Speech delivered by Mark Garnier, Parliamentary Under Secretary of State at DIT, at the Fintech Connect Live conference in London.
Many thanks, Rachel, for your introduction.
It gives me great pleasure to address FinTech Connect Live, one of Europe’s most exciting FinTech conferences, returning for a second year to London.
Once again, this puts London on the FinTech map as one of the top financial technology hubs in the world.
Represented here today are many start-ups, innovators and entrepreneurs who have taken their businesses to the next level.
Today they stand shoulder to shoulder with industry giants, financiers, practitioners and enthusiasts who are all coming together in one place to share experiences, forge partnerships and learn from one another.
This is testament to the financial industry’s strength and its drive for innovation.
Prior to becoming a politician, I worked in the city of London for 27 years, first as an investment banker and then as a fund manager.
Since being elected to Parliament 6 years ago I have done a huge amount of work with the finance sector, particularly in my previous work on the Treasury Select Committee and Parliamentary Commission on Banking Standards.
I am absolutely delighted to have responsibility for financial services within the Department for International Trade, and to be addressing the FinTech industry here today.
I understand the importance of financial technology in the financial services sector and its role in our economy.
FinTech revolutionises the industry and the way financial services firms operate, transforming debt and equity markets, payments, credit assessment, regulatory compliance, personal finance and many other facets of the sector.
Today I want to speak about 3 main things:
the role of the Department for International Trade
the importance of the UK as a global FinTech centre and its value to our economy; and
what the Government is doing to support UK FinTech firms achieve their aspirations abroad, particularly in Central and Eastern Europe
Department for International Trade
First, let me address the recent changes in Government that have been put into effect following the UK’s vote to leave the EU in the referendum that took place in the summer.
The UK is leaving the EU, but can I absolutely stress we are not leaving Europe, and the EU and its members will continue to be an important trading partner to the UK.
Indeed, it is important for us that the EU remains successful and prosperous.
They are our friends, our allies, and our nearest and biggest trading partners.
It is crucial to this country that their success is in our best interests.
Leaving the EU will allow us to shape our own ambitious trade and investment opportunities, drive even greater openness with partners in Europe and beyond, and put Britain firmly at the forefront of global trade and investment.
As leave the EU, there will be a number of challenges that we will have to face up to and tackle head on.
Setting up the right Government structures to meet these challenges has been an early priority of the Prime Minister, Theresa May.
The Department for Exiting the EU has been created to establish our new relationship with Europe.
The Department for International Trade, the department I am a Minister for, has been created to promote British trade abroad and ensures the UK takes advantage of the huge opportunities open to us.
My department is responsible for:
first of all, promoting UK exports of goods and services to support a growing economy that serves the whole of the UK
maximising opportunities for wealth creation through supporting foreign direct investment, with a renewed focus on overseas direct investment for UK businesses investing overseas; and finally
we want to deliver the best international trading framework for the UK outside the EU, including through building our capacity to negotiate and administer a national trade policy
Importantly, DIT want to understand the needs of the businesses that we support as they reach their export and investment goals.
Our role is to gather feedback, understand your issues and listen to what is required for an effective Brexit that works for industry and Britain as a whole.
And having overall responsibility for promoting British trade across the world, we are perfectly placed to bring together government, industry and our growing overseas network of diplomatic missions to help UK businesses grow.
In talking to UK businesses we want to understand what more we might do to help companies that are only currently domestically focused look abroad for their growth opportunities.
These are areas where we welcome views from industry.
FinTech in the UK
This leads me on to the second point, the importance of Financial Technology industry in its own right and its value to the broader UK and global economy.
The UK is the global capital for FinTech.
Last year, the sector employed over 60,000 workers and attracted almost £ 525 million in investment.
This increased activity makes the UK’s sector worth a total of £ 6.6 billion in annual revenue.
In recent reports by EY and Deloitte, the UK ranked first amongst the world’s 7 leading FinTech hubs for having the strongest FinTech ecosystem.
This is a hugely impressive feat when you look at the great work being done in New York, Singapore, or Silicon Valley.
The UK’s competitive advantage comes from our nation’s strong pool of talent; high demand for financial innovation; great availability of capital; and the presence of supportive policy and regulatory regimes.
It is these essential ingredients that help UK FinTech to thrive.
And I think it is worth going into a little more detail on each one.
Regulation is a necessary part of government. Too little and problems occur; too much and we stifle innovation.
The EY report concluded that the UK has the best regulatory and policy environment to support growth and innovation in the FinTech sector.
The Financial Conduct Authority was the first regulator to introduce a regulatory sandbox.
This provides businesses with a ‘safe space’ to test their new products with consumers, before they take on the usual full regulatory process.
It also demonstrates the regulator’s deep commitment to fostering a culture of innovation and encouraging creative solutions.
Making sure the UK has the expertise to support emerging opportunities is vital.
We have unrivalled access to financial expertise, employing nearly 2.2 million people in financial services.
We also benefit from a booming technology industry and incredible entrepreneurial talent.
There is no other place in the world where you can find this particular mix of world-renowned skills on your doorstep.
This is supported by world leading universities and research. A fabulous mix.
The UK is one of the largest centres for financial institutions, with a truly international client base.
We are home to nearly 600 foreign financial services companies.
And our appetite for innovation continues to get stronger.
Digital is one of the fastest-growing sectors in the UK economy.
But the ability for funding start-ups to access funding is crucial.
That is why the availability in the UK of capital is good for early- stage investment.
To support investment in UK FinTech, my department will provide £ 500,000 a year for FinTech specialists based overseas.
And the Government has commissioned an annual ‘State of UK FinTech’ report on key metrics for investors.
We are committed to ensuring that the UK continues to be the best place in the world to be a FinTech company.
London is home to a number of accelerators and incubators that help UK and overseas start-ups gain knowledge and access to the UK FinTech ecosystem.
The Bank of England, our Central bank and one of our Financial Authorities, has recently established its own FinTech Accelerator.
This provides truly remarkable access for FinTech firms to explore innovative solutions with a regulator.
But the focus is not just London-centric.
In the Autumn Statement, delivered just a fortnight ago, the Chancellor announced that the Government will also launch a network of regional FinTech envoys.
2 envoys for the Northern Powerhouse have already been announced and more will follow shortly.
One of the most important things that we can do in Government is to help our businesses go global.
That is why we are building FinTech bridges – uniting Governments, regulators and businesses to make it easier for companies to expand abroad.
By working collaboratively with our international partners, we can help UK firms to reach new markets, new customers and new heights of success.
Early next year, we will be taking innovative UK FinTech companies on trade missions including Australia, Japan and India.
This will help our home-grown firms build international networks and grow their businesses abroad.
And we will continue to host foreign companies that are looking to make the crucial decision to invest in the UK.
I am proud to welcome 12 Canadian FinTech firms to the UK this week who have come to explore the unparalleled opportunities for UK FinTech growth.
We will also be establishing a FinTech ‘one-stop-shop’.
This dedicated service will provide expert advice to ambitious FinTech firms looking to expand internationally.
Finally, next year will see the first International FinTech Conference in London.
The conference will showcase our thriving FinTech sector to international investors and remind the world that the UK is a FinTech world leader and continues to be open for business.
FinTech in Central and Eastern Europe Report
This leads me to address my third point regarding the opportunities for global growth for the UK FinTech sector.
In Central and Eastern Europe, the UK is seen as a source of innovation in the financial sector.
This creates significant opportunities for innovative UK FinTech companies operating in many different areas such as payments, data and analytics, cybersecurity or capital raising and personal finance.
The Department for International Trade is leading efforts to support UK-based FinTech companies seeking to internationalise their business.
To this end, we have published a report highlighting FinTech trade opportunities in nine Central and Eastern European countries:
Austria, Bulgaria, Croatia, Czech Republic, Hungary, Poland, Romania, Slovakia and Slovenia.
I strongly encourage you to familiarise yourselves with this pioneering review of the financial technology market in Central and Eastern Europe.
It provides a useful overview of the region’s financial services industry and the size of the FinTech market in each of the 9 analysed countries which is estimated at 2.2 billion Euros overall.
The aim is to highlight FinTech trends and key players shaping the local competitive landscape.
And most importantly, identify and evaluate exciting business opportunities across the Central and Eastern Europe region and give you a clear steer where to focus your activity to best exploit them.
And now here is a short video which summarises some of the key findings of the report.
We hope our report will be useful for FinTech companies, investors and those in the FinTech ecosystem who want to find out more about Central and Eastern Europe, do business in that region and further support this vibrant and dynamic sector in the UK.
We see strong potential in the entire Central and Eastern Europe market.
New entrants, incumbents and disruptors, have a chance to succeed in providing innovative solutions to either the financial sector or directly to end-users.
Our dedicated DIT team with Trade Advisers based in all 9 markets across the region have already supported UK FinTech companies that have successfully established their presence there.
An example of one such company is a provider of predictive analytics products specifically designed for the insurance sector.
By entering in partnership with a large software provider, the company now enables its customers in several Central and Eastern Europe markets including Poland, Czech Republic and Hungary to apply predictive analytics to make better decisions across the insurance lifecycle.
Another successful story is a UK FinTech company offering a cloud-based platform allowing automation of the way money is sent and received internationally.
They have teamed up with a pioneering FinTech platform for investment banking services in the Czech Republic allowing them to provide simple, transparent and fast foreign exchange transactions.
The Department for International Trade is ready to support these types of companies looking to expand internationally.
We also encourage overseas enterprises seeking to locate in the UK.
Our role is to help companies realise their international business potential through knowledge transfer and ongoing partnership support.
Our position within Government, in-depth knowledge of UK regional business and global network make us a unique strategic resource.
If you are interested in expanding your business to other markets, please speak to our team at the DIT stand.
I, and my department, look forward to helping you tackle the challenges and helping you find and exploit the opportunities that lie out there.
We are expanding our services to support our British industry to raise their eyes to the horizon; delivering and enabling global trade.
The future is an exciting one - we will carve a new positive and refreshed relationship with Europe and a stronger, bolder relationship with the rest of the world.
We will work towards negotiating the best deal for the UK and seizing new opportunities globally.
And our message to UK businesses, to international businesses and to global investors remains the same as it always has:
The UK is a beacon for open trade and we will continue to be a bold, outward-looking nation.
We are not just open for business. We mean business.