In the wake of the Brexit vote, the UK’s relationship status with the rest of Europe remains in the ‘it’s complicated’ category. So it is no surprise that our government is sweetening our relationships in Asia.
Our new chancellor Philip Hammond is in China today promoting British business, while the Treasury has just announced a new “FinTech bridge” with the Republic of Korea (better known as South Korea – the less scary one).
The South Korea deal includes a regulatory co-operation agreement between the two countries, so that FinTech start-ups can easily operate in both. The idea is that it will encourage South Korean investment into UK businesses and vice-versa. The government says it will promote information sharing about new technologies and help scale up FinTech businesses in both countries.
Hammond said: “The newly established FinTech bridge between the UK and the Republic of Korea is an important step for one of this country’s most exciting industries.
“The government is determined to help the UK FinTech sector to innovate and grow and to ensure that Britain remains the location of choice for FinTech start-ups.”
This can only be a good thing for the UK and its hugely significant FinTech industry, which employs around 60,000 people and last year generated £6.6bn in revenue.
While South Korea may be a relative newcomer to FinTech, it is certainly a veteran in the tech/IT space (Samsung, SK Hynix, LG) so is well-placed to provide innovation for our home-grown tech start-ups.
Conversely, there are areas of UK FinTech that could potentially benefit South Korea – such as our peer-to-peer finance industry, which has lent £5bn since 2010.
“Whilst the level of cross-border international lending to date has been limited, a number of countries have looked to the United Kingdom as an example of how an appropriate regulatory regime can be constructed which facilitates innovation and growth in the alternative finance landscape,” said a spokesperson from the Peer to Peer Finance Association, which represents the UK’s fast-growing peer-to-peer finance industry.
“As developments in the FinTech sector gather pace, more partnerships – such as the FinTech bridge with the Republic of Korea – will enable other countries to follow the path which has made the United Kingdom a global exemplar in peer-to-peer finance.”
With the UK’s status as a financial hub at risk if we fail to secure a decent agreement with the EU on passporting, it makes good sense to improve relations further afield and remind the world about what we have to offer.
Many years ago, Qatar hoped to become the financial hub of the Gulf, competing with the likes of Bahrain and Dubai. Dubai won, in part due to its swiftness in developing a friendly regulatory regime. So what did Qatar do? It created a ‘three-pronged plan’ to offer niche areas of finance that would set it apart from the rest of the Gulf: asset management, reinsurance and captive insurance.
Now I’m not comparing the UK to Qatar, for many reasons – one being that we already have a highly developed financial centre – but it would not hurt to turn a potential disaster into a positive opportunity by using our newfound independence to innovate. And FinTech should certainly be a key part of that.