Compliance has a “role to play” |
Fintech innovators looking for funding are likely to struggle unless they focus on regulation and compliance, a UK fintech envoy has warned.
Speaking at FinTech North’s Fifth Annual Manchester Conference, Chairman Chris SaysHM Treasury fintech envoy for England, warned of a ‘potential’ crisis for fintech amid UK financial turmoil. It is estimated that as much as £500m has been wiped off the UK stock and bond market by 2022.
“Fintech is potentially in a bit of a crisis at the moment,” Sier said in his welcome address to delegates. “The people who invested in you and flooded the cryptocurrency markets and into the distributed ledger markets are now burned. With quite a lot of money.
“People who invest in capital markets are burned. The valuation of venture capital funds and private equity funds has fallen. They have less money to give away; they fail. So if you want to raise money right now, be prepared to struggle; it is not good.”
Engage in regulation
Despite the bleak outlook, Sier suggests “there is tremendous value out there” and that investors will look for “things that are solid”, especially those “that are demonstrably well managed” and “mitigating risk”.
“So if you’re an exciting fintech that wants to grow but bans regulation, think again,” he said. “If you’re a fintech willing to play the regulator’s game, play the game of making sure your consumers are well protected, there are huge opportunities for you.
“If you’re frothy and bubbly and talk big about your company but don’t talk about how you manage the risks, you’re probably going to struggle right now. Control yourself, control the way you present yourself. Get measured and you’ll find the money because they’re there. But it’s not there for the unlimited growth that comes with some things.”
Sier cited the collapse of cryptocurrency exchange FTX as an example of a failure in both governance and compliance. He added: “Compliance has a role to play and fintechs looking at compliance have a very strong role to play.”
FinTech North 2022
FinTech North’s Manchester 2022 conference took place at the University of Manchester’s Whitworth Hall on 24 November. The hybrid event attracted more than 180 delegates throughout the day and featured 45 speakers. It also attracted 17 companies to the fintech showcase.
Panel discussions spotlight female entrepreneurship, the Manchester fintech scene, as well as research and innovation.
Peter Cunnanedirector of international and national initiatives at Innovate Finance, provided an update on the UK’s fintech status.
While Whitecap Consulting highlighted its work in collaboration with key regional stakeholders for a new report focusing on the fintech ecosystem in Greater Manchester. A full report is planned for release in February 2023.
The final panel of Fintech North addressed the lack of funding for female entrepreneurship. Heather Waters, regional ecosystem manager, natwest, revealed: “Only one in five entrepreneurs are women. The biggest single barrier is access to finance. Less than one percent of VC investment goes to all-female teams.”
FinTech North is also part of FinTech National Networkannounced in 2019. It connects fintech hubs, such as FinTech Scotland, FinTech Wales and FinTech Westand supports financial innovation across the UK.
