By 2015, London had established itself as one of Europe’s leading FinTech centres. It combined a global financial centre, a large technology workforce, substantial investment and unusually close interaction between government, financial institutions and startups.
The UK’s FinTech infrastructure
What stood out was the interconnectedness of the ecosystem. Talent and ideas could move between financial services, technology companies, investors and government initiatives. London remained the nucleus, but the broader UK ecosystem was becoming increasingly important.
The ingredients were familiar: access to financial expertise, a large technology workforce, strong digital infrastructure, significant investment and political support.
The UK’s position raised a broader question, however: what should the role of government actually be in fostering innovation?
UK FinTech and government leadership
Government support can create the conditions in which an ecosystem develops, but it also raises questions about control. How far should government go? Should it simply encourage innovation, or should it actively shape the infrastructure around it?
Those questions were particularly important after the financial crisis. Financial scandals and opaque products had exposed weaknesses in the relationship between consumers, financial institutions and regulators. Greater transparency — knowing what you are buying and what you are paying — was becoming an important part of the FinTech proposition.
There was also a systemic issue. FinTech could alter payment infrastructure and other parts of financial services in ways that potentially changed the role of existing institutions and oversight mechanisms.
The most useful role for government, in my view, was therefore not to control innovation directly but to create enough clarity and stability for the ecosystem to develop without losing sight of the risks.