Get in touch
Please contact us to discuss how working with Myriad Associates can maximise and secure R&D funding opportunities for your business.
Contact usDuring FinTech Week Rishi Sunak, set out three proposals to enhance the UK’s FinTech industry. What are they and what do they mean for FinTech?
On 19th April 2021, during FinTech Week, the Chancellor of the Exchequer, Rishi Sunak, set out three proposals to enhance the UK’s FinTech industry. What are these proposals, why have they been introduced and are they enough to bolster the industry and give us a significant competitive advantage in FinTech?
The first proposal is designed to help start-up FinTechs grow and involves the creation and launch of a ‘scale box’ and a Centre for Finance, Innovation and Technology (CFIT).
The launch of ‘scale box’
The Financial Conduct Authority (FCA) is planning to create a digital sandbox that mimics the market infrastructure. This sandbox, which they’re calling ‘scale box’, will be a safe place for upcoming FinTech companies to collaborate with other financial services providers and demonstrate or test out their new ideas and propositions.
Later down the line, they’re also planning to launch a second phase of the scale box which will enable FinTech firms to test concepts that specifically tackle sustainability and climate change-related challenges.
The creation of a Centre for Finance, Innovation and Technology (CFIT)
The Centre for Finance, Innovation and Technology will be an industry-led organisation that will support the implementation of FinTech initiatives. The organisation will work closely with the regional and national FinTech communities to enhance FinTech expertise across the UK and address sector challenges.
Both the scale box and CFIT have been designed to boost growth and support rising FinTech companies.
The scale box specifically will help start-ups collaborate with the bigger financial conglomerates and test their new solutions in a safe, like-for-like environment, which will lower the perceived risk when trying to launch their new products or secure investment.
The CFIT will be a coordinating body for the start-up FinTech community and will also act as a delivery mechanism for future FinTech initiatives, such as the Kalifa Review.
There has been a largely positive response to the proposed scale box and CFIT:
“This is a clear step in the right direction to support FinTechs across the UK to continue their growth trajectories — and to create centres of excellence not only in London but also in other major cities in Britain. Not only will this body enable the fintech industry to continue to flourish in the UK, but it will also drive growth internationally.” - Rafa Plantier, Head of UK & Ireland at Tink
However, it is thought that:
“If the Chancellor wants to see a significant acceleration of growth in UK FinTech, he will need to look in particular at the expansion of R&D tax credits, Enterprise Investment Schemes and Venture Capital Trusts and the creation of a new £1bn ‘FinTech Growth Fund.’” – CMS Cameron McKenna
To push the boundaries of digital finance, Rishi Sunak wants to develop a New Central Bank Digital Currency (CBDC) task force and set up two forums to support it.
The development of a CBDC task force
A CBDC is a digital currency that can be used to carry out payment transactions. It’s effectively a digital version of a traditional paper banknote. The Bank of England will set up a dedicated CBDC task force which will be co-chaired by Deputy Governor of the Bank of England, Jon Cunliffe, and HM Treasury’s Director General of Financial Services, Katherine Braddick. The task force will include members of the Bank of England and HM Treasury who will explore this new currency and ensure we adopt a strategic approach to the creation of the new digital pound.
The introduction of two new forums
Alongside the new CBDC task force, two new forums will also be established. These forums will engage technical experts and key stakeholders (including financial institutions, merchants, business users, civil society groups, and consumers) to support the creation of the CBDCs.
The sole purpose of this initiative is to make the UK the global leader in the digitisation of finance. Putting a central bank digital currency task force in place will provide support for the new technologies and infrastructures.
This initiative has been welcomed by the FinTech industry. A CBDC is an opportunity to innovate and replace existing payment infrastructures with new, cheaper, and more efficient methods.
“These are critical measures to ensure that our fintech across the UK can continue to thrive. We look forward to continuing to play our part on this important agenda.” - Catherine McGuinness, City of London Corporation Policy Chair
However, there are a few concerns relating to privacy issues, the potential for the government to misuse data and whether the public sector should be involved in such a project.
To make sure that the UK is conforming to the highest possible regulatory standards, the government will consult on reforms to capital markets. Reforms such as removing double volume cap and share trading obligations will be reviewed to make sure we’re not only setting the highest standards but that we’re also improving our competitiveness, supporting economic growth and making sure the rulebook is fair and proportionate.
Three reform recommendations include:
This initiative has been designed to create a rulebook that is fair, supports competitiveness, and ensures that the UK maintains the highest possible regulatory standards.
The general feeling about this initiative is positive:
“It’s a real opportunity for leaders in capital markets to direct this creative energy to some of the areas where innovation has traditionally lagged behind – in post-trade, for example…Whether it’s the low-tech and costly processes associated with onboarding and KYC, brokerage fees, trade settlement failures or transaction taxes, under investment has left a legacy of expensive inefficiencies in post-trade which are in need of attention.” - Daniel Carpenter, Head of regulation at Meritsoft
With the announcement of a dedicated scale box, a Centre for Finance, Innovation and Technology, a digital currency task force supported by industry-led forums, and an overhaul of capital market regulations, Rishi Sunak feels that:
“This is an incredibly important moment for the UK financial services sector…If we can capture the momentum, the excitement and the extraordinary potential of the technological revolution that you are leading, we can make real our vision of this country as the pre-eminent financial centre in the world.” – Rishi Sunak, Chancellor of the Exchequer
Find out more about the FinTech initiatives here.
You may have seen a host of changes announced in the Spring Budget in March affecting the R&D Tax Relief scheme. But what do they actually mean for your claim, and how can you start preparing for them?
Reducing the level of non-compliance in R&D tax relief schemes is a priority for HMRC. In this article, we share HMRC's latest guidelines for compliance with R&D tax reliefs
Looking to claim R&D tax credits in the UK? A professional consultant can help you maximise your claim, avoid errors and audits, and save time and resources. Learn more in this post.
Please contact us to discuss how working with Myriad Associates can maximise and secure R&D funding opportunities for your business.
Contact us