Launched by former Chancellor and now Prime Minister Rishi Sunak, the Kalifa Review into the future of the UK fintech sector outlined five core recommendations: policy and regulation; skills and talent; investment; international attractiveness and competitiveness; and national connectivity.

But two years on what progress has been made? For businesses both large and small it remains a work in progress and the entire Review process has completely overlooked the issue of sustainability. This is according to virtual payment card provider Lanistar.

Jeremy Baber, CEO at Lanistar, commented: “When the Government announced the launch of the Kalifa Review we warmly welcomed the initiative as one that was clearly designed to place the fintech industry in a central role in the UK’s future economy. But we were also clear that this was always going to be a marathon and not a sprint and as we pass the two-year anniversary, there is still much work to be done.

“What has also complicated the picture is that the economy is facing new challenges, with the rise in inflation, higher interest rates and an ongoing war in Ukraine adding to the economic woe. On top of this the Review itself – and its implementation now slowly underway – has overlooked almost entirely the issue of sustainability in the industry.  There is virtually no reference to net zero or sustainability in the Review itself stating as it does the biggest challenges being Covid, Brexit and competition.”

In the forward to the Review, Ron Kalifa OBE noted: “Fintech is not a niche within financial services. Nor is it a sub-sector. It is a permanent technology revolution that is changing the way we do finance. Its essence is in both fast-growing fintech companies, and the investment and use of technology by our incumbent financial institutions. It’s in the way we regulate previously unknown technology and set new standards.  But most importantly, it’s about delivering better financial outcomes for customers, especially consumers and SMEs”.

1. Regulation

The Review had made reference to the launch of two interrelated initiatives: the formation and support of a ‘Scalebox’ designed to help scale technology by enhancing the existing regulations; and the creation of a Digital Economy Taskforce. 

Baber commented: “This latter initiative was truly ground-breaking as it was designed to bring together all the pre-existing regulators into one body, to drive one roadmap for the sector.  No-one has seen or heard anything about either. This is without doubt the biggest policy fail we see two years on.”

2. Skills shortages

To maintain the UK’s position in the global fintech space, the Review dedicated considerable space to upskilling and reskilling, and how to effectively open up the economy to international talent. Here, the Review appears to have made some gains.

Baber continued: “In August 2022 the Government changed the visa scheme to allow talent into the UK via its new Scale-up visa. This is transformative for many smaller businesses and those now scaling up. This new visa means that highly skilled people can get two years’ leave-to-remain without the burden of sponsorship or detailed permissions so often required.”

3. Money, money, money

The Kalifa Review was clear: that without investment the sector will struggle. As a result it recommended the establishment of a Fintech Growth Fund of £1bn, funded by UK institutional capital.

Baber stated: “There can be no doubt that this is for many fintechs the more critical issue – access to funds to help drive growth.  Progress has been a bit stop-start, but late in 2022 a Fintech Growth Fund was launched.  That said, it still remains to be seen what impact it is having, what its remit is and what investments it has made to date. 

“From a purely selfish perspective, as a start-up forged at the height of the pandemic, we saw no Government assistance because we did not qualify and there is no Government backed fintech investment funds of any note.  This lack of support and action is an issue hurting all of UK’s fintech start-ups.”

4. International co-operation and standing

Two outcomes highlighted by the Review and only just coming to fruition again illustrate that the Kalifa Review is very much a work in progress.  The two bodies the report called for to help drive international collaboration – the Centre for Finance, Innovation and Technology (CFIT) and the Fintech Credential Portfolio (FCP) – have only just come online.

5. Connectivity

Baber commented: “The Review was always clear on the timetable for the roll-out of a programme to improve the national co-ordination of the UK’s top ten fintech clusters. This three-year timetable does appear to be on schedule, but we are yet to be convinced we are in fact delivering the recommended connectivity. Time will tell on this.”

There can be no doubt that many of the recommendations in the Review have helped provide much-needed focus on the UK fintech sector.  Many of the recommendations to deliver and build a resilient environment are underway but there is still much to be done.

Baber concluded: “I would argue that the central planks of the Review are now in place, but progress is slow and there are huge parts of it that have seen no action at all.  We are still missing an operational regulatory regime for crypto, although the Government has now launched a consultation. Further, the London Stock Exchange is still not the destination for tech listings, as we have seen this week with WANdisco and Softbank-backed semi-conductor business Arm.

“If the UK is to remain at the centre of the global fintech industry we cannot remain complacent. We recognise that the UK must invest in its fintech sector to maintain its global position. But the Review has totally overlooked the Government’s net zero objectives and that means it falls to enlightened fintech themselves to help drive the green agenda.  This is central to Lanistar as we drive the use of plastic out of the market, and act as a responsible citizen.”