Just before the turn of the century, a renowned Harvard professor published a series of reports on how to power the economy through business “clusters”. These would be geographically clustered businesses that would all feed off of both the collaborative and competitive energy of being in the same place as similar organizations. These reports proved hugely influential, and the UK government of former Prime Minister David Cameron drew up plans to create a new fintech hub in the UK, called ‘Tech City’. London’s Old Street Roundabout was chosen as the location for this exciting new project, and it was quickly dubbed ‘Silicon Roundabout’ in a nod to its aspiration to emulate California’s Silicon Valley.
Now it seems the metaphorical student has become the master – the Silicon Roundabout experiment has worked wonders. Fintech is one of the fastest growing global industries, and in 2020, fintech investment worldwide exceeded $44 billion. Unsurprisingly, the US market still holds the majority at $22 billion, but the UK market has grown to the point where it now represents the second largest share of the global fintech industry.
The UK has established itself as a forward-thinking force to be reckoned with in fintech. Rishi Sunak called on the Royal Mint to produce an NFT, and the Bank of England announced plans to roll out a national digital currency. These would be “stablecoins”, which would differ from cryptocurrencies like Bitcoin in that they would be attached to the national currency. Stablecoins would therefore only rise and fall in price according to the British Pound’s own fluctuations. In contrast, the United States has been slower to act in this market. It is only in the early stages of introducing similar innovations, with President Biden recently directing government agencies to explore this crypto avenue and determine if a US digital currency would be a wise move.
Many policy makers and business leaders in the US are beginning to look to the UK to anticipate the direction in which the fintech industry is heading.
Algbra, a purpose-driven digital banking proposition, is at the forefront of the fintech revolution in the UK. It emerges as an ethical alternative to traditional banking systems, offering users various ways to support charities through the Algbra app. A key aspect of the UK’s vision for the future is sustainability, as highlighted in the government’s multitude of commitments at COP26. If fintech is to be an essential ingredient of this future (as well as recent initiatives to create a net zero future), it is essential that technology remains inclusive and environmentally friendly. Algbra helps ensure this is the case. Through the app, users can track their water and carbon footprint, and Algbra has also taken steps to introduce a sustainable map. Algbra’s partnership with Mastercard is an integral part of this pursuit, having joined the multinational payments company’s Priceless Planet Coalition.
The announcement of this transatlantic partnership signals the UK’s emergence as a central player in the global fintech space. The US can certainly learn from the UK’s digital banking model, which involves open banking and enhanced cybersecurity with a focus on the cloud. The UK’s open banking system requires the UK’s nine largest banks to share their data with licensed start-ups; this facilitates much faster expansion for these small businesses. This was pointed out by Karen Mills, Administrator of the US Small Business Administration for President Obama, who points out that open data and open banking are the foundations of financial and technological innovation.
Zeiad Idris, CEO of Algbra, underlines the importance of this transatlantic relationship for the global progression of fintech: “The UK fintech space is a hugely exciting industry at the moment. As a nation, we continue to show ourselves We can learn a lot from the US market as well, and that’s why Algbra is helping to build this fintech bridge across continents.
NOTE: This article is a contribution and does not necessarily represent the views of IBTimes UK