The UK’s Islamic fintech community could get a much-needed boost from the government as His Majesty’s Treasury has launched a new national hub for fintech named the Centre for Finance, Innovation and Technology (CFIT), enabling fintech firms to benefit from new waves of technological change and innovation— widening consumer choice, cutting costs and increasing efficiency.
According to the Treasury, the CFIT is the first of its kind in the world and is backed by GBP5.5 million (US$6.64 billion) of Treasury and City of London Corporation funding.
The center has been established in response to one of the recommendations included in the Kalifa Review of UK Fintech by Ron Kalifa, the chairman of Network International. During the Budget 2020 presentation, the then-chancellor of the exchequer Rishi Sunak had asked Ron to conduct an independent review to identify priority areas to support the UK’s fintech sector. The review was then formally launched in July 2020 with objectives for supporting the growth and widespread adoption of UK fintech and for maintaining the UK’s global fintech reputation.
Following the review, a report was published to set out a series of proposals for how the UK can build on its existing strengths, create the right framework for continued innovation and support UK fintech firms to scale.
Since this report was published in 2021, the government has been working across industry and regulators to deliver on the recommendations, including introducing a fast-track visa system for fintech scale ups, implementing a scale box under the Financial Conduct Authority allowing innovators to trial new products and reforming its listings regime to maintain the UK’s position as Europe’s dominant capital market hotspot.
“The center will be instrumental in fostering collaboration between industry, academia and policymakers, promoting innovation and turbo-charging the adoption of new technologies for businesses and consumers. I have no doubt that it will enable the UK’s fintech sector to become more competitive and I look forward to seeing the impact it will have across the UK in the weeks, months and years to come,” Ron said.
Despite being a non-Muslim-majority jurisdiction, the UK is often ranked as one of the top domiciles of Islamic fintech companies. As at the 1st March 2023, it is the third-largest Islamic fintech market by number of providers, after Malaysia and Indonesia, with 42 active fintech firms, according to the IFN Islamic Fintech Landscape.
There are six Islamic digital banking start-ups in the UK, more than any other jurisdictions in the world.
With robust regulations, a broad customer base and encouraging government support, the UK remains one of the leading countries for Islamic finance in the region, having the highest value of Shariah compliant assets at around GBP600 million (US$724.09 million).