Election Results: What it Means for FinTech?

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The Labour Party, under the leadership of Sir Keir Starmer, achieved a landmark victory in the general elections last week.

Their ambitions for supporting FinTech in the UK focus on fostering innovation, enhancing global competitiveness, and ensuring inclusive growth. Key strategies include promoting open banking and open finance, establishing regulatory sandboxes for new financial products, and advancing the development of a central bank digital currency.

Open Banking and Open Finance: Labour supports the continuation and expansion of open banking, which has driven competition and improved access to credit. They plan to work with regulators and industry to develop a roadmap for open finance, aiming to enhance financial wellbeing by giving consumers greater control over their financial data and services.

Regulatory Sandboxes: The party intends to establish new regulatory sandboxes to encourage the development of innovative financial products, particularly those aimed at underserved communities. This approach draws inspiration from successful models in countries like Ghana, India, and the UAE.

Central Bank Digital Currency (CBDC): Labour recognises the potential benefits of a state-backed digital pound to maintain the integrity and sovereignty of the Bank of England and the UK’s monetary system. They support ongoing work by the Bank of England to explore this possibility while addressing concerns related to privacy, financial inclusion, and stability.

Combating Fraud: The party advocates for a coordinated approach to fraud prevention involving government, law enforcement, regulators, financial services firms, and tech companies. This includes regulatory frameworks for tech companies to share data with financial services firms to enhance fraud detection and prevention.

Sustainable Finance: Labour aims to make the UK a global hub for green finance by creating a robust regulatory framework and supporting the financial sector’s role in decarbonising homes and other areas.

Regional Growth and Inclusion: To promote inclusive growth, Labour plans to scale regional financial centres and unlock the potential of the mutuals sector. They also intend to incentivise local government pension schemes to invest in regional fintech companies, fostering growth beyond the traditional hub in London.

Consumer Protection and Financial Inclusion: Strengthening consumer protection is a priority, with plans to regulate the Buy Now Pay Later (BNPL) sector and create a national financial inclusion strategy. They also advocate for longer-term fixed-rate mortgages and other models to increase financial resilience.

These policies reflect Labour’s commitment to maintaining the UK’s leadership in fintech while addressing emerging challenges and ensuring that innovation benefits all sectors of society.

Sarah Kocianski, CEO of FinTech Wales, commented: “We are pleased to see the Labour Party’s commitment to the further development and growth of the fintech industry across the UK. At FinTech Wales, we look forward to working with the new government to ensure Wales’ fintech industry continues to thrive and reach new heights.”