With the General Election looming in a matter of days, it’s anyone’s guess who will hold the reins of power in several weeks’ time. But I predict that whichever party or combination of interests ends up in Number Ten post May 7, the political class will do little to dilute existing support for fintech. Why? Because our industry is one of Britain’s greatest current success stories.
I’ve written before about my admiration of the Enterprise Investment Scheme, and the Seed Enterprise Investment Scheme, and the fact they endure precisely because they work so well. This is something politicians of all hues appear to understand, and they’d be foolish to tinker with such winning formulas for growth. Next, consider that last year fintech investment increased at more than three times the rate of overall venture capital investment, according to a recent report by Accenture. Europe experienced the highest growth rate globally, with the UK accounting for 42 per cent of the European total. Impressive achievements, indeed.
This success has been endorsed by recent moves to open up tax breaks for investors in peer-to-peer platforms, and the revelation the Government is now using crowdfunders, among others, to invest in seed tech businesses via its London Co-Investment Fund. It’s clear that our innovative ways of financing businesses are beginning to be taken seriously by those in Westminster and beyond. So much so, in fact, that several of the major parties have used crowdfunding platforms to raise cash for their causes during this election campaign, the Greens and the Scottish Nationalist Party among them. It would seem we’re not only changing business finance, our industry is changing politics, too.
However, any future Government should do more to help our funding revolution. While bank lending to smaller businesses continues to fall – and the most recent Trends in Lending figures from the Bank of England shows that it is – alternative finance becomes an ever more credible, viable, and desirable way for companies to raise capital. This amazing progress could easily be disrupted by over-zealous regulation, or a reactionary approach to policy-making. Politicians need to better understand how our business works in order to be able to create a regulatory framework that works with it, not against it, while still, of course, protecting investors.
Our future leaders could go further. Efforts are being made to force traditional financial institutions to give others the reach they’ve long enjoyed, but the banking establishment really must be made to share the data about business customers it so jealously holds, or little will change in practice. If banks don’t want SMEs’ custom, there are growing numbers of alternative financial providers and platforms that do, but we need information to be able to help these cash-starved companies. I also hope more is done by the next administration to build upon the Chancellor’s promises in the recent Budget to nurture businesses and entrepreneurship outside of London and the South East, particularly in the North of England. The decommissioning of the Regional Development Agencies had a huge impact on businesses outside of the capital, and I’d like to see better help and encouragement for enterprises all over the UK.
The political landscape will change in the weeks and months ahead. But I hope when the votes are cast, and the subsequent deals done, any future Government recognises what it has in the form of fintech innovation in the UK. We’re not just a means for parties to boost their campaign coffers. Britain is leading Europe in this innovative field, and competing on the world stage, but we have the potential to do much more. If our future leaders seriously support our industry’s continued growth the economy overall will benefit, businesses will grow, and the UK succeeds. And, surely, that’s what any politician should want.
Please note: The contents of the article are the author's opinion and have not been approved as a financial promotion by Resolution Compliance Limited.