Fintech Finance: Fintechs react to the Spring Budget 2021

Hot off the heels from last week’s Kalifa report, Chancellor of the Exchequer Rishi Sunak has laid out his 2021 Spring Budget and this is how the fintech community has reacted to the Budget.

Budget comment on fast-track visa scheme for startups and high growth companies, attributed to Rafa Plantier, Head of UK & Ireland at Tink:

“The UK has always been a fintech pioneer and the driving force behind the legislation that ushered in the era of open banking. We must continue to nurture our start-up culture but, crucially, we must also give high growth UK firms access to the global talent they need to flourish internationally.

“To make this happen, it’s vital that not only should the UK have access to people with the right technical skills, but also to those who have spent time with ambitious, rapid growth businesses from around the world — and who can bring this experience to bear on the UK fintech sector.

“The new visa presents a golden opportunity for the UK to continue to trailblaze in fintech — encouraging entrepreneurialism, investment and growth. Doing this will ensure UK tech companies have access to the global market opportunities they deserve to foster innovation and to keep making waves in the fintech industry.”

Seema Farazi, UK & Financial Services Immigration Leader at EY, comments on the Chancellor’s announcement of a new FinTech visa: “The UK Government has today taken a decisive and affirmative step forward to position the UK as a leading hub for tech and FinTech by launching a new scale-up visa route. Supporting the growth of UK tech and FinTech is fundamental for the sectors’ global success and will also aid the UK’s economic recovery as we look to counter unemployment and increase skills in growth areas.

“A tailored visa route into UK scale-ups will have far-reaching positive implications and will support the tech sector as it looks out to the global marketplace. It is crucial the UK leads the way in attracting skills from all over the world as well as creating homegrown talent. Today’s announcement will drive progress in establishing the UK as a leading scale-up market.”

James Lynn, co-founder and co-CEO of Currensea – “After fears at the start of the year about the issue of equivalence caused by Brexit, it’s quite unexpected not to hear any announcements from the Chancellors about the country’s fintech sector

While recognised in last week’s Kalifa report, many were anticipating additional announcements into support for R&D into tech innovation, including Open Banking. Open Banking still feels very new, even though it was legalised back in 2018. This is because it has been down to innovative young fintechs to build out this infrastructure from scratch. For example, Currensea is the world’s first Card Based Payment Instrument Issuer (CBPII) — we spent over a year in the R&D phase building our product, partnering with GPS (Global Processing Services) to truly break ground in this space.

Why does this matter? The development of Open Banking puts financial power back into the hands of the consumer, allowing them to have more control over their money – for example, our use of the technology allows them to spend on their card internationally directly from their bank account, but without any of the fees which saves them over 85% on charges.

As of January 2021, OpenBanking.org.uk claimed there are now 300 fintechs and innovative providers who have joined the ecosystem so we do hope to hear more from the government soon about new incentives into the space allowing our sector to blossom further.”

Karim Haji, head of financial services at KPMG UK, said: “The proposals, such as changes to listing rules, may look like tinkering round the edges, but in fact have the potential to provide a timely fillip to the City of London.

“Relaxing the rules on dual-class shares and the minimum level of free float are about providing entrepreneurs and investors with more flexibility and the incentive to raise and invest their capital here in the UK, which in turn helps the economy. When successful UK companies feel it is more beneficial to list in New York or elsewhere, it is very logical to consider how we can ensure London remains a world-class financial market that attracts the best businesses.

 “Of course, a key driving factor in this is Brexit. There now appears to be a willingness to take advantage of the additional flexibility offered by being outside the bloc to boost London’s competitiveness on the global stage.”

Pranav Sood, VP of Small Business at GoCardless, said: “Covid-19 and Brexit have created a tough environment for small businesses, so the Government’s Help to Grow scheme couldn’t have come at a better time.

“The widespread adoption of technology will fuel the next wave of growth in this sector and unlock significant gains in productivity. However, there are two major obstacles to achieving this. One is a lack of awareness of the tools and software available to help SMEs. The other is the sense of apprehension many businesses feel when it comes to integrating new technology into their day-to-day operations. The type of training proposed in the Government’s scheme should help to overcome these hurdles.

“Small businesses have big ambitions; for example, GoCardless data indicates half of our SMEs collect payments internationally. By identifying and selecting the right technology that fits their needs – often solutions that work straight out of the box – they can pursue their plans with more confidence, ultimately driving wider economic growth.”

Matthew Jellicoe, Co-founder of OnePlanetCapital, a new investment house focused on businesses tackling climate change, comments on the implementation of a National Infrastructure Bank announced in the Budget: “The transition to net zero requires a paradigm shift across most aspects of society – from energy production through to transport and the way we live in general. Indeed, many scientists believe net zero is unlikely without scalable carbon capture technology alongside these changes. A national infrastructure bank is a good idea in that it can take on large and long-term projects where private finance may often be reluctant. Strategy is nothing without implementation and for the government to be able to drive strategy and control the timings of projects it has to be able to cornerstone infrastructure investing.

“Large upgrades to rail infrastructure, the re-introduction of trams to city centres, tidal power plants – all of these type of long term projects will benefit from a National Infrastructure Bank. I spoke to a carbon capture PHD scientist recently who said the technology was falling behind due to a lack of investment in infrastructure and plants to prove the technology viable.

“With a crisis as pressing as climate change I do not think the government has any choice regarding setting up the NIB. EU banking facilities have to be replaced rapidly, and if the government wants to drive the ‘green industrial revolution’ it will have to walk the walk. The risks in large long-term infrastructure projects are always there, HS2 for example, and the climate change space is moving rapidly with no end game in sight, but if the bank can work with private finance I think a lot of these risks are mitigated.”

Duncan Grierson, Founder, Clim8 Invest comments: “It is fantastic news that the Government has today confirmed that a new green infrastructure bank will be set up. The bank’s mission should be to encourage and accelerate private capital into the clean technologies and the creation of hundreds of thousands of green jobs that we need to build a net-zero economy.”