From changing how we manage our money, to creating a more pluralistic finance industry, financial technology (fintech) represents a growth sector for the UK.
UK fintech is thriving, but it is also vulnerable. Its success has occurred against a backdrop of openness towards global trade and investment, and this is reflected in the international nature of its workforce.
Recently, Innovate Finance unveiled a report on the implications for that same workforce resulting from changes in immigration policy.
Fintech’s success depends upon talent which is in short supply. The sector employs 76,500 people and this is projected to grow to more than 100,000 by 2030. With 42 per cent of fintech workers drawn from outside the UK, the sector is highly exposed to changes in the immigration settlement post-Brexit.
The government has a mandate to challenge the UK’s net migration figure, but Brexit also provides a unique opportunity to re-imagine the immigration system to better suit the UK’s needs.
Innovate Finance respects this mandate, but believes that any new system must not limit fintech’s ability to attract workers from the global pool of mobile and talented individuals. This is because our report calculates that by 2030, there will be 3,300 fintech firms in the UK and the sector will need approximately 33,500 migrants from the European Economic Area (EEA) to support them.
The report predicts the most likely scenario that restrictions on EEA citizens are brought into line with those from non-EEA countries, resulting in a potential loss to fintech of £361 million as firms struggle to recruit the workers they need.
These talented individuals support growth in fintech businesses, whether they are founding entrepreneurs or software engineers. Such individuals complement rather than compete for UK jobs and a more restrictive immigration policy will potentially undermine this transfer of skills.
We believe support for fintech demands a balanced policy response, mitigating the impact on an already limited global talent pool, at the same time supporting the development of local skills – a task which is long overdue.
At the Innovate Finance Global Summit, we announced the formation of the Fintech Strategy Group (FSG), launched with the City of London Corporation, providing an industry-led perspective on what UK fintech needs to prepare for the future. Fostering a collaborative dialogue on the sector’s future, the FSG will bring together senior leaders from across the sector and ensure talent is pushed to the top of the policy agenda.
Working with key partners across finance and technology, Innovate Finance will develop a robust set of recommendations that support UK fintech. For instance, we recognise the need to redefine the term “highly skilled migrant” to reflect not just academic achievement, but a more sophisticated analysis of experience; the need to identify gaps in digital skills to create a mechanism for training local talent; and the need for smarter methods of sponsorship to reduce the costs of hiring for smaller fintech firms.
The UK cannot rest on its laurels. To sustain growth we must continue to attract the best international talent. As one of the most innovative and fast-growing areas of the UK economy, and an area where the UK is a global leader, the benefits of nurturing UK fintech cannot be overstated.
As both incumbents and startups alike look to collaborate and invest in talent, Innovate Finance remains optimistic about the future growth of fintech and will continue to promote the UK as a leader in financial services innovation.