UK Trade & Investment (UKTI) release a research report titled “Fintech – the UK’s unique environment for growth”

UKTI released a report titled “Fintech – the UK’s unique environment for growth” on 6th August 2014 to coincide with the launch of the new UK Fintech organisation Innovate Finance.

The report looks at the strengths of the UK’s Fintech sector and how overseas companies can benefit from setting up in the UK.

The full report can be viewed or downloaded here.
Fintech in the UK. The UK is a uniquely well-suited location for technology applied to financial services – Fintech. This fast-growing sector covers both: (1) Traditional Fintech (with larger incumbent technology firms supporting the financial services sector), and (2) Emergent Fintech (with small, innovative firms using new technology to bring financial services directly to consumers, often disrupting existing business models).

The UK and Ireland is now the fastest-growing region for Fintech investment (Accenture). Deal volumes here have been growing at 74 percent a year since 2008, compared with 27 percent globally and 13 percent in Silicon Valley. During the same period, the value of Fintech investment increased nearly eightfold, to US$265 million in 2013 – a rate of 51 percent a year, nearly twice the global average (26 percent), and more than twice that of Silicon Valley (23 percent).   The UK’s growing strengths in Fintech are due to: 

• the presence of a large and technologically sophisticated customer base 
• London’s position as a world-leading centre for financial services  
• good availability of business capital 
• a supportive regulatory approach
• excellent financial services infrastructure, and 
• London’s position as a global trading hub. 

In addition, the UK offers many specific market opportunities in Fintech, especially in relation to payments, platforms, software and data analytics. In Fintech, the UK is the place to do business, and the UK Government is committed to supporting Fintech companies. Today many of the biggest players in Fintech have chosen to have a base in the UK.

The UK Fintech market and Regulation 
The UK regulator, the Financial Conduct Authority (FCA), supports the Fintech industry, providing transparency and creating a level playing field. The FCA liaises with other parts of the UK Government, so that it speaks with one voice, and it has a reputation for being open-minded. The FCA’s Project Innovate is a clear signal that the regulator wants to ensure that Fintech businesses operating in the UK are supported by the UK’s regulatory environment. As part of the project, the FCA has said that it will open its doors to any company that is developing new business models that fall outside of current regulation.

UK has supportive tax measures A number of tax incentives are also provided by the UK Government to encourage innovation, including in Fintech. They include:

 – the Enterprise Investment Scheme (EIS)
– the Seed Enterprise Investment Scheme (SEIS)
– Entrepreneurs’ Relief (ER) – R&D tax credits
 – the Employee Share Scheme (ESS)
 – the Patent Box scheme, whereby companies pay a lower rate of Corporation Tax on profits earned from their patented inventions and other innovations.

UKTI commissioned EY (Ernst & Young) to carry out research on the UK’s Fintech sector. The findings were used to create this report.

 Source : http://gov.uk and http://gov.uk/ukti