Recent developments in financial technology (fintech) could super-charge an already-buoyant sector and significantly boost the North East economy.
The government this month announced its new fintech sector strategy – aimed at enabling the industry to flourish in the UK and cementing Britain’s position as a global fintech authority.
The plan’s initial focus includes a new crypto assets task force, the next steps in ‘robo-regulation’ and a new UK-Australia partnership. Other measures include helping small firms to grow and reach new customers, new fintech regional envoys to ensure the benefits of fintech spread far beyond London and a set of industry standards to make collaboration easier.
The strategy is a clear recognition of fintech’s vast potential,and the value of leading its international development.
The UK’s global standing in financial services is unquestionable. It can now build a similarly strong position in a related sector which has an incredibly bright future following rapid growth in recent years.
The North East of England, still disproportionately reliant on public sector jobs, has much to gain.
A burgeoning fintech cluster is already taking shape in the region, populated by both start-ups and major employers, including True Potential in Newcastle, named European Business of the Year in 2017.
It is somewhat fragmented, however, with lots of firms working on their own distinct part of the fintech market. The type of global fintech opportunities the government is courting, would help this cluster mature and develop a collective pull for more inward investment.
Plans to forge a bridge between the fintech sectors in Newcastle and the Gulf market are already well underway, through various activities led by Policy North. New links to a lucrative region where fintech is underdeveloped but blossoming will directly boost the North East’s digital economy in the coming years. But fintech is almost universally growing in territories across the globe and there are many more patches of fertile ground to target.
The new UK-Australia Fin Tech Bridge is a good start, and hopefully stronger bonds with other fintech markets will develop post-Brexit.
Just as in Britain, Australia’s consumers are clamouring for ever-more convenient and efficient ways of handling their finances. Organisations serving its 24 million population, meanwhile, continue to strive for tighter cyber security controls and new and innovative ways of ultilising data.
The new fintech bridge will enable British firms to export their fintech products and services Down Under and bring together regulators, policymakers and the private sector from the two nations.
The government believes this will nurture a “fintech ecosystem” that supports the growth of both fintech markets.
This is a prime example of the type of overseas agreement that could shape Britain’s success after Brexit. The new Global Britain will depend not only on the world’s appetite to buy our goods and services and do business here.
Eagerness around the world to tap into our knowledge and expertise in key sectors will also dictate our economic future. The UK has led the way in driving the advancement of fintech, and digital industries generally, in recent years; Yet we are still to foster a true home-grown giant on the scale of Amazon or Google. The sector strategy approach - combining our cutting-edge products and services, and openness to do business and share expertise – could change this, especially once we have the ability to fine tune our own trade deals.
Other forms of support are now needed to bolster this broad fintech plan. Enhancing research and development allowances for fintech projects would be an obvious step forward. So too would a renewed push from the UK’s official innovation agency, Innovate UK, in promoting pioneering, UK-based research which has potential implications for fintech.
Such measures would act as catalyst for growth in this hugely exciting sector, and could bring much-needed opportunities to the North East.
Stephen Purvis is chairman of the think-tank Policy North, which represents the interests of firms in the North of England.