Promised by Rachel Reeves, the UK's fintech sector eagerly awaits delivery on her pledges
Time's Up for Rachel Reeves: Here Comes the UK Fintech Verdict
The downfall of Rachel Reeves is imminent, with the world of UK fintech holdings her fate. In a electrifying speech at Innovate Finance's 11th global summit, the Chancellor confirmed the eagerly anticipated Financial Services Growth and Competitiveness Strategy will be released on 15 July.
Reeves has sung the praises of the booming fintech sector and lauded achievements from fintech frontrunners Zilch and Allica Bank. She's vowed to make the UK the premier destination for fintech startups, scale-ups, and IPOs. But Nik Storonsky, CEO of Revolut, ripped London's listings as "unreasonable" last year, so the Chancellor has her work cut out for her.
Eyes are fixed on July, as Reeves' commitment to fintech will be put on trial, and fintech leaders will take on the roles of judge, jury, and executioner, ready to pull the plug if dissatisfied.
Optimism Hangs in the Balance
Schachar Bialick, CEO of London-based firm Curve, told The City A.M., "Fintechs must be a priority because they affect every aspect of modern economic life, from spending to saving to financial well-being. Right now, the sentiment is hopeful yet guarded. Companies are keeping a close eye to see whether the government will convert policy into meaningful reform."
Bialick further stated, "Optimism hinges on delivery." Curve, a challenger to Apple Pay, had a valuation of $781m (£587m) in a 2024 funding round. However, the fintech has since retreated from the US market, slashing over 100 jobs and reporting a loss of £36m.
Bialick implored the Chancellor to "level the playing field, ensuring fintechs can compete fairly with Big Tech. That starts with infrastructure access." The Financial Conduct Authority and Payment Systems Regulator wrote to the Competitions and Market Authority in February advocating for fairer legislation on near field communication (NFC). The European Union has mandated Apple to open access to NFC technology for third-party mobile wallet providers, excluding Apple Pay.
"If the government is determined to back British fintech, it must act decisively and mirror Europe's approach. This one move would trigger a wave of innovation in mobile payments and strengthen the UK's standing as a fintech leader," Bialick said.
Mountains to Climb
During her speech, Reeves boasted the UK as the ideal spot for fintech investment, second only to the U.S. However, a report by KPMG revealed investment has slipped since 2021 and hit a four-year low in 2024 at £7.9bn.
Private equity boss Rami Cassis told The City A.M., "We'll need bold moves from the government for it to succeed. At the moment, it's all talk, and we need to see far greater action." He added, "The reality is that the UK's fintech sector still has steep mountains to climb - and they have only grown taller due to the actions of this government."
Cassis, CEO of Parabellum Investments, pointed to the government-triggered departure of non-doms which "pushed out a crucial group of investment banking professionals deeply involved in the sector."
"Investment bankers are indispensable for any UK fintech firm aiming for an IPO. Non-doms accounted for a substantial proportion of the UK's bankers, and the Labour Party's policy shift has left a significant gap to fill. The impact has been severe, with Zurich, Frankfurt, and Paris building their fintech presence at London's expense."
The Plea to Deregulate
As the government pledges to minimise red tape, regulation remains a significant sticking point in fintech's push for economic growth. Allica Bank's CEO Richard Davies told The City A.M., the firm is "hearing positive things from the Chancellor" but warned "we can't rest on our laurels."
The digital bank, named Europe's fastest-growing startup by Sifted and the UK's fastest-growing private company by The Times Hundred, reported impressive pre-tax profits of £29.9m, catering towards small and medium-sized enterprises (SMEs). Davies stressed, "To maintain momentum, we need regulation that promotes competition and growth."
He added support for UK SMEs is "essential" and called for a "supercharge" to the Growth Guarantee Scheme, offering approximately £500m in additional lending capacity to help smaller firms.
The expansion of UK fintech has exploded in recent years, with big names such as Monzo and Revolut becoming household names, and a wave of new players joining the scene. Alex Mollar, CEO of Tandem Bank – a Blackpool-based fintech – expressed optimism for plans to develop fintech clusters beyond London.
David Newman, CEO of Manchester-based Firenze, said, "The upcoming strategy is an exciting opportunity to present other tangible plans, which will drive fintech and ultimately growth for UK Plc." Mollar added, "As UK fintech enters its next phase, it's vital we set the stage for challengers to thrive – I'd welcome a fintech-first approach across the board, focused on innovation and creating opportunities for more competition at scale, truly taking on the big players."
Checkout.com's CMO Rory O'Neil concurred on the regulatory woes, and added fostering a robust fintech talent pipeline should be a focal point in the Treasury's strategy. He cautioned, "Failing to deliver on either could slow down the growth of scaling fintechs, and worse, make the UK less attractive to future start-ups and scale-ups."
The strategy will serve as a watershed moment for the industry, with momentum poised to accelerate or derail. Ahead of the global summit, Innovate Finance's CEO Janine Hirt informed The City A.M. that fintech currently employs over 82,000 people, with the workforce projected to surpass 100,000 in the next two years.
The Chancellor will face a long list of petitions from firms on how to bolster the industry – and though she may not fulfill every demand, if Reeves is found guilty on all counts, fintech's progress could grind to a halt.
- The Chancellor's commitment to the UK fintech sector will be put to the test in July, with fintech leaders serving as judges, juries, and executors, ready to adjust their support if they find dissatisfaction.
- Schachar Bialick, CEO of Curve, emphasized the importance of prioritizing fintech and called for the government to level the playing field, ensuring fintechs can compete fairly with Big Tech, starting with infrastructure access.
- As the government pledges to minimize red tape, the need for regulation that promotes competition and growth in the fintech sector remains a significant sticking point for firms like Allica Bank and Tandem Bank.
- Fostering a robust fintech talent pipeline and bolstering the industry through measures such as a fintech-first approach and expanding the Growth Guarantee Scheme have been suggested as ways to drive fintech growth and ensure the UK remains a fintech leader.
