ICON IN THE MAKING

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Ali Paterson
Fintech Finance TV
Don’t remove choice
in the payment
revolution
Ali Paterson is a host on
Fintech Finance TV and
a big fan of new payment
technologies, although he
won’t be leaving his leather
wallet at home just yet.
I’m all for payment innovation but
any new technology must be better
than what we have already and not
a passing craze. It is great the disruptors
in the FinTech market give
consumers more choice because
companies should not dictate how
people pay for goods and services.
The examples of London buses
banning cash and the Dartford
Crossing telling its customers
how they must pay are indefensibly
dictatorial in my view.
Consumers should be allowed
to choose their payment method
without being penalised for their
decision. I love Apple Pay and I
have used it since its UK launch
in July. Supermarkets find it easy
to accept payments by phone and
more shops will add the scheme
to their payment options.
The UK is a more important market
than the US to assess how consumers
will react to paying for their
frequent shopping using a phone.
We can boast more NFC enabled terminals
than our friends across the
Atlantic. But as much as I adore new
technology I will still be carrying my
physical wallet around with me.
The payments environment is
evolving rapidly but people worry
about the security of their data.
I would too if I had all my payment
details and passwords on my phone.
The future of FinTech needs to be
about choice. Disruptors must
build trust and this will come if current
payment options can co-exist
alongside new methods for as long
as customers want them to.
The UK FinTech landscape has
greatly evolved even in last 12 months
With the UK recognised as a global hub for FinTech development and innovation,
interest levels in FinTech from incumbents here and abroad are soaring.
Start-up funding volumes continue
to grow. According to London-based
deep data provider
Beauhurst, 2010 saw deals for
UK FinTech companies involving
14 funding organisations. In comparison,
by 2014 there were 92, around 40 per
cent of which were based in the US. This
demonstrates that savvy investors are
identifying viable exit routes for UK-based
FinTech companies.
UK investment in skills and talent is
impressive and is a significant part of its
allure as a FinTech hub.
For example, The Open University
and Innovate Finance launched FinTech
101, an e-learning qualification course
on FinTech. Meanwhile, the Innovate
Finance Manifesto 2020 aims to increase
the number of people employed in Fin-
Tech by 100,000 over the next five years
– almost double the current workforce.
Policy developments
A number of policy developments are also
noteworthy. An independent Payment
Systems Regulator for the £75 trillion payment
systems industry became fully operational
in April 2015, the first of its kind
in the world. The FCAs Innovation Hub,
seeking to cut industry red tape, in
By Steve Hemsley
June published a call for input to gather
views on regulatory barriers to innovation
in mobile and digital.
These two regulatory bodies are a
shining light to global peers in terms of
their role in promoting innovation in
financial services.
Peer-to-peer lending
However, what symbolises most the UK’s
current leadership in FinTech policy is the
peer-to-peer lending space. Next year the
Government will introduce the Innovative
Finance ISA for loans arranged via peerto-peer
(P2P) platforms. This proves that
alternative finance is far more than a niche
offering for tech-savvy investors.
The implications of this policy are threefold.
Firstly, it creates a new asset class
for retail investors between stocks and
cash and removes a market distortion
in terms of tax treatment. It is potentially
a huge step in bringing FinTech to a
mainstream public audience.
Second, recent influx of capital by institutional
investors into most P2P platforms
has raised the risk for retail investors,
who have less buying power, and
are therefore unable to compete with
the professional investors for the best
loans. By pooling investors, ISA funds
“Alternative
fi nance is
far more
than a
niche
offering for
tech-savvy
investors”
Shaul David
FinTech sector
specialist, UKTI
can effectively compete for business on
the platforms.
Finally, ISA capital flows will attract
more providers to the P2P market, increasing
competition which in turn fosters
innovation and will allow the sector to
better serve consumers and businesses in
need of funding.
International expansion
At UK Trade and Investment (UKTI), the
UK government’s international business
development arm, we actively support
and promote cross border business. Indeed
we have helped a number of overseas
P2P platforms interested in the UK
market, as well as our home-grown stars,
expanding their businesses globally.
We are also banging the drum for the
UK FinTech scene and this week we are
hosting 10 exciting Australian FinTech
companies in London, as they look for
opportunities to expand in the UK. In October,
a group of UK FinTech companies
will fly to the US to explore business opportunities,
and we will be promoting the
best of UK FinTech on trade missions to
the US, Japan and Vietnam.
The message is clear. The UK FinTech
scene is buzzing and looks to have a bright
future ahead.