While the UK continues to be a leader in the global fintech market, administrative shakeups in the country mean the future of the sector could be heavily impacted. This has somewhat tainted the good news announced by Fiinu as developments may have to be put on hold: it has become the second fintech in recent months to receive a banking license by the Prudential Regulatory Authority (PRA) and the Financial Conduct Authority (FCA).

With the number of open banking users predicted to rise by 22.4 per cent by 2026, Fiinu’s announcement could help develop the technology’s adoption according to Business Insider:

Chart showing open banking users

Fiinu, a UK-based fintech, is set to offer a plug-in overdraft feature, which gives customers access to overdrafts without their needing to switch banks or current accounts. The feature will be available via open banking and will sit alongside customers’ existing bank accounts.

The company approaches overdrafts through a unique underwriting model, which allows it to bring overdraft features to customers who wouldn’t normally be able to access them.

Fiinu has been working with the FCA and PRA for five years to obtain its banking license. Once it’s official, the fintech aims to become the first open banking led interest income banking infrastructure provider, with its technology becoming a bank-independent platform, serving all other UK bank customers.

In addition to the banking license, Fiinu underwent a reverse takeover by Immediate Acquisition Plc. The new company will be named Fiinu Plc: it is now listed on the London Stock Exchange‘s AIM segment and is valued at £53million ($72.9million).

Commenting on the takeover, Dr Marko Sjoblom, Fiinu’s founder, said, “We chose the London Stock Exchange as the UK Government is highly supportive of the fintech industry. Since Brexit, some British companies have chosen New York for their IPO but we are here for long-term. What also makes this step exciting is the start of a new generation of Plugin product opportunities, enabled by the Open Banking Implementation Entity (OBIE) initiative. It has been a vision of mine for a long-time that one day our Bank Independent Overdraft platform will create a new market where unbundled overdrafts will increase financial fairness and freedom for everyone, everywhere.”

UK banking license rollout 

Obtaining a banking license in the UK isn’t easy. The government demands that financial institutions (FIs) demonstrate they have robust systems and that they employ strict compliance and risk management processes. It’s also very critical of FIs that wish to offer crypto-related products.

Revolut is still fighting for a UK banking license, after applying more than a year ago. Regulators are concerned the neobank’s dealings in cryptocurrency could leave it susceptible to fraud and anti-money laundering.

Fiinu’s banking license is the second the UK government has issued in the past month. Towards the end of last month, digital bank Kroo was granted a license based on an application it began in July 2020.

Future fintech uncertainty

The UK has prioritised financial technology in an effort to become a global fintech powerhouse. That’s why Fiinu chose to list on the London Stock Exchange: The firm applauded the UK’s support of fintech. But Prime Minister Boris Johnson‘s planned resignation leaves the future of UK fintech in question. A few big initiatives are in progress at the FCA:

  • Open banking regulation: The UK is still refining open banking, including replacing the OBIE with a new regulator and gathering feedback from stakeholders.
  • Crypto regulation: Earlier this year, Economic Secretary to the Treasury John Glen vowed the UK will also become a crypto powerhouse and said it would allow companies to innovate using digital currencies in a sandbox environment. The country has also promised to become a hub for digital assets.

The UK has put in a lot of work to get to its current, advanced technological state. Banks are eager to earn a UK banking license to jump in on the innovation, and UK regulators seem ready to heavily promote stablecoins and other digital currencies. But the political turmoil currently unfolding in the country could lead to delays and scrapped plans in the fintech sector.