Judging by the recent report by the World Economic Forum that points out that the worldwide $2 trillion funding hole for small businesses could be closed by the fintech industry, if it was given the chance to power private enterprises globally. However, despite that fintech is working miracles for economies such as the U.K.’s, the U.S. is undermining this industry at every turn.
Learning from the UK
While occasional good moves can be seen in the U.S., it keeps ignoring its strengths and fails in building a good environment for fintech companies. Several things that have been done in the U.K. could be replicated in the U.S. to help this sector evolve and grow.
Regulation, when implemented properly, is good for proper growth of fintech. Instead the U.S.’s fragmented regulatory sector only creates confusion, especially in the payment sector. The U.K.’s regulation is efficient and clear, as well as open for future collaborative reform.
The process of licensing a money-serving business needs to be simplified. The U.S. is set up in such a way that getting a license in one state makes it valid in that state alone, while the EU has a system that allows licensing rights issued in London to be “passported”, and be valid in any other city within the EU.
The fintech industry also needs government support to function and grow properly, and while in Europe that support exists, in the U.S. there is currently significant distrust between technology companies and the government, as well as the issue of a more decentralized political system.
Good for Business
The U.S., which keeps lagging behind other countries when it comes to the creation of good conditions for the growth and development of fintech, needs to take steps to support the industry as investor interest will not last forever. In other words the U.S. needs to realize that Fintech is one of the elements that help small businesses flourish, and those enterprises are the lifeblood of all economies.