The Kalifa Review

After the first anniversary of the landmark review into UK fintech, what has changed in the industry—and what do firms need to know now?

According to Ron Kalifa OBE, fintech is “a permanent, technological revolution”.  This, contained in his preface to the Kalifa Review of UK Fintech, explains in a nutshell why so much attention is being paid to this area of financial services. Financial services is often seen as a crown jewel in the UK economy, so it’s no wonder that one year ago we saw the results of a government-commissioned independent review into how to grow and develop the fast-growing fintech landscape.

The Kalifa Review: Key Points

The review recommends a 5-point delivery and action plan in the following areas:

Each of these is expanded upon with action and policy recommendations laid out in the executive summary and full report, from shaking up the way the Competition and Markets Authority (CMA) works to creating a Centre for Finance, Innovation and Technology (CFIT) and examining the implications AI has on regulations. From point to point, the message is clear: the UK wants to encourage growth, innovation, and access to hold onto its crown as a global leader in fintech.

While much of the report focuses on growing businesses through access to things like talent and funding, Supervisory technology (‘suptech’) is a new subset of fintech that regulated firms should be aware of regardless of their area of activity. On the other side of the technological development that the review aims to encourage are increased abilities and expectations on the part of regulators and supervisory bodies.

Where other areas of fintech help individual consumers and businesses to conduct financial-related business and regulated activities more efficiently, suptech offers similar functions for regulators. Technological developments mean that regulators can be more powerful and efficient than ever in their oversight of regulated firms—and compliance professionals are increasingly turning to regulatory technology solutions so that they can keep up.

With the triple threats of the covid-19 pandemic, a murky post-Brexit regulatory future, looming international competition, and ongoing developments in the cryptoasset space, industry leaders are keen to act swiftly in order to protect and develop the strength of fintech in the UK. In fact, Innovate Finance recently published an open letter signed by over 70 leading UK fintech companies calling for updated regulations to help progress the industry. It looks like while the Kalifa review is a detailed starting point, more needs to be done to advance UK fintech—and regulated firms must take care to evolve in tandem to stay on top of their compliance obligations.

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