Innovate Finance Global Summit 2023, showed a a real commitment to making sure digital asset and ESG are not just buzzwords.
The Innovate Finance Global Summit (IFGS) has built up an enviable reputation. It’s a hotbed of thought leadership and fresh ideas, and a real highlight in fintech’s busy calendar.
IFGS 2023, held at the historic Guildhall in the City of London, didn’t disappoint. It brought together industry leaders, including innovators, regulators, and policy makers, for a packed two-day agenda.
The event showed that the UK is striving hard to take that leadership position when it comes to positioning itself as a forward-looking fintech and digital assets hub. The energy in the room was positive, albeit with the knowledge there is some way to go – and we may sweat to get there!
We heard from prominent figures, including the Bank of England’s Sir Jon Cunliffe and Julia Hoggett from the London Stock Exchange (LSE), about their ambitions to make Britain the place to start, grow and scale a fintech.
A highlight for me personally was how digital assets were widely and favourably represented, with an awareness of the need to double down on ESG considerations, ensuring that the industry goes far beyond lip service. There is a real commitment to making sure it’s not just a buzzword, and that companies’ claims are underpinned by real actions. Something we pride ourselves on at Zumo, through our decarbonising crypto work.
Here are three themes that I thought stood out strongly.
The UK is moving forward fast in terms of digital innovation, especially when it comes to digital money and payments.
Sir Jon Cunliffe started his speech, which I would encourage all to absorb, by highlighting how he was concentrating on exploratory use cases for the tokenisation of money. “They offer new ways to record the ownership, and the transferring of ownership, of assets – again including the transfer of money – which we generally call payments.”
The sentiment reflected that of Citi’s Digital Money Symposium, with the bank betting big on digital assets, and it was hugely encouraging to see startups across the Guildhall pitching their ideas for digital assets for asset managers – all with a firm focus on trust and compliance.
ESG was at the forefront of discussions, with companies outlining how they are taking it forward and avoiding greenwashing.
I was very interested to learn that the Financial Conduct Authority (FCA) will be one of the first international regulators taking part in the Global Financial Innovation Network’s (GFIN) first-ever Greenwashing TechSprint – a fantastic initiative, held at exactly the right time as the industry gets to grips with this important issue.
The LSE’s Julia Hoggett went on to talk about growing the green economy and the crucial role of financial markets. The LSE is really playing a leading role in driving things forward. She said there are three things the exchange can do to facilitate the transition to a greener economy: generate mechanisms for capital to flow into the green economy; set standards and rules; and produce data to enable smarter decision-making.
She also noted how the UK has a strong framework in place when it comes to evaluating the net present value of future cash flows adjusted for their impact on the planet, which puts it ahead of many other jurisdictions.
She outlined how the Task Force on Climate-Related Financial Disclosures (TCFD) is now mandatory for listed issuers and owners in the UK. Transition plans are also being introduced for companies to describe how they will achieve a net-zero commitment on a science-based foundation.
Last, but by no means least, the LSE has created a voluntary carbon financing market to support projects that reduce CO2 in the atmosphere, with the goal of producing a real-world KPI of how much carbon has been removed from the atmosphere in 20 years’ time.
There were some very encouraging noises from Andrew Griffith MP, Economic Secretary to the Treasury, when it came to wrapping the industry in innovation-friendly regulation.
“My objective,” he said, “is to ensure the UK is the most innovative, most international, and most business-friendly economy anywhere in the world.” He also announced the much-anticipated next actions to improve UK Open Banking rules and the next steps for its expansion into the data-rich world of Open Finance.
Innovate Finance CEO Janine Hirt went on to issue a rallying call for the sector to work together with the government and regulators to make the coming years “the best chapter yet.”
Looking at crypto specifically, speakers were bullish on the UK’s prospects of developing into a major hub. “The US has the potential to be an important market for crypto, but right now we are not seeing that regulatory clarity we need,” said Coinbase CEO Brian Armstrong, before crediting the UK for being faster moving. “Anything is on the table, including relocating or whatever is necessary.”
Privacy and governance were hot talking points, but there is a real feeling that regulators and policy makers are now more on board.
“We’ve had some great announcements from policy makers,” said Anastasia Kinsky, Associate Director, Forefront Advisers. “I think we can see much healthier conversations around tokenisation and the use of DLT across financial services, and the role of crypto in these innovations.”
“This vision is there, and the frameworks are there,” added Sean Kiernan, Founder of Greengage. “The proof in the pudding will be can we see firms build here, get authorised, and get the right team in place with the necessary support. I think we can, but it won’t be easy and it needs a lot of work.”