Fintech Firms in UK Request Government-Backed Finance
Fintech companies are the ones driving a number of technological advancements across the world. Unfortunately, in the UK it turns out that they are suffering from a lack of funding from the government in comparison to other sectors of the development. According to the Digital Finance Forum (DFF) The UK Fintech business leaders strongly believe that they are not treated fairly since they are excluded from government investment projects. This also leads to a lack of an influential voice when it comes to regulatory policymaking.
Research named Fintech Founders Summer Survey 2020 of more than 100 different fintech company heads has revealed that as many as 67% of the interviewees believe that their sector is strongly underfunded and not properly represented when it comes to the development process of regulations while 46% have also reported that they feel very disadvantaged when it comes to the government providing loans and finances to fintech businesses. This is in the face of the ongoing coronavirus pandemic problem that the UK is facing. It goes without saying that the virus has caused a huge commotion across the world with almost every country locking down their borders as a priority to keep public health and infection-free. Unfortunately, the UK was not successful in its efforts as it is one of the hardest-hit countries across the western world.
A lot of business sectors have suffered immeasurable damage due to the social distancing rules as well as the lockdown of the borders. Airline industries have reported as much as $84 billion in losses in 2020. Apart from this, the tourism sector has also suffered badly due to the safety regulations. Fintech companies are no exempt from this equation as well. However, all of the previously mentioned industries are being subsidized and stimulated by government funds. Fintech companies weren’t lucky in this sense as well.
Out of all that were surveyed as much as 37% have reported that they were totally unable to access any government-backed investment funds. This has caused a strong notion across the fintech community that the government is just not doing anything to provide early-stage capital investments for fintech startups. The sector is important due to its roots in technology. It goes without saying that a lot of financial developments that have happened and are still on-going are due to these very same companies. The fact that our lives, as consumers, are improved with better mobile banking, better financial services, Artificial Intelligences that provide multitude of services in minutes instead of a human being taking months are all largely attributed to these companies. This notion is backed by almost all legit UK forex brokers in the country that are heavily reliant on these developments. Stock markets, forex, commodities, cryptocurrencies, etc. are all dependant on fintech development due to the fact that these technological advancements allow for faster and more efficient payment methods that directly translate into the revenue for a lot of these companies.
A good number of founders have added that there are specific rules in place for Seed Enterprise Investment Schemes(SEIS) and Enterprise Investment Schemes (EIS) that exclude financial service businesses from any type of financing. Even more troubling is the fact that the British Business Bank, which is the one providing governmental-backed loans, has a specific request for an applicant to not be investing into fintech businesses. This means that the fintech companies are essentially fighting against the tide right now even though they also need help from the government much like other sectors. Lots of people in the survey have outlined that they believe the system to be rigged against the non-bank fintech lenders as it only supports big banks.
This points us to the last point that the regulations and laws are just not there to work on the benefit of fintech firms. The Australian government has already made a very well received and income-oriented decision and appointed a Minister of Fintech who oversees specifically the development process of financial technology in the country. This is something totally absent from the British government agenda that needs to be looked over. Economic secretary to the Treasury, John Glen MP, has come out stating that Digital Finance Forum’s findings are quite alarming and that he is committed to ensuring that the UK becomes much more welcoming for fintech companies to do business. He has said that the government has launched an independent fintech review that is working towards understanding how the UK can aid innovation while maintaining an ecosystem to support growth in firms. The agenda is the integration of new technologies across financial services.