Yesterday (November 23rd), all eyes were in UK were on chancellor of the exchequer Philip Hammond as he delivered his first Autumn Statement, setting up the country’s financial priorities for the months ahead.
The statement allows the government to respond to economic forecasts and give details of its spending plans, and this year’s edition was much anticipated as it was the first of Theresa May’s government, as well as the first since the UK voted to leave the European Union in June.
Among the spending promises was the announcement of extra funding to support the country’s growing financial technology (fintech) sector. This highlights how this part of the industry is becoming ever more important – and something traditional players in the banking world will have to keep an eye on.
Mr Hammond revealed the government will pump £500,000 a year into developing specialists in this sector, as well as commissioning an annual ‘State of UK Fintech’ report that will analyze key metrics within the sector. It will also work with the Money Laundering Steering Group to modernize guidance on electronic ID verification. This should support the use of technology to access financial services.
This is yet another illustration of how new, innovative startups are set to play a major role in tomorrow’s financial services sector. The fact governments are starting to recognize and support this will surely help boost the industry in the coming years.
But should traditional banks be worried about these new players?
The answer is ‘not necessarily’. While it’s true that these players will offer a new alternative for many consumers that traditional banks will have to contend with, it’s a mistake to think of fintech firms purely as competitors.
As well as providing some much-needed impetus to improve their own services and offerings, these companies offer great possibilities for collaborations and partnerships to extend banks’ reach and develop new solutions.
Increased government interest and support for fintechs is a sign of the times we live in, and it’s one that can offer great opportunities for both banks and consumers in the coming years.