The launch of the UK's new Centre for Finance, Innovation and Technology (CFIT) has been hailed as a landmark moment in the UK fintech industry as the government looks to bolster support for regional clusters.
Unveiled yesterday, the establishment of the CFIT acts on a key recommendation of the 2021 Kalifa Review into the state of the UK fintech industry.
The launch of the centre is backed by £5.5 million in funding from the Treasury and City of London Corporation. It will see the creation of a series of “innovation hubs” across the country aimed at supporting collections of startups in various areas of the country, known as regional clusters.
These hubs will play a key role in driving “national connectivity” across the fintech sector, according to the government, and provide businesses with vital assistance to support innovation and growth.
As part of the move, centres will be established in Scotland, Wales, Northern Ireland, and a host of English cities, including Leeds, Manchester, Birmingham, Bristol, and Newcastle.
A key focus of the CFIT will also include cultivating cross-sector collaboration to foster closer ties between finance, technology, academia, and government to address key growth barriers for the industry.
Charlotte Crosswell, chair of CFIT described the move as a “significant moment” for the UK fintech sector and one that will offer crucial support for “talented innovators and trailblazers in every corner of the country”.
“This organisation will enable us to come together as a sector to start breaking down barriers that the fintech sector is facing while creating a clear path for our homegrown fintech companies to achieve global scale, impact, and success,” she said.
A welcome move for UK fintech
Speaking to IT Pro, industry stakeholders have hailed the move as an overwhelmingly positive step from the government to accelerate growth in cities and regions outside of London.
Andy Thornley, head of financial services at techUK, said the launch of CFIT is “much welcome” and comes at an important crossroads for the industry.
“In being industry-led, but with the backing of both Treasury and the City of London Corporation, the body will have both the insight and influence needed to ensure that UK fintech fulfils its potential and continues to be an international success story,” he said.
Sarah Williams Gardener, CEO at FinTech Wales, said the cluster organisation is “looking forward to collaborating with Charlotte, Ez, and the team at CFIT to tackle the barriers our members tell us are holding back innovation and growth”.
“It’s imperative now that we bring together the best and brightest minds to ensure CFIT can be additive and focus on the wicked problems to drive growth and innovation,” she added.
Dima Kats, CEO at Clear Junction, told IT Pro that the CFIT launch represents a “strong and positive move from the UK government” that will provide “instrumental” to the future of British fintech.
“With this, there will be greater opportunity for new regional players outside of London, such as those in Leeds, to penetrate the fintech sector and lead to a more competitive landscape,” he said.
“The CFIT will enable the fintech industry to come together as a sector to break down regional barriers the sector is facing while also creating a clear path for a wider pool of fintech talent in the UK, to achieve global scale, impact, and success. This is a key moment for the sector,” he added.
Strong regional performance
Fintech clusters outside of the capital have performed well in recent years, with regional fintech experiencing a 237% increase in investment in 2021 as companies capitalised on rapid growth during the height of the pandemic.
However, in recent months economic conditions have soured and concerns have been raised over the UK’s ability to maintain its dominant position in European fintech.
UK fintechs secured $12.5 billion in investment in 2022 across more than 500 deals, placing it second only to the US in terms of fintech investment.
Yet despite this, late-stage fintech companies have encountered significant challenges as the flow of venture capital funding slowed due to investor hesitancy amidst a looming recession.
Chris Ford, head of government affairs at enterprise blockchain firm, R3, told IT Pro that given the increasingly competitive marketplace, the establishment of the CFIT and regional innovation hubs could be key to supporting future growth and maintaining UK fintech’s global position.
“It’s no secret that the UK is experiencing the heat from international competitors when it comes to retaining its status as a global hub for financial and technology, meaning the government is right to take a bold and ambitious approach in recreating the right environment for fintech to thrive,” he said.
