Fintech founders call for greater support from government and regulators
A new survey has found that two out of three (67%) fintech founders don’t think that the views of the fintech sector are properly being heard in policy and regulatory circles. The survey also reveals that nine out of ten founders expect to face funding challenges in the year ahead.
These are the headline findings of a study published today by the Digital Finance Forum (DFF), a network of the UK’s leading fintech founders that is a forum to enable better collaboration between fintech entrepreneurs, the government and regulators. There were over 100 fintech founders that participated in the survey across the sector, including many from the UK’s leading fintech firms.
The survey has been welcomed by the government with John Glen MP, Economic Secretary to the Treasury saying:
“The Digital Finance Forum’s results reinforce my commitment to ensuring the UK’s pre-eminence as a place for fintechs to do business. We have recently launched a major independent fintech review which will consider how the UK can continue to foster innovation, maintain an ecosystem that supports growing firms, and promote the integration of new technologies across financial services”
Christian Faes, chair of the Digital Finance Forum and co-founder of LendInvest, commented:
“The Digital Finance Forum’s summer survey has confirmed that there is work to be done, to ensure that the UK remains a world leader in the fintech sector. Key themes that came out from many of the respondents pointed to the fact that many fintechs are not on a level playing field with other startups when it comes to raising S/EIS funding; that it can take ‘way too long’ to obtain authorisations from the regulator; and that changes are need to ensure that the non-bank sector is on a more equal competitive footing to the larger incumbent banks.
We look forward to working with the government to try and continue to evolve the competitive landscape for the UK fintech sector.”
The study reveals how fintech founders have been adapting to the ongoing pandemic and what their most pressing issues have been over the last couple of months:
- Difficulty in accessing government support schemes during the Covid-19 pandemic: 37% of those surveyed sought a loan but were unable to qualify for one.
- Lack of funding more generally was the single most cited issue by founders. Just under half of respondents (46%) cited limited access to capital as the most pressing challenge facing them, and the main impact of Covid-19 upon their business.
- More than two thirds (67%) of founders don’t feel their voice is properly heard in UK policy and regulatory circles.
The survey respondents made a series of recommendations to government including a review of the Enterprise Investment Scheme (EIS)/Seed Enterprise Investment Scheme (SEIS) rules to end the exclusion of the financial service sector, along with improving the competitive landscape for non-bank lenders, so that there can be a more level playing field.
The study also identified a range of opportunities that have arisen for the sector following the crisis:
- More than a third (35%) of founders expressed optimism that Covid-19 would provide new opportunities as it accelerates digital adoption among businesses seeking to change the way they work; and over 80% were confident about the outlook for their businesses generally over the next 12 months
- One in five founders felt that Covid-19 presented an opportunity for fintech companies to help consumers and businesses rebuild their finances and drive the economic recovery, with many gaps and underserved customers left by the larger banks.
- Two in five founders said that they are actively looking to grow and expand their business in the coming months, not least since they anticipate new talent entering the labour market.