On 26 February, the long-awaited Kalifa Review of the UK fintech sector landed to great fanfare. Authored by former Worldpay boss Ron Kalifa, the report was applauded for its lengthy focus on how the government could aid the UK’s crown jewel in the years to come.
However, some parts of the Treasury-commissioned review, or indeed, lack thereof, caused others to question whether the 106-page report had been truly comprehensive.
Some of the UK’s most prominent target areas for businesses, such as diversity and inclusion for minority groups and the growing climate crisis, went largely untouched. Other select recommendations, such as on competition, were criticised as potentially unachievable.
A missed opportunity
Though the Kalifa Review “notes with concern the ongoing diversity and inclusivity challenges within UK fintech”, its three proposed solutions to tackle these issues focused on a broad-brush approach through upskilling, recruiting foreign talent and internships.
The terms ‘Black’, ‘ethnicity’, ‘BAME’ and ‘female’ were not mentioned at all in the landmark review, while ‘women’ was mentioned only once in reference to the name of an existing industry accreditation.
In the most recent data available, accountancy firm EY’s 2019 UK fintech census showed less than 30% of the sector’s workforce are women. At a senior level, only a quarter of fintech companies have at least one female co-founder.
The statistics are even less visible for the sector’s ethnic diversity, with no research having been published on the topic — though in the wider technology industry, a 2020 report by venture capital firm Atomico showed just 0.9% of founders in Europe are Black.
“It’s critical,” Andrei Brasoveanu, a partner at Monzo investor Accel, told Fintech Files. “Unfortunately in the financial sector, it’s a sector that has historically lacked much diversity… and that’s something we all need to go home and work on.”
Imran Gulamhuseinwala, who heads up the Open Banking Implementation Entity, said that while the report was largely targeted at what the government can do to help fintech, it “perhaps missed an opportunity to talk to the sector”.
“If you’re a citizen, you should have access to financial services. And if you’re providing financial services, you need to reflect your customer base,” Gulamhuseinwala said in a virtual interview. “It’s kind of as obvious as that.”
The climate crisis has been an issue of prominence both for the government and wider financial services for some time now, with the environmental summit COP26 on the horizon in Glasgow this winter.
While the Kalifa Review mentioned the need for governments and regulators to better use fintech to meet their own ESG requirements, scant attention was paid to how fintech firms should prioritise climate and sustainability themselves.
Louise Brett, head of fintech at accountancy firm Deloitte which co-authored one of the review’s chapters, said that while climate was “not called out very explicitly, or explicitly at all in the report”, the environment underpinned much of what its recommendations were driving towards.
“All the consequences of those areas of focus have to include climate,” Brett said in an interview. “It cannot be ignored and should be brought to the centre. As they’re talking about innovation, the innovation should be around reducing the impact on the planet, as well as serving SMEs and citizens with better access to finance.”
One section of the report said the Competition and Markets Authority should adopt “more flexibility in the assessment of mergers and investments for fast-growing markets such as fintech”.
It has been argued that asking a regulator to provide a light-touch approach to a specific sector, or even to high-growth companies in general, would be hard to achieve. Amazon’s famed investment in tech firm Deliveroo was only approved last year due to the latter’s failing finances.
Gulamhuseinwala, who is appointed by the CMA as a trustee of the OBIE, said “it did feel like a little bit of a throwaway comment, or at least one that was debated and added at the last minute”.
“It wasn’t entirely clear to me that the comment couldn’t cut both ways: in the sense that M&A activity, if it’s allowed to go through, can just as easily take out a high-growth scale-up, whereas actually, it may be better if the M&A activity were blocked and it stayed independent for longer,” Gulamhuseinwala said. “So I didn’t fully follow the logic of the recommendation.”
Nick Lee, head of regulatory and government affairs at fintech bank OakNorth, said right now there was “a chance” for regulators such as the CMA to explore how they can help companies grow.
“The reality is in the UK we’re great at establishing businesses,” Lee said in an interview. “But sometimes we don’t always have the best track record in helping them scale up.”
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To contact the author of this story with feedback or news, email Emily Nicolle