An independent review led by Ron Kalifa, the chair of Network International (a fast-growing payments company) in February 2021 sets out recommendations for the sector, which include a new FinTech scale-up visa stream, a ‘scale box’ for growing firms and changes to UK listings rules.2
Liz Truss, the current Secretary of State for International Trade, tweeted her support for this review on 26 February 2021 remarking that the UK is a global FinTech hub and epicentre of financial innovation. She promised that the government will work with the FinTech sector to seize trade opportunities and open up markets around the world.
The Kalifa recommendations find that “The UK should introduce measured, targeted and controlled changes to its immigration system that build on existing visa schemes to deliver innovation, flexibility and resilience.” Its Recommendation 2 is to “Create a new visa stream to enhance access to international talent for FinTech scale-ups”3
It recommends that the 2021 immigration architecture should provide on the one hand, a ‘FinTech Scale-up Stream’ within the Global Talent (or proposed Unsponsored) route which will support scale-up growth and allow globally mobile talent via a job offer at the required skills level (RQF6) from a recognised UK FinTech scale-up which would “automatically qualify for the Fintech Scale Up Stream under either the Global Talent, or proposed Unsponsored Route, without the need for third party endorsement. This would be a world-leading offering and would position the UK as the top destination for the most globally talented in the sector.”
On the other hand, across the immigration system, it recommends the UK should actively seek to attract job creators, by introducing enhancements and ‘reach out’ strategies to support FinTech scale-up growth via the Skilled Worker (Sponsored route) which encourages inward investment.
This would entail:
- promoting this bespoke visa offering and attract FinTech talent to the UK
- support for FinTech firms to engage with the immigration system
- a progressive approach to fees and charges (e.g. Immigration Skills Charge), noting the impact on small and high growth firms
- ongoing engagement with the FinTech sector to understand its needs and gaps and, most significantly,
- practical improvements to the Skilled Worker Route to reduce processing times to below 72 hours in most cases; avoiding a new immigration application for changing between employers; the ability to change employers when a Certificate of Sponsorship is issued, rather than awaiting the outcome of the visa application.
The Kalifa report identifies the unclear messaging Brexit entails and the need for the UK to stay ahead of other European hubs. “In order to sustain its global dominance in fintech, the UK needs to strengthen its position on immigration or risk a significant shortage in human capital.”
Whilst labour shortages are likely in many lower skilled occupations following the departure of 1.3 million non-UK nationals from the UK since 20194 and there will have been a brain drain in some sectors, FinTech appears to continue to grow across the whole of the UK driven by a firm commitment from the government to provide a raft of support to the sector as demonstrated by the FinTech Sector Strategy published in 2018.5 To enable FinTech companies to understand and to assist them with any regulatory obstacles, the strategy also includes two flagship projects by the FCA, i.e. the Innovation Hub and the Regulatory Sandbox.
In his capacity as an entrepreneur at Worldpay, Ron Kalifa said: “The UK has emerged as the dominant force of technology-driven innovation. Together with the right regulation, policies and business environment, it has enabled Worldpay to grow from a UK start-up into a global market leader in FinTech worth over $35bn. FinTech has never been this exciting and by continuing to partner with the government, it will lead the way in creating global opportunities for UK consumers and businesses.”
Having examined the proposed improvements to UK’s immigration offer, it is indeed clear that STEM subjects are very much favoured by the current government in many parts of the immigration system.
The current Immigration offer favours Tech within the Skilled Worker route (formerly Tier 2 General) already by offering salary reductions of as much as 20% from the going rate that would otherwise be payable to a sponsored worker where the proposed overseas employee possesses a PhD in a STEM subject relevant to the job. This means, for example, that a software engineer who falls within the Standard Occupational Code6 2136 and who would otherwise need to be paid £33,300 (the going rate) could be paid £26,640 instead, if they have a PhD in a Science, Technology, Engineering or Mathematics subject that is relevant to their job.
Under the sponsored Skilled Worker route, a Sponsor employer must pay the higher of the market rate for the job role or the standard minimum for a skilled worker role which is now £25,600. All jobs under SOC 2135 such as IT business analysts, architects and systems designers including cybersecurity professionals are deemed Shortage Occupations throughout the UK and are thus also eligible to be paid the higher of a salary reduction of 20% of the going rate (or a bare minimum of £20,480 per annum).
Moreover, the current Global Talent visa route which identifies (in addition to many other fields) FinTech and cybersecurity among its specialist Technology based “leader” or “potential leader” applicants, requires endorsement from Tech Nation.
The Global Talent visa involves a two-stage process of endorsement from an endorsing body approved by the government followed by a visa application. Tech Nation assesses the endorsement application and decides whether one meets the eligibility criteria to apply for the Global Talent visa.
If Tech Nation approves an endorsement an email will be sent from the Home Office with a copy of the endorsement letter. These are then submitted as a part of the visa application. Tech Nation assesses not only technical skills but also business expertise in the Digital Technology field. Thus, Global Talent applications are welcomed by, for example:
- DevOps / SysOps engineers
- Principal software engineers/developers
- Artificial Intelligence, Natural Language Processing and Machine Learning experts (AI, NLP, ML)
- Cybersecurity experts
- Hardware engineers
- Experienced front-end developers
- Operating systems engineers
- Experienced Mobile App developers
- Experienced back end developers leading development of or contributing heavily to major new technologies or open source projects (for example, blockchain, Scala, Golang, Elasticsearch and so on)
- CTO or VP engineering experience managing teams of in-house employees at a growing digital business
- Experience of leading substantial VC investment over £25m GBP
- Experience as a commercial / business lead (P&L, growth, sales and distribution strategy) in a digital business
- Experience of expanding or growing a significant product-led digital technology business
- Sector-specific experience for example, payment infrastructure in FinTech / international expansion in EdTech and so on.
- Solution sales experts
- Experienced Product Manager
- SaaS or enterprise sales leadership for digital services
- Solution sales skills performed for a growing B2B digital business (i.e. not big-company experience)
- Performance marketing experts, performed in house for digital businesses
- Experienced and senior VC or PE analysts with track records of leading investments in digital businesses
- Experience as C Suite in a SMEs + (CEO, CMO, CIO) or head of operations for a digital business
Furthermore, other visas such as the new Graduate visa from 1 July 2021 for international students completing a degree will be unsponsored, meaning applicants will not need a job offer to apply for the route. There will be no minimum salary requirements nor caps on numbers. Graduates on the route will be able to work flexibly, switch jobs and develop their career in FinTech as well as in any other field. “As part of the route, highly skilled migrants with a job offer from a recognised high-growth firm will qualify for a visa without the need for sponsorship or third-party endorsement”.7
The Start-up or Innovator visas which did not at first transpire to be realistic for many, could nevertheless be an attractive proposition for the FinTech industry due to the possibilities for scaling up. Whilst the Start-up do not require an initial investment of funds, the follow-on Innovator route requires only a £50,000 investment (one quarter of the requirement for its predecessor, the Tier 1 Entrepreneur visa). Both Start-up and Innovator visas need a two-stage process with support from incubators or endorsers who may generally seek a stake in return for endorsement and who remain involved in reviews throughout the visa journey. Approved endorsing bodies for the FinTech sector include Level 39, Founders Factory, Start up Giants plc and Innovate Britain. Those involved in high-growth industries such as FinTech will be more readily able to meet the conditions of viable, scalable and innovative business that these routes require.
Innovate Finance’s report Supporting UK Fintech: Accessing a Global Talent Pool8 noted that only 58% of the UK FinTech workforce consisted of UK nationals and 42% of the FinTech work force was from overseas (28% were EEA nationals and 14% from outside the EEA). The report predicts continued growth in the FinTech sector between now and 2030 and that it will thus need 33,500 migrants from the EEA.
UK FinTech – The State of the Nation policy document records: “The UK remains Europe’s best destination for FinTech investment and the increasing levels of later stage growth capital being deployed suggest the industry is maturing at an unprecedented rate globally. The success of the UK’s FinTech sector proves that there is no better place to innovate and invest in the future of financial services. The UK’s diverse FinTech talent, connectivity and capability combined with the government’s commitment to ensuring the continued growth of the industry sets it apart from other financial services hubs”
Chancellor of the Exchequer, Rishi Sunak, plans to make the UK the most open and dynamic place in the world to operate a financial services business and provide a competitive edge over other leading FinTech hubs. It is likely therefore the UK government will take up most of the Kalifa recommendations including:
- introducing a new ‘FinTech scale-up’ visa route for specialists
- implementing a ‘scale box’ to provide regulatory support
- improving UK listings rules
- creating a £1 billion-pound FinTech ‘growth fund’
- establishing a private sector-led Centre for Finance, Innovation and Technology to support national coordination and growth in FinTech across the UK
In 2020, investment into UK FinTech stood at $4.1 billion; this is more than the next four European countries combined.9
Despite all the current challenges, the future will be bright for a country eager to attract the brightest and the best from across the globe as a part of its reconstruction. Many opportunities exist for the astute and the innovative, while traditional banking also accepts the need to align its offer mindful of the growth of FinTech.