In the UK, polls indicate that Labour is the clear front-runner for the upcoming general election, which might happen in a few months. Investors, market watchers, and fintech professionals have been closely examining their policy output for clues about their objectives and the potential implications for the UK fintech industry, as well as globally, of a Labour triumph.

The fintech sector, in my opinion, has been waiting for some leadership—or at the very least, a clear direction—about what the UK fintech landscape would entail in five years. All of the information in Labour's paper, "Financing growth: Labour's plan for financial services," is qualified, risk-averse, hedged, and lacks a clear timeline. Even after reading this research from cover to cover, you won't know exactly what the financial services industry would look like in the first year of a Labour government.

Compliance officers may be concerned if they want to follow the law's current requirements and be proactive and comprehensive.

Nonetheless, a recurring theme among the report's six main objectives is the mention of changing regulations to make the system more user-friendly and better while simultaneously providing consumers with regulatory certainty that is more in line with modern technology.

An "escalating dissonance"

At an industry gathering in Northern Ireland earlier this year, Paysafe's chief risk and compliance officer Richard Swales was reported in the Irish Independent as stating that there is a "growing dissonance" in regulatory approaches between Europe and the UK.

This could lead to a complicated and frequently repeated compliance need for businesses like Paysafe that operate in both markets. This is a crucial theme in Labour's report, emphasizing the need to try and collaborate more on regulatory concerns with partners abroad, particularly the European Union.

This caught my attention because I had mentioned "glocalization" as one of the major fintech trends in a FinTech Futures video that was released last year. Glocalization is the concept that, even though technology is omnipresent, it must be tailored to the unique regulatory requirements of each jurisdiction in which it is intended to operate, resulting in a fragmented business model.

That gets us to the elephant in the room, which is Brexit. The study places a strong emphasis on Labour's decision not to pursue EU reunification, emphasizing its political significance with bold lettering. Careful observers, however, will point out that this raises concerns about the specifics of "deepening cooperation," particularly in relation to the Regulatory Innovation Office—a mysterious promised organization.

Reading the study allows us to make comparisons between the UK and other fintech hubs, such as Dublin. Dublin's tax regulations have made it a desirable destination for international digital companies, and as a result, a corresponding payments sector has sprung up around it.

A chance for innovative, enterprising businesses in the UK fintech

It doesn't need to be said again how difficult the last two years have been for the fintech industry. Flotations have been dropping, and Omdia's neobank activity tracking data shows a significant decline in UK fundraising and deal volumes. Labour must find a solution to this regulatory challenge if it hopes to fulfill its declared goal of restoring the UK to its position as a fintech leader. This includes not only concentrating on London but also creating fintech-friendly settings in all regions.

More than anything else, uncertainty will be the biggest obstacle facing the UK. Fintech entrepreneurs, investors, and customers will all become discouraged and turn away in the face of uncertainty. In the meantime, nations like Ireland are solidifying their dominance in the fintech industry.

If the situation does not quickly improve, all of the issues that make it difficult for firms to operate in both the UK and the EU may simply lead to enterprises leaving the UK altogether. In fact, this emphasizes how important it is that fintech companies conduct their own research in this field. As crucial as politicians are, there doesn't seem to be much upside to depending on them to chart the course for UK fintech going forward.

Innovative, enterprising businesses have a chance to dominate the UK fintech space and reshape the industry in ways that would be challenging to achieve abroad. The sector has to return to a more traditional kind of entrepreneurialism if political parties are unwilling to take advantage of the current situation and present a bold vision for the future.