At the Treasury’s International Fintech Conference last month, Matt Hancock spoke to Spotlight about how to support and sustain the growing UK fintech sector.
Why is London’s fintech sector growing so quickly?
Britain is the fintech capital of the world right now and we need to make sure we keep it that way. I think the reason for this is a combination of strong support for tech and the fact that we’re the leading tech hub in Europe, alongwith London’s position as the biggest international financial market. The fact that Silicon Roundabout – the heart of the renaissance in the British tech scene – is only half a mile away from the City of London means there is a strong pool in both finance and tech, which is rare anywhere else in the world.
Will the benefits of the fintech sector be felt across the UK?
The capital’s strength is a good thing for the country because it means the UK as a whole is stronger in fintech. We’re working now to spread those benefits around the country. Taking the organisations that really made London the tech hub that it is today, such as Tech City, we are looking at turning that into Tech Nation; and are focusing on expanding it to other parts of the country now. That demonstrates our desire to spread the benefits of this tech boom.
What might regulation entail?
That is a Treasury and Bank of England lead. Making sure we have pro-innovation regulation is important, especially in finance. A good regulatory structure must work collaboratively with new start-ups rather than saying no to every idea. I think it’s better to have cryptocurrencies based here in the UK in a good regulatory system that supports innovation but also gives them a firm framework, rather than having them offshore in a tax haven.
Will the Bank of England ever back a new “Britcoin”?
That is a very intriguing question. The currency in the UK is rightly backed by the government and the Bank of England. We only want one currency here in the UK. Nevertheless, having other currencies whether they’re backed internationally or are essentially backed by technology and verified through a distributed ledger, it’s better to have them here than offshore. Because we have such a strong institutional set up the demand for a UK cryptocurrency isn’t as great. Ultimately, what does the blockchain provide? It allows you to verify that validity of a transaction. In the UK we have a tried and tested, centralised way of doing that.
How can government mitigate the impact of Brexit on the sector?
I know people in the sector have concerns. But my sense from talking to people regularly over the last 18 months is that people are increasingly reassured. The good deals – both the first deal in December and the transition deal we did last month [March] – have reassured people a lot. Of course people still want to have access to the brightest and best talent and that’s very important to us. Making sure the financial regulations mean the European market is open is very important too. But ultimately, there’s an opportunity and the opportunity is to be trading with the whole world, which is what London has traditionally done in financial services.
Could distributed ledgers be useful in the public sector?
I use as my example the use of blockchain in development aid because then you can follow the money to the recipient and go and check that the recipient has received the money and what they’re using it for. I can see anywhere where you need verification, the blockchain is a potential technology for doing that. So I can see the big advantages of doing that in international aid where delivery can be opaque and I’m interested in where else that can happen in the public sector too.
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