The Chancellor today announced a series of measures to support the growth of the country’s emerging FinTech sector and encourage innovation in finance, including supporting alternative finance providers and exploring the potential of virtual currencies and digital money.
Re-stating the government’s commitment to cement Britain’s position as the centre of global finance, the Chancellor declared his intention to make Britain the global centre of financial innovation, benefiting consumers and businesses.
One of the steps the government will take is to start a programme of work looking into how virtual and digital currencies could or should be regulated in Britain. The government will look at the potential virtual and digital currencies have for achieving positive change and for encouraging innovation in our world leading financial sector, as well as the potential risks.
The Chancellor also confirmed that the government will also encourage the growth of alternative finance providers, which are a major part of the FinTech sector, by introducing legislation to help small and medium-sized businesses access alternative sources of finance if they are turned down for finance by their bank.
Under the new rules, banks that reject SMEs for finance will be required to ask these firms whether they want their information to be shared with designated online platforms that can match firms with challenger banks and alternative lenders, including FinTech lenders such as crowd-funders, peer-to-peer lenders and invoice financiers.
Britain’s alternative finance market is growing fast, with one estimate that it expanded by 91 per cent in 2013, to almost £1bn. The market is expected to be worth £1.6bn in 2014.
Other measures that were announced today include:
Chancellor George Osborne said:
“Key to the government’s long term economic plan is cementing Britain’s position as the centre of global finance.
It’s only by harnessing innovations in finance, alongside our existing world class knowledge and skills in financial services, that we’ll ensure Britain’s financial sector continues to meet the diverse needs of businesses and consumers here and around the globe, and create the jobs and growth we all want to see in the future.
That’s why I’m delighted to announce a series of major steps today to help our FinTech firms continue to grow and succeed.”
Business Secretary, Vince Cable said:
“Forcing banks to refer businesses to alternative lenders is something I’ve been determined to make happen. It’s good that more SMEs are making use of alternative finance but the big banks still dominate and small businesses often give up if they’re turned down for finance by their bank.
“The UK needs a diverse and competitive business finance market like Germany and the US if our SMEs are to thrive, and that is why the Business Bank is so important. Money is already reaching small businesses, but my ambition for the Business Bank is to radically alter the overall market landscape.”
The government will publish a strategy document later this year setting out in detail how we intend to make the UK the global centre of financial innovation.