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Something Spreadsheet This Way Comes: Phillip Hammond Addresses the State of Fintech

By Matthew Dove (Senior Editor)

In the cloakroom at the Guildhall, there’s a statue of the Shakespearean actor Henry Irving. On Tuesday, in the Great Hall just above Henry’s head, Phillip “The Spreadsheet” Hammond addressed the delegates of Innovate Finance regarding the state of fintech.

So, having strut and fret his (half an) hour upon the stage, were the Chancellor’s words strong and stable or mere sound and fury, signifying nothing?

Henry Irving listening patiently below the Chancellor’s feet

Like every master orator (ed – citation needed) Mr Hammond opened with a joke. In fact, just as TFT was preparing to tweet an amusing comparison between Phil’s postponed appearance at the conference (he was booked to speak on Monday) and the delay in Brexit, he beat us to it!

I want to apologise for my “no show” yesterday. It’s perhaps fitting, as I was required in Brexit talks with the opposition, that I had to negotiate a short extension with Charlotte [Crosswell – event organiser] and her team.”

From there, polite chortling subsiding, the theme of Hammond’s speech became clear…

Missing the Call of History and the Avoidance Thereof

Citing that, “the competitive engine of the City of London – governed for centuries from this very hall – has always driven innovation and change” the Chancellor went on to emphasise the need for the UK to remain ahead of the curve.

He argued that the UK’s dominance in finance is evident but it’s not guaranteed. Keeping pace with developments in fintech is one of the ways Hammond believes the City will avoid stagnation in these increasingly fluid and uncertain times.

The Chancellor was therefore keen to highlight the bright side of fintech innovation in Britain;

“The UK is now a fintech powerhouse. Last year, fundraising for UK fintech reached a record £15 billion – representing one in every six pounds invested in fintech around the world.

The UK remains the top destination in Europe for venture capital investment, with almost double the funding of Germany, the next-largest destination. Only the US and China have invested more – and they both have a few more people than we do!

Keeping pace with developments in fintech is one of the ways Hammond believes the City will avoid stagnation in these increasingly fluid and uncertain times.

The sector in the UK now employs over 76,000 people in the UK; Is worth nearly £7bn to the UK economy; And provides financial services to nearly 50% of the population, compared to a global average of just 33%.”

The Right Honourable Gentleman then tempered his jingoism by considering factors that could impede the rise of Fintech Britannia. However, before addressing internal barriers, Hammond chose to focus on the growing foreign threat. He is a Tory after all!

“International competition is growing. In Shanghai and San Francisco, gifted engineers and entrepreneurs are determined to preserve their city’s rankings. In Mumbai, Tel Aviv, Berlin and Paris, talented innovators are building significant challengers. So the question for us is: how to maintain our advantage in fintech, in an increasingly competitive and globalised world?”

Brexit Stage Left
All the world’s a stage for Mr Hammond (including the parts of it which happen to be stages)

Acknowledging the elephant in the room and the silent scream on every delegate’s lips, Hammond went on;

“Of course, I recognise that the immediate key to doing so is to ensure that we ratify the Brexit deal with the European Union – and do it soon! I know that, nearly three years on from the referendum, the ongoing uncertainty is bad for business and that every one of you in this room would have wanted us to have resolved this issue many months ago.

But democracy is a messy business – as Churchill noted, the worst form of government, except for every other form that has even been tried. And no one yet seems to have invented the perfect Brexit algorithm yet!”

Au Contraire, Mr Hammond! Having mined the wealth of expertise available at Innovate Finance, TFT is proud to announce that it has done just that;

(Brexit + Time Machine) + No Referendum = All Just a Bad Dream

For anyone lucky enough to have been stuck down a well for the past six months, the Chancellor offered a brief Brexit recap;

“The Withdrawal Agreement with the EU is finalised. Some changes may be negotiable to the Political Declaration about the future relationship but essentially it’s time for Parliament to make up its mind.

We are reaching out across the House to try and build the majority we need. Which is the right way – indeed the only way – to proceed in a Parliamentary democracy. I’m confident of the good faith of both sides in those discussions and that we will, one way or another, reach a resolution, that will enable the deal to get through Parliament…so we can stop talking about Brexit…and get on with the business of business.”

To Regulate or Not to Regulate, That is the Question…

For those delegates, quite understandably, thinking that Brexit has been used as a ministerial smokescreen to obfuscate a lack of regulatory clarity, Hammond said;

“Our Regulatory Sandbox led the way – and has been copied in dozens of other jurisdictions; Our Open Banking initiative is already dramatically changing the way consumers and small businesses engage with banking…we’ve set up a Regulators’ Pioneer Fund to innovate in other areas of regulation…and the fintech strategy that I launched last year set out actions to make the UK the best place to start and grow a fintech business, including ensuring access to long-term capital for scale-ups. I’m pleased to say that one year on, all the actions in that strategy have now been implemented.”

Unfortunately, this somewhat pat response will do little to allay the concerns of the speakers on the To Regulate or Not to Regulate? A Global Take on Crypto & Digital Assets panel, all of whom (including a representative of the FCA!) agreed that more regulation is needed and soon.

Ben Mason, Joint CEO of Compliancy Services, was especially strident in his belief that growth follows “regulatory certainty” and not the other way around. When he was asked for his final thoughts on regulation in fintech he opined, “Do it now!”

Hammond’s approach appears to be rather more laissez faire, contenting himself to announce the launch of the Fintech Alliance – an easily accessible “digital marketplace” – rather than detailing specific policy. He also sang the praises of Innovate Finance’s schools initiative.

“I’d like to commend the brilliant work of Innovate Finance in supporting our domestic talent pool…including the recently launched “FinTech for Schools” programme, and the fantastic new FinTech Jobs Board.”

“Democracy is a messy business – as Churchill noted, the worst form of government, except for every other form that has even been tried. And no one yet seems to have invented the perfect Brexit algorithm yet!”

Pacts Britannia

Hammond next borrowed a line from his colleague Liam Fox claiming that, as well as posing an existential threat to the UK’s market dominance, international economic powerhouses can also be seen as an opportunity for post-Brexit partnership.

“We’ve already established fintech bridges with Hong Kong, Australia, Singapore, South Korea and China…committing governments and regulators to collaborate in supporting growth and investment in fintech across markets. And we’re already seeing the benefits as fintech firms use the UK as a base to access markets around the world.

In February, we held the first UK-India fintech dialogue, and the Prime Minister has announced the first ever UK-Africa fintech partnership. That partnership includes a dedicated challenge fund to support Nigerian innovators turn their ideas into reality – and I’m delighted to welcome the six winners here to this conference.”


The other picture of British superiority that the man with the little red briefcase wished to paint before his closing remarks was that of the UK as one of “the most cyber-secure jurisdictions in the world.”

In an aside one part Keynesian market philosophy and one part Orwellian nightmare, he added that;

“We are determined to make a competitive advantage out of being one of the safest places to do digital business on the planet.

So we are leveraging the unique capabilities of the state and our world-class signals intelligence communities…through resources like the National Cyber Security Centre, harnessing the techniques of GCHQ to keep businesses safe in Britain’s cyber space.”

To paraphrase the Duke of Wellington, I don’t know what statements like that do to cybercriminals but they frighten the Hell out of me!

Raj Samani, McAfee

So perturbing was this vision of state-lead cyber trade war that it was actually heartening to hear Raj Samani’s response to the Chancellor’s braggadocio. The Chief Scientist at McAfee poo-pooed the idea that there even exists a Cyber Fortress Britain let alone a commercial application for it.

Setting the percentage of GDP lost to cybercrime at around 1.6%, Samani noted that;

“Our failure to address these issues is impacting your growth and it’s impacting your bottom line. And as we had the Chancellor up here earlier, it’s deterring investment into this country. Quite frankly, globally, we aren’t doing well enough.”

Red Flags and Horseless Carriages

HammondThe question of the day was; what comes first growth or regulation? The chicken or the egg? The Chancellor is in the former camp, happy to wait and see, arguing that early interference by the FCA et al could stifle innovation. He referenced the advent of the automobile for a flourish of historical context;

“There’s no point innovators pushing the cutting edge if regulators can’t keep up – there’s no point in us having the digital equivalent of requiring a man with a red flag to walk in front of a new-fangled horseless carriage.”

The fintechs themselves, on the other hand (here voiced again by Ben Mason) are crying out for a little adult supervision, “just let us know what we need to do!”

The question of the day was; what comes first growth or regulation? The chicken or the egg?

To stretch Mr Hammond’s analogy a little further than is perhaps strictly necessary, fintechs begging to be regulated is a little like putting the cart before the horse. But that’s where we are apparently. Not that the Chancellor seems unduly bothered.

“I look around this ancient hall and see not the past, but the future: an industry that is buzzing with ideas, energy and optimism.”

Optimistic for sure but for how long? As Mr Hammond took his leave, a quiet chorus of doubt was growing. The shuffling of chairs in the interval that followed (the room emptied in fairness) disguised the faintest echo of the great Henry Irving as Hamlet breathing new life into old words, “enterprises of great pith and moment with this regard their currents turn awry, and lose the name of action.”


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