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Mishcon Academy: Digital Sessions - Delivering a digital revolution powerhouse - Interview with Ron Kalifa

Posted on 18 May 2021

In this session Ron Kalifa OBE discussed with Legal Director Miles Geffin, the high level themes identified in The Kalifa Review of UK FinTech, the Government's response to the Review and the recommendations contained in Mishcon de Reya's report 'A blueprint for an entrepreneurial technology driven economy'.

The key themes from the discussion include:

  • How collaboration by all stakeholders is key to delivering the Government's tech strategic plan
  • Unlocking institutional investment will drive transformative growth across the tech sector
  • Bridging the UK tech skills gap is imperative to deliver the social and economic benefits of a tech driven economy.

In July 2020, Ron was appointed by the UK Government to lead an independent FinTech Strategic Review. The Kalifa Review was published on 26 February 2021 and highlights the opportunity for the UK to create highly skilled tech jobs, boosting trade and extending the UK's competitive edge over other leading FinTech hubs.

Ron was CEO of Worldpay Group Plc from 2002 to 2013 and then continued as Vice Chairman until 2020. He is the Chairman of  FutureLearn, an EdTech platform. He is a Non-Executive Director of the Court of Directors to the Bank of England. He joined the England & Wales Cricket Board as a Non-Executive Director in November 2020 and sits on The Hundred Board. He is also a member of the Council of Imperial College London.

We will be hosting a series of events examining a number of the themes identified in our Report, namely:

Miles Geffin

Welcome and thank you for joining us today for this Mishcon Academy Digital Session, on Delivering a Digital Revolution Powerhouse. 

I’m absolutely delighted today to be joined by Ron Kalifa OBE.  Ron has had a long and distinguished career in banking and FinTech.  He was the CEO and later the Vice Chairman and Board Director of World Pay.   Amongst other appointments, Ron is the Chairman of Future Learn, the EdTech Platform; he’s a Non-Executive Director to the Bank of England’s Course of Directors and a Member of the Council of Imperial College.  In July last year, he was invited by the Chancellor of the Exchequer to lead an independent FinTech strategic review.  That review was published in February of this year.  Ron, welcome and thank you for joining us today. 

The Kalifa Review identifies a number of areas of strategic priority to support the UK’s FinTech sector.  Just so we’re clear, are the review’s recommendations specific only to the FinTech sector or do they have broader applicability across the wider financial services and tech sectors?

Ron Kalifa

The proposals that I put forward in the review very much apply to wider financial services and the reason for that is because it’s no longer the case that there is a clear distinction between FinTech and let’s call it the traditional financial sector and in fact, when I speak to the largest financial institutions in the country, the CEOs there, they often refer to themselves as a FinTech.  Which is a sort of a laughable thought a few years ago, but it just shows how they’re thinking about it.  I think it’s imperative that traditional players such – as much as the new ones – embrace and lead this, this technological revolution. 

Miles Geffin

The response from the review’s recommendations which you’ve touched on, from FinTech and from the wider tech and financial services sectors, has been very positive.  And to some extent, the ball is now in the Government’s court.  In terms of the response from Government, what are you expecting?

Ron Kalifa

The Chancellor basically confirmed that the Government will action on a number of the recommendations that we’ve put forward.  Also, he talked about the fact that we want to ensure that the UK remains at the cutting edge of digitising financial services.  The Government also committed to consulting on a number of changings to the listing rules, in order to attract more IPOs here to the UK.  And finally, I’m really pleased that both the Chancellor and the Economic Secretary have backed the proposal to create a Centre for Finance, Innovation and Technology.  CFIT, for short, is an important recommendation from the review and it represents a broader vision for FinTech.  CFIT is about combining the UK’s strengths in FinTech in tech and in finance, to develop a platform that I think very few will be able to compete with. 

Miles Geffin

There was a call for building a public/private coordination to ensure strategic focus and an official mandate from Government to pursue it.  Clearly, that mandate has been provided.  I’m interested to know what you think were the barriers in the past to that public/private coordination. 

Ron Kalifa

This is very much to do with the proposal to establish CFIT, the Centre of Finance, Innovation and Technology.  How do we accelerate growth in areas such as digital ID, ESG, data, etcetera?  I think the way that we’ll try and do it will be through research, through thought leadership and by identifying and addressing barriers to FinTech’s scale and adoption.  You know, the reality is that we don’t have a problem in the UK in terms of start-ups.  The big challenge is actually scale-ups.  How do you get businesses that have got the seeds of ideas, to really go to the next level so that we have more jobs created; we have more innovation; we have a levelling up agenda; we have more IPOs that come out of the UK and that’s essentially the principle around it. 

Miles Geffin

What’s been extraordinary during the pandemic, is the extent from which we’ve seen state intervention.  Do you expect the rate of state intervention in the FinTech and broader tech sector now to increase or do you think the state is going to draw back?

Ron Kalifa

I think Government’s role is principally about convening.  It’s about, you know, moving the barriers away.  I think less is more in terms of the Government.  Government need to let private sector get on with it but they need to facilitate it; they need to encourage it; they need to convene and make sure that the barriers that do exist, are out of the way. 

Miles Geffin

What do you see are the risks to the UK’s future progress, prosperity and position on the world stage, if we don’t get to grips with this challenge and deliver on our strategy?

Ron Kalifa

We identify you know, three threats if you like, in the review.  We talked about Brexit, we talked about Covid, we talked about international competition and the UK is a leader in this sector.  But it’s really important that we don’t become complacent.  So, without additional action, I think our 10% global market share could be eroded. 

Miles Geffin

You mention in the review the focus on three threats.  If we start with international competition, let’s take Singapore as an example.  It has executed its strategic tech strategy and it’s become a regional and global hub for tech.  How far behind the curve do you think the UK is in executing its strategic tech strategy?

Ron Kalifa

In many ways, the US has stolen a march in terms of technology companies.  Singapore has declared that its goal is to be an international hub and a regional leader in FinTech innovation.  I think there’s still an opportunity, a key opportunity for us in the UK, to play in the FinTech space.  We’ve got strong heritage and strong legacy in terms of financial services and if you truly believe, as I do, that FinTech is the future of financial services, then there’s everything to play for. 

Miles Geffin

Assuming, that we deliver through a public/private partnership, if you like, how long do you think it’s going to take us to get ahead of the game in terms of becoming established regional, global, global regional players?

Ron Kalifa

Supporting export growth was a key theme in the review.  So, whilst the UK has a strong environment for start-ups, there is always a risk that FinTechs looking for scale may see the UK market as limited, based on its size.  So, I think it’s important that the UK can position itself as a springboard for international expansion.  I think that’s the way to characterise it and that expansion is often vital to FinTechs who are facing global competition from not only FinTechs in other jurisdictions but also the big tech companies. 

Miles Geffin

Brexit is identified as a clear threat.  It’s created uncertainty and additional cost for business.  How can the drag on the UK FinTech and broad Tech Sector in terms of the competitiveness of those sectors caused by Brexit, be ameliorated?

Ron Kalifa

So, we’ve identified a number of ways in which the threat caused by Brexit can be reversed.  The first is around attracting international talent and the second is on regulation and standards setting.  When it comes to talent, there’s no doubt that Brexit has made accessing international talent harder.  But no jurisdiction has got their approach to attracting FinTech talent exactly right here.  So, we’ve got an opportunity and we’re perfectly poised to lead global innovation in this space and position ourselves ahead of our competitors.  Following our departure from the EU, we’ve gained greater powers to basically remodel our regulatory framework and you know, we must take advantage of this to ensure that we can now support scale and adoption.  I think right now we’re in a relatively unique position to deliver an ambitious digital finance package that can set the standard for the rest of the world. 

Miles Geffin

In the review, there are three main opportunities: job creation, increased trade and improved social inclusion.  The opportunities for tech-based job creation are enormous.  However, there has long been a significant tech skills gap in the UK and that’s going to take time to bridge.  Is that a realistic policy, bearing in mind how we may have arrived at Brexit?

Ron Kalifa

So, the new fast-track system will help FinTechs today by maintaining access to overseas talent, to be a global leader.  We get all of that.  But we still need to address at the core, the domestic talent pipeline.  That’s at the heart of your question.  And by improving our own talent pipeline we’ll create a more sustainable model and reliance on overseas talent should decline.  The second initiative or recommendation was to build a pipeline of talent by supporting scale-ups to offer embedded work placements to help further education and higher education students.  This is, I think, the huge opportunity to align the future skills needed for growth with education. 

Miles Geffin

One of the issues is around clustering and networking of tech hubs and the review talks about this as extremely important in terms of driving the sector.  But what I’m interested in knowing from you is whether you think that can be centrally or locally planned and how do you give that opportunity of upskilling or re-training to people who are not able to get to the hub locations?

Ron Kalifa

The success story is not about London but it has been in terms of FinTech but it’s been spread across the UK in clusters.  Clusters are where financial services, technology expertise, STEM skills, academia and investment capital are present.  And to support their continued growth and foster these specialist capabilities and enhance the national connectivity, we’ve identified 10 clusters that are producing more consistently and they need to produce more consistent and targeted three-year FinTech strategies.  That’s the way that we’ve tried to tackle it.  I think it’s a vital part if the UK is to play as UK Plc. 

Miles Geffin

We have a pretty high rate in the UK of digitally-excluded members of society.  Do we need a Biden-esque, digital infrastructure programme to run concurrently with the industrial tech strategy, to be able to deliver the strategy?

Ron Kalifa

Digital exclusion is a problem in the UK and is something that we’re going to need to be cognisant of as we go forward.  Access is important but I’m not sure it’s an infrastructure package that we need to deliver equality of tech opportunities across the UK.  Not everyone’s got the ability to use the internet and online services.  I think we need to be focusing on how we improve the skills of our population and that needs to be a national effort that requires investment from both the public and the private sector. 

Miles Geffin

I want to look at another very important stream of recommendations that came out of the review around unlocking institutional capital and one of the recommendations was the creation of a £1 billion FinTech Growth Hub.  A very clear message that we’re hearing is that there are very significant amounts of institutional capital available to invest in UK VC funds.  The issue is that it’s coming from overseas institutional investors and is going back out to those investors when there’s realisation.  So, my question is, do we need a radical shake-up of the situation here permitting UK institutional investors in the tech sector?

Ron Kalifa

It was a surprise to me that through the work on the review that UK FinTech, insofar as domestic capital input is concerned, is a relatively underserved investment opportunity.  2019 figures, I think it was, show that 26% of the investment came from domestic sources.  Not only does that create difficulty for a firm looking to access finance, it also represents I think a missed opportunity for UK investors.  So, that’s why we’ve recommended this £1 billion growth fund.  The fund would be market-led.  It should be financed by domestic, domestic institutional capital.  It would be modelled on the business growth front but focused solely on the sector and it provides a viable and focused solution for facilitating new productive investment into UK FinTech. 

Miles Geffin

So, it’s almost like opening a crack in the door? Land this and then let’s see where we get to?

Ron Kalifa

Exactly, exactly.  Because with that you can create indices.  With that you can create better hubs and you can just have an ecosystem that can work with. 

Miles Geffin

UK Tech Sector is in good health and it’s fared well during the pandemic, growing jobs and attracting plenty of investment.  Can we be confident about the sector or are there reasons to be concerned?

Ron Kalifa

We have a lot to be proud of.  A lot to be proud of.  In terms of where we are, our market share, the history, the legacy that we’ve built.  But we have to take action.  Other markets and other countries are watching what we do and when I’ve asked many in other jurisdictions, what is it they’re doing, they have a very simply answer.  They say, we look at what you’re doing in the UK and we copy it.  I think we’re now in a place where we have to ensure that we collectively work together and the prize is about jobs and it’s about the future of the sector, the financial services, which is at the cornerstone of the UK.  We’re known for that and as I said, right at the beginning, the future of financial services is about FinTech.  So, I’m very optimistic and very hopeful because I think we’re going to get there. 

Miles Geffin

It’s good to end on a very optimistic message.  And Ron, thank you, thank you so much for your time today. 

The Mishcon Academy Digital Sessions.  To access advice for businesses that is regularly updated, please visit mishcon.com

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