As the Tories lick their wounds after a historic defeat in the polls, we wonder what Labour’s rise will mean for the vital Fintech industry and tech in general. While incoming Prime Minister Keir Starmer has published a hundred-day plan, it is not yet apparent how he will deal with innovation in financial services.
CI has received various comments from several insiders on Labour’s victory, along with some policy recommendations, which we have shared below.
🤝 The King received in Audience The Rt Hon Sir Keir Starmer MP today and requested him to form a new Administration.
Sir Keir accepted His Majesty’s offer and was appointed Prime Minister and First Lord of the Treasury. pic.twitter.com/g1TwdPObbD
— The Royal Family (@RoyalFamily) July 5, 2024
Dan McLoughlin, Fraud and Security Specialist at Lynx – a credit score specialist, believes the new Labour government, under Keir Stormer’s leadership, must maintain the UK finance industry’s global leadership by ensuring regulations remain relevant both domestically and globally while supporting growth in Fintech.
“While we cannot say for certain what a new Labour government will deliver, its goals are broadly aligned with industry needs. We know it wants to keep the UK at the forefront of global innovation and prioritise the safe development of AI. Now in power, to deliver on these aims it needs to create its proposed Regulatory Innovations Office to speed up and maintain regulatory compliance and the implementation of new, pro-innovation Open Banking and Finance frameworks.”
Aurum Solutions CEO Tiago Veiga says Labour must take a holistic approach in supporting UK tech firms while cautioning against aggressive regulation.
“There’s a lot of talk about how the next government needs to prioritise the regulation of AI, but with this technology evolving so rapidly, it’s likely any rules will be out of date by the time they’re finalised. In the meantime, a smarter short to medium-term strategy would be to focus on educating people and business on how to safely use AI, where it should and shouldn’t be deployed, and identifying targeted use-cases where it can boost productivity,” explains Viega. “Labour will be judged by how successfully it creates economic growth, and giving businesses the right tools and knowledge to safely get the best out of this technology will be key to fulfilling this mission.”
Veiga adds that AI is not a silver bullet for everything and Labour needs to focus on supporting UK tech firms as a whole.
“All too often, firms are implementing AI solutions just because they want to jump on the bandwagon and say they are using AI. Instead, they need to think about how to solve their problem most efficiently rather than going out of their way to find a use-case for AI. We need to have expertise and skills across a range of emerging technologies – not just AI – to create an environment conducive to innovation.”
Sinead McHale, CEO Satago, points to the fact that small and medium enterprises (SMEs) are the heart of the UK economy, telling Labour it must prioritize and address their needs.
“Despite recent signs of easing inflation, business costs remain high. SMEs continue to grapple with profitability challenges and longer-term growth plans, with limited access to finance and late payments persisting from larger corporations,” says McHale, who adds that new policies must be implemented, like incentivizing prompt payment practices for firms.
McHale believes that more collaboration between Fintechs and banks will help SMEs perform better.
“For example, invoice financing helps SMEs build resilience against future challenges and increases visibility by allowing them to access capital via their balance sheets.”
McHale says that the new government must prioritise Fintech development which ultimately benefits the entire UK.
Mike Bristow, CEO of CrowdProperty, a top property investment platform, reminds us that Labour has committed to building 1.5 million new homes, a promise which he hopes they deliver on.
“Momentum is against Labour too – housebuilding starts in 2023 stood at just 176,000, with starts in the second half of 2023 in particular plummeting by 44% on the previous year. This further muddies the water and adds further concern in relation to seeing an uplift in housebuilding output in 2024/25. Finance, which is a major concern for SME developers, is critical to increasing output and should be a policy focus area. Any levers that can be pulled now to help attract additional public and private capital will help relieve sector-wide pressure and deliver the additional housing that is so desperately needed. As great as it sounds, any form of ‘planning reform’ will undoubtedly take years to implement; Labour needs to be decisive and take immediate action now.”
Bristow believes that Labour must learn that if they want more homes built they must support SME developers.
“In the 1980s, 39% of new homes were being built by SME developers, now it’s just 10%. With plentiful supply of small sites, infill, conversion and refurb opportunities, SME developers aren’t constrained to the availability of large sites like the volume housebuilders – and this is the answer to delivering the 1.5 million homes. We need clear policies to specifically support this vital segment, potentially as widespread as finance, tax, planning and employment.”
Seamus Rocco, CEO of Xapo Bank, a Gibraltar-licensed digital bank, compares the current administration in the US and its anti-crypto stance and how Bitcoin ETFs came to be regardless of the opposition. Rocco says the Republicans are more supportive of crypto, which may help them improve their popularity amongst the electorate.
“In other words, crypto in the US has been politicised. Will crypto become politicised in the UK between the Tory and Labour parties? I honestly don’t know the answer to that, but what I do know is that the UK needs to think about how to make itself attractive to entrepreneurship, innovation, fintech, and crypto to help create an industry and jobs. Both parties would do well to have a clear policy on how they intend to promote the UK as a jurisdiction that wants to do business.”
Co-CEO and co-founder of Loqbox, Tom Eyre, focused on the need for better financial education.
“The new Labour government has a duty to make financial education a priority. Every citizen of the UK directly and indirectly contributes to the economy and vital public services through spending, saving, and paying taxes. It’s time the government paid it back by contributing to building the financial health of every citizen.”
While we have seen little on Starmer’s policy towards Fintechs, part of Labour’s plan is to NOT raise corporate taxes and to focus on investment. It appears that Labour may understand economic growth is vital and that may be the best way to boost revenue.