Chancellor right to push drive for innovation – but is it enough?

It is great to see the Autumn Statement include new directions and a desire for driving innovation in the UK. The UK government has begun to realise that it needs to help drive its cities forward to become world leaders in technological development. Chancellor Philip Hammond announced yesterday that £400m has been put aside to provide up to £1bn of additional funding for SME growth through the British Business Bank. This may support a small number of growing tech firms, but is unlikely to make a significant difference to the industry as a whole.

Commendable as it is, this is a drop in the ocean compared with the financing needs of an industry that is expected to fill the government’s coffers for years to come. The headline figure certainly feels large to the consumer, but will only enable a handful of firms to go through an extra round of funding. With large fintechs often collecting tens of millions of pounds per round during their beta development phase, this level of investment will not make any real change.

The announced investment in 5G networks carries the same headline figure of £1bn. With the typical infrastructure costs of connecting fibre across the UK, this may help a narrow geographical area, but will leave the majority of customers currently underserved by the mainstream internet providers with poor connectivity. Tax breaks or incentives to innovative telco providers or alternative methods of providing fast internet would go a long way, and we hope that the government builds on this announcement further in the Spring Statement. With the finance industry fast joining retail in its mass exodus from the high street to its migration online, country-wide fibre and 5G coverage is going to be crucial for supporting these industries in the future.

Financial services providers of the future are building demand-heavy innovation into their products. Ability to interact with your bank seamlessly is critical to building cutting edge products and live connection to your account, but live connectivity, video support and interaction with customer services cannot be done over slow networks.