Chancellor George Osborne said at an event in London today that he wants the UK to be at the pinnacle of financial technology (FinTech) and virtual currency developments.
The UK capital is well known for being one of the world’s financial centers, and the chancellor wants to take advantage of that experience and heritage to ensure that future technology services are developed within the country.
We have among the best scientific research; one of the greatest tech hubs in the world, near here in Tech City; and the highest density of start-ups in the world.
We have a long history of leading the way in financial innovation [...] And with the right backing from government, I believe we can make London the Fin Tech capital of the world. For me this is not an add-on to what the City already does. It has to be what the City becomes in the future.
Easing the way
Stating an ambition is one thing, but providing the right environment to enable FinTech to flourish is a different matter.
To that end, Osborne said there new incentives to encourage investment in startups, a new lower 10 percent tax bracket for inventions made in the UK (via ‘Patent Box‘) and changes to allow peer-to-peer lending in ISAs.
He also announced that there will also be an additional £100 million ($168 million) in funding unlocked for FinTech startups via the British Business Bank and new regulations that will require the UK’s big banks to pass on information about small businesses they reject loans for, thereby allowing FinTech specific lenders to step in and provide funding if they wish.
“So often a small business will be suitable for finance, but 70 percent only approach one bank and nearly 40 percent give up at the first attempt. Meaning many businesses just don’t get the finance they need,” Osborne said. “No more. This legislation will bring a whole wave of new lenders much closer to the small businesses they serve.”
As well as changing regulations to allow things like paying in checks via smartphones, Osborne said the government would look at the potential of virtual currencies and digital money.
These alternative payment systems are popular because they are quick, cheap, and convenient – and I want to see whether we can make more use of them for the benefit of the UK economy and British consumers. I also want to be alert to the risks that accompany any new technology.
The research will look at whether regulation of the sector is required “so that virtual currency business can continue to set up in the UK, and for people and businesses to use them safely”, among other things.
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