTech clusters across the country
• Creating a £1 billion-pound FinTech ‘growth fund’ to help firms grow independently

The merger of the private and public spheres is perhaps best encapsulated by the establishment of a Centre for Finance, Innovation and Technology (CFIT), mandated and supported by the UK Government, but led by the private sector to coordinate the delivery of the aforementioned recommendations.

The Kalifa Review has received a tremendously optimistic response, yet it is its proposals for digital upskilling and global talent attraction that has garnered a particularly thunderous round of applause across the UK FinTech community. As foreign workers represent 42% of UK FinTech employees, tapping the global tech talent pool has been one of the biggest worries in a post-Brexit world.

This is, of course, exacerbated by many firms having to overcome visa hurdles for EU talent for the first time in four decades. Thus, the Kalifa Review’s proposal of a fast-track visa scheme for FinTech workers which will importantly offer a route to citizenship for those judged eligible has instigated a collective sigh of relief.

A week after the Report was published, UK chancellor Rishi Sunak formally announced this new visa scheme, following in the footsteps of countries such as France (Tech Visa), Canada (Global Talent Stream) and Australia (Global Talent Programme) who have rolled out similar schemes. It is also hoped that such a specialised visa regime will help address significant diversity issues in the wider financial community, which continues to lag behind other sectors.

So, what now? HMT is expected to publish a response in due course and Mr Kalifa has requested the UK Government to consider appointing a FinTech ‘business champion’ to deliver the strategies set out in the Review. Kalifa concluded in his report that:

“Britain has a proud record of starting-up and scaling-up some of the best known FinTech products, but we cannot rest on our laurels. The next powerhouses will not be created by accident… With the right reforms that encourage entrepreneurialism, investment and make it easy to attract and invest in talent, Britain can usher in a period of dominance that can help us build back better from Covid-19.”

This belief has been echoed throughout the wider financial services industry, as Sherry Coutu CBE has argued that if these recommendations are implemented, “this sector will lead our economic recovery”.

The Kalifa Review’s Call-to-Action has undoubtedly bolstered the UK’s FinTech leadership by offering a positive path to future success adjacent to the somewhat-murky post-Brexit toll road.