The Kalifa Review,  Brexit consequences & the future of the UK FINTECH sector

The UK’s Fintech sector which has grown rapidly in recent years is going to have to overcome fresh barriers as a result of Brexit-induced challenges. It is estimated that Fintech sector employs over 75,000 people across the UK, and contributes over £7bn annually to the economy, attracting nearly £3bn in investment during 2020; it is recognised that Fintech will play a vital role in both a post-pandemic recovery and also in the UK’s future outside of the EU. 

After the referendum in 2016, many have predicted that the UK will lose its leading position in fintech and will be left behind by other countries such as France, Germany, the US, China, Singapore and the UAE – who all regard the sector as one which has strategic importance to their economies. It is widely thought that the Government, regulators and the industry must collaborate to ensure that the UK remains the best place to establish and grow successful Fintech businesses.

An independent Fintech Strategic review led by Ron Kalifa OBE, former CEO of Worldpay, was commission by the UK government review and has suggested measures to support UK’s Fintech sector including tech-specific visas to allow the UK’s Fintech companies access to overseas skilled workforces despite restrictions bought about by Brexit. European Economic Area (EEA) workers can no longer move to the UK visa-free which will could have a significant impact on UK Fintech Sector, whereby 42% of the workforce comes from outside of the UK and 2/3rd of those being drawn from EEA countries. Fintech companies will now face visa barriers for attracting talent, and will no longer have access to an EU-wide pool of investors. The review also recommends the creation of a £1bn fund to fuel investment in fast-growing start-ups.

Ron Kalifa OBE

Additionally, the UK-EU Trade and Cooperation Agreement, which came into effect on January 1, does not make provisions to continue the free flow of financial services between the UK and the EU. For example, euro-denominated shares traditionally traded in London have moved to EU-based stock exchanges to retain easy access to all EU investors. The Kalifa review has suggested changes in law to encourage Fintechs in picking the UK to its primary trading base.
It is hoped that the outcomes of the review will address these challenges quickly with targeted regulatory amendments, with the goal to ensure the UK retains its crown as one of the world major finch hubs  Alongside the Tech-Visas, we believe you will likely see proposed changes to the UK listing regime to include duel class share structures which with this address flexibility could make the UK more attractive fo public listings. 
With the UK being home to 8 of the worlds 70 Fintech Unicorns (Fintech start-ups now valued at over 1 billion US dollars) including the likes of TransferWise (Valued at US$3.5bn), Greensill (US$3.5bn) and Monzo (US$2.6bn) the importance of the Fintech sector to the whole financial services industry in the UK can not be overlooked. The UK is home to the largest and most forward looking cluster of financial and professional services firms, and a consumer base with one of the highest Fintech adoption rates in the world.
The scope of the Review is impressive – ranging from Fintechs still at the early stages of seed funding through to larger, more-established businesses – and looking at the challenges faced by both. It is hoped if the Government responds positively, the Kalifa Review can be the launchpad for the Fintech sector in the UK.

Campbell & Fletcher Recruitment work across the United Kingdom sourcing the highest equality talent in the banking and financial services industries, especially within the Fintech sector. We are proud members of the Women in Finance Charter and are committed to closing the gender diversity gap.