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Has Theresa May been the best U.K. Prime Minister for the fintech industry? I would argue that she has in some respects, but it is evident that the ecosystem has changed dramatically since David Cameron and George Osborne were at the helm. May continued what Cameron and Osborne had started and went on her trade trip to Africa, but because of the way the space has changed, all she could do was to promote U.K. fintech by encouraging partnership with foreign talent.
When Cameron was in office, the message that fintechs put forward was that they had to compete with banks because the traditional players did not understand what customers wanted and did not know how to remedy the lack of trust following the financial crisis. Today, the fintech message is more about collaboration and partnership, and I’m not sure what that says about Theresa May’s leadership, but I guess it means something positive.
Despite winning the no confidence vote, the Prime Minister revealed that she would step down before the next election, which raises questions around whether a new Conservative Party leader could reignite some passion into the technology industry. As I mentioned, in August 2018 May took a delegation of U.K. fintech specialists on her first official trip to Africa and there she met with entrepreneurs to leverage trade and export relationships in South Africa, Nigeria and Kenya.
Remarking on the scale of opportunity that the continent presents, May forged connections with a number of leading African companies which later led to Azimo announcing an 80 percent growth in transactions sent to M-Pesa in Kenya since the start of 2018, reiterating that a relationship with leaders in the industry can be found in other countries and that the U.K. can help with serving those who are possibly unbanked and underbanked.
Following May’s announcement of the $2.6 million UK-Nigeria fintech partnership in Lagos, this partnership and collaboration with startups or payment providers in other countries was a reoccuring theme and raises questions around if talent exists outside the UK, do Tories have the right immigration policies to be able to ensure that the fintech industry can truly flourish? Or will pride in the experts that we currently have in the UK hinder the sector?
May has always voiced her support for the fintech industry, notably at the 20th anniversary of the independence of the Bank of England where she said that that a free market economy would be beneficial in reducing poverty, improving disposable income and supporting innovation.
Reminiscent of many other politicians before her and echoing many after, May said in 2017: “We will work with the sector to ensure the UK remains the world’s financial centre and the global hub of fintech.” However, in order to be a global leader, I believe that collaboration needs to happen and talent from other countries must be included.
The real question here is does May have confidence in the fintech industry, or has she just been repeating what everyone else has said? David Cameron expressed full and fervent support for fintech and with Osborne behind him, saw the benefit in having a Special Envoy for the industry and appointed Eileen Burbidge. He also put forward a manifesto with Innovate Finance calling for 100,000 new fintech jobs to be created by 2020, with some through apprenticeships and fintech degree courses – whatever this means.
It would be an understatement to say that misunderstanding and miscommunication about Brexit was the reason why many Brits voted to leave the European Union back in June 2016. However, May has steered towards a Hard Brexit, expressed desire for leaving the single market and taking control of immigration.
Industry leaders in fintech also accused May of putting a “political dogma” on immigration when it was announced that the Conservatives planned to raise the immigration skills charge levied on firms who were employing non-EU workers with Tier 2 visas from £1000 to £2000, in an attempt to encourage companies to develop and hire U.K. talent instead.
Lawrence Wintermeyer, the former Innovate Finance CEO, condemned this decision at the time and said that almost a third of fintech founders in London were born outside of the UK. “Doubling the skills charge is a real threat to the development of a sector which employs 65000 workers in London and threatens to put a real talent hub even further behind the likes of the US and China. Our members are concerned over a policy which puts political dogma on immigration ahead of one of London’s most exciting growth stories. Giving another reason for talent not to come here will simply mean that everybody will lose out.”
It could be said that while it is not easy to tell how a particular Conservative politician will address concerns in the technology industry, because access to talent has such significance for the future and success of fintech in the U.K., if we consider attitudes towards immigration, we should be able to figure out who considers collaboration and partnership with other fintech initiatives in other countries as a priority, despite Brexit.
(BoJo will not be Prime Minister, but to humor those who think he will, I’ve included a little on what he could potentially do for the fintech industry!) Like May, Boris Johnson has also made the statement that London is the true world center of fintech. While Mayor of London, Johnson announced a partnership with Tokyo around the time he embarked on a trade mission to the South East Asia. He said: “Londoners are embracing financial technology as the use of contactless on the London Underground and mobile payments used throughout the city shows.”
Johnson continued: “As our expertise flourishes in this area, I am delighted companies based in London are taking their goods to Japan and we are now sharing that knowledge and experience with our Japanese counterparts to further fuel this innovation and growth.” Following this announcement, it was revealed that Japanese companies have invested millions in 19 U.K. tech startups between 2010 and 2015 and this has figure has grown. It must be mentioned that Johnson has also been a fervent supporter of the technology industry, having helped establish the U.K. capital’s Tech City in East London.
Connections were then made between Singapore and London and fintech sandboxes were created with Johnson and London & Partners leading the delegation. But again, it is not just about partnering with different fintech hubs: it is about ensuring that the best people from different countries can move freely to and from the UK and offer their expertise – in a similar way to how French President Emmanuel Macron and his representatives came to the U.K. to encourage experts to come to France.
Interestingly, Amber Rudd is also a contender for the top job after her return to government under May but her resignation as Home Secretary amid the Windrush scandal calls into question her attitude towards immigration policy. Innovate Finance also waded into this argument and warned that a tightening rules would be a threat to fintech.
Numbers from April 2018 revealed that the UK fintech sector employs 76,500 people of whom 42 percent are from overseas, with 28 percent from EEA countries and 14 percent from non-EEA countries. Innovate Finance predictions revealed that the sector will grow to more than 100,000 employees and the number of UK fintech companies will more than double to 3,300, by the year 2030. However, 82 percent of companies said that recruiting non-EEA migrants was already a problem.
Catherine McGuinness, policy chairman of the City of London Corporation said: “As the financial services sector increasingly turns to technology to shape its future, it’s essential that the UK is able to attract international talent to unlock the full potential of this thriving industry.”
However, there seems to be more support for Rudd’s replacement Sajid Javid who has also shared a view or two on the current immigration situation. Back in October of this year, Javid announced what was referred to as an immigration overhaul at the Tory Party conference which meant that those who were seeking British citizenship could face tougher English-language requirements after Brexit and would end free movement from the EU.
In this announcement, he revealed that this single immigration system would treat people from EU countries in the same way as those from non-EU countries, with highly-skilled workers who live and work in Britain given a priority while low-skilled immigration would be curbed. Earlier this year, Javid also announced a new visa route for people who wanted to start a business in the U.K. and will replace a visa route which was exclusively for graduates, opening up to wider pool of business founders. Again, the question of talent comes up again.
In June 2018, he said: “The UK can be proud that we are a leading nation when it comes to tech and innovation, but we want to do more to attract businesses to the UK and our migration systems plays a key part in that. That’s why I am pleased to announce a new visa for people wanting to start a business in the UK. This will help to ensure we continue to attract the best global talent and maintain the UK’s position as a world-leading destination for innovation and entrepreneurs.”
At the time of the last U.K. election, the Conservative pledge to move ‘Forward, Together’ received a lot of backlash because of the uncertainty around the manifesto and May was mocked for her comments on being strong and stable amid more immigration controversy. It all remains to be seen what happens when the time comes for another election.
December 13, 2018 at 07:01PM
Forbes – Entrepreneurs