Publication Date: March 2015
UK science and the financial sector are among the country’s most valuable assets. Both are key priorities to enable the Government to support the economic recovery and national prosperity. Science and the financial sector are interdependent. The financial sector, which is evolving extremely rapidly, depends for its research and development on the science base, which encompasses science, engineering, technology and social sciences. Science in turn can feed from the enormous range of challenges that will arise, e.g. from mathematical and quantum approaches to cryptography to social scientific questions about identity, privacy and the implications of machine learning for individuals and society.
The way in which the Government, business and academia respond to the development and commercialisation of new financial business models and disruptive innovation, known collectively as ‘FinTech’, will be of particular importance in positioning the UK financial sector for the future. The Government is committed to cementing the UK’s world-leading position in FinTech and has already taken significant steps towards achieving this goal.
As part of this work, the Chancellor of the Exchequer, the Rt Hon George Osborne, commissioned me to provide a report on FinTech futures and to make recommendations that will ensure that the sciences continue to contribute most effectively to FinTech. This report builds on the current work of HM Treasury and other parts of the Government to provide a longer-term vision for the UK FinTech sector.
Its recommendations are intended to provide a firm foundation to support and catalyse the growth of the sector out to 2025. In particular, it makes the case that the Government, regulators, business and academia must work together closely and in innovative ways. Like any technology, FinTech is neither good nor bad in itself. It is the specific uses of the technology that can be good or bad. It is already clear that FinTech will disrupt existing business models.
It creates huge opportunities for development and delivery of better business and consumer services and to promote financial inclusion for people who are currently excluded. But this cannot be taken for granted. There is plenty of potential for FinTech to offer new methods for fraud and exploitation of businesses and consumers and, if poorly implemented, could increase financial exclusion.
That is why it is important that the Government and regulators maintain a close watch on the sector as it emerges. I am indebted to the expert panel who have advised me and contributed to the drafting of the evidence papers that provide the background and support for my recommendations to HM Treasury and the Government as a whole.