The UK FinTech market has seen incredible growth and impressive development over the last decade. But what are the key challenges ahead and what will make the UK stronger in FinTech? The recent independent Kalifa Review of UK FinTech covered several key areas, including the best way to export our success, and support the regulatory and investment climate to foster this vital sector. The UK also has an opportunity to differentiate itself on the global stage by ensuring it has a workforce with the right skills and talent, especially as firms look to scale-up.
By 2030, forecasts estimate that direct FinTech gross value added (GVA) contribution to the UK economy will be £13.7bn, with job creation contributing to 70% of this. Yet, access to the right level of highly skilled talent to realise this growth remains one of the biggest challenges.
I was honoured to work on the talent and skills chapter for the Kalifa Review. Despite the number of different stakeholders involved ranging from FinTechs, investors and government, there is almost unanimous agreement that a skilled workforce will be integral to the attractiveness of the UK as a leading global FinTech centre.
With agreement on the end destination, the challenge is to ensure the UK is heading in the right direction today. If we look at the current situation, reliance on overseas talent within FinTech stands at c.42% of the workforce. Any future plans must enhance access to overseas talent in the post-Brexit system whilst at the same time building the domestic pipeline so more of those skilled individuals are from the UK. This will not only benefit FinTech, but also other UK technology sectors and would be a significant boost to domestic productivity which is currently only 4% higher than the level it was in 2018.
Immediate need - the UK is open for FinTech
The UK’s current 2021 immigration system is a significant step forward. The removal of resident labour market testing and the cap on the number of people who can enter the UK as sponsored workers, has increased the efficiency of the system for FinTechs.
Could we do more? Post-Brexit, FinTechs now need to apply immigration rules to 42% of their workforce, as opposed to just the 14% of the workforce who are non-EU nationals. It comes as the global race for talent grows ever more competitive, accelerated by the COVID-19 pandemic. We know of other countries aggressively promoting their access to global talent.
This is a real threat to the future of the UK, and not just to FinTech. FinTech is currently one of the fastest-growing sectors in terms of job creation and will have a vital role in economic recovery. The UK needs to calibrate its immigration structure to make it practical and allow FinTechs to hire the right talent from overseas quickly, flexibly and without burdensome costs.
No single jurisdiction has got this exactly right yet. The UK is perfectly poised to do so, to lead global innovation in this space and position the UK against its competitors. When looking at recommendations in the Kalifa Review we wanted the proposals to complement the current immigration system, with measured, targeted and controlled revisions to immigration policy.
The Review accordingly proposed a ‘FinTech Scale-up Stream’ within the proposed unsponsored route to support scale-up growth. This would allow globally mobile talent with highly sought-after skills to join high potential firms, without unnecessary burdens on the firms and individuals, or impeding creative activity.
Across the immigration system, building for example on the former inward investment role offering in the Skilled Worker route, the UK should actively seek to attract job creators, by introducing enhancements and ‘reach out’ strategies to support FinTech scale-up growth.
These measures are truly innovative amongst competitors and aim to deliver improved flexibility to business. They also allow the government to flex and contract across routes as market conditions determine, with built-in controls. Crucially, they will send a clear and loud message that the UK is open to global talent for the most in demand FinTech roles.
Long run – building a workforce for the future
Whilst the above will help FinTechs today by maintaining access to overseas talent, to truly be a global leader the UK needs to address its domestic talent pipeline. This dual approach will create a more sustainable model and the reliance on overseas talent will naturally decline.
It would also provide the talent to help FinTechs scale-up and drive economic growth in the UK. The key recommendations that were produced in the Kalifa Review to address this were:
- Retrain and upskill adults to meet the needs of UK FinTech by ensuring access to short courses from high-quality education providers at low cost.
This would allow the UK’s FinTech workforce access to relevant educational support to keep up with the pace of change in this fast-moving sector. With 81% of FinTechs made up of less than 50 people, many struggle to invest in training due to reduced capacity and budgets. It will also increase accessibility to the sector, key to future economic productivity and to reduce inequality - also known as levelling-up, a priority for the UK Government.
- Build a pipeline of FinTech talent by supporting FinTech scale-ups to offer embedded work placements to further education and higher education students.
There is an opportunity to align the future skills needed for growth with education. Students could be moved closer to the FinTech industry through work placements within further and higher education courses. This will help students gain the technical and soft skills required and mean companies get early access to talent and can train them according to their needs. There are already some good initiatives in the UK to boost the supply of talent. The FinTech Kickstart scheme aims to help young people into work by creating placement opportunities within FinTechs and was set up in response to the pandemic.
