The UK government has stated that it intends to retain the country’s status as the global fintech hub. However, the government’s strategy has so far made little effort to boost demand.
The majority of the government’s fintech strategy is focused on attracting and deepening capital, producing and attracting more talent, and devising evermore accommodative policies.
The analysis supporting the strategy acknowledges that demand – particularly consumer and corporate demand – lags behind that in other countries, but only vaguely recommends supporting a financial inclusion agenda to increase this demand.
Firstly, changing consumer behavior is a difficult task even for the most successful companies, let alone governments. Secondly, there is no mention of tapping the demand of corporates at all.
The UK will not be able to maintain its status as the global fintech hub if it relies on consumer demand alone. While corporates are also likely to adopt fintech at different stages, the competitive dynamic that drives all businesses will foster greater demand, faster. Consumers do not face the same pressures.
In contrast to the government’s strategy, Barclays’ latest innovation – the Barclays SmartBusiness service – shows that it recognizes the importance of corporate demand. The service offers SMEs access to key financial metrics that allow companies to benchmark their performance locally and gain market insights on their local customer base.
The government’s strategy is misdirected and is aimed at further improving strengths, rather than addressing weaknesses. UK banks that are looking to harness the power of fintech to create new solutions, and ultimately new revenue streams, should not overlook the corporate sector.
By Sean Harrison, Retail Banking Analyst