How UK fintech can benefit from ‘The Innovation Pound’ to gain greater global competitive advantage.
Fintech firms are at the cutting edge of R&D development, as financial services firms look to the fintech arena for new technology that can help them manage tactical and strategic issues. These issues include big data, legacy systems, the impact of potential interest rate rises, compliance with regulations (particularly Basle III), and taking advantage of new product launches and price point differentiation.
In 2014 this led to a significant increase in investment in fintech companies. Recent figures by Accenture highlight that investment grew by 136%* in the UK and Ireland – almost twice the rate of investment in similar Silicon Valley companies. As a result the sector is in an ideal position to take advantage of the UK’s competitive tax relief scheme to further bolster its financial position and global growth.
However, more awareness of R&D and innovation funding schemes is still needed as many companies are still not realising they are eligible and that their technology qualifies as R&D, or just how generous the rewards can be, despite being at the forefront of the digital revolution.
Martin Hook, Managing Director of Ayming UK comments:
“HMRC’s latest statistics** show that 76% of R&D claims are made by manufacturing businesses. Whilst manufacturing is an R&D-heavy industry, it is certainly not the only one. The R&D tax schemes are open to all sectors, and although there will be some with more R&D expenditure than others, we would expect to see a wider and more balanced spread across different industries, particularly from fintech. Fundamentally we don’t accept that there are just less innovators in the fintech industry. It doesn’t matter if a company has never claimed, or is already claiming, they must take a collaborative approach and review what they’re entitled to on a regular basis.”