# Tackling Covid-19 and Brexit – fintech innovation is key
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2020-10-23
Category: TECHNOLOGY
Category URL: https://financedigest.com/category/technology
Meta Title: Fintech Innovation in Post-Covid and Post-Brexit UK
Meta Description: Discover how fintech innovation is crucial for the UK's economic recovery post-Covid and post-Brexit. Learn how to capitalise on GovGrant's insights.
URL: https://financedigest.com/tackling-covid-19-and-brexit-fintech-innovation-is-keyhtml

![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/flexibility-8-1736838780605-compressed.jpg)

_By **Luke Hamm,** CEO of GovGrant on Tech Innovation._

Fintech is well capitalised, topical and often an attractive investment option. As the UK attempts its economic rebuild from Covid-19 and simultaneously confronts the challenges of Brexit, innovation in fintech is an important consideration for the UK. Whilst we’ve seen the rise of [challenger banks](https://www.financedigest.com/the-rise-of-challenger-banks.html "challenger banks") in recent years, the need for innovation can’t be placed solely on their shoulders. Traditional institutions and organisations will also have to embrace it if we’re going to [secure the UK’s economic future](https://www.financedigest.com/contactless-payments-the-way-of-the-future-or-security-scare.html "Contactless Payments – The Way of the Future or Security Scare?").

**The state of play**

With the Covid-19 crisis, Brexit has been somewhat overshadowed for UK businesses, but the preparation the UK must do to ensure its [success on the world](https://www.financedigest.com/impact-com-releases-the-partnership-economy-a-new-book-that-guides-businesses-to-success-in-a-digital-world.html "impact.com releases The Partnership Economy, a new book that guides businesses to success in a digital world") stage following December’s deadline remains.

When we [reach the end of the transition period](https://www.financedigest.com/global-tool-holders-market-is-anticipated-to-reach-over-us-1604-5-mn-by-the-end-of-the-projected-period-growing-at-a-cagr-of-5-1-fmi.html "Global Tool Holders Market is anticipated to reach over US$ 1,604.5 Mn by the end of the projected period, growing at a CAGR of 5.1%: FMI"), the UK will be its own island with immediate ties to the EU severed. We will need to compete for [trade deals](https://www.financedigest.com/exclusive-indian-car-makers-propose-tax-cut-on-imports-in-trade-deal-with-britain.html "Exclusive-Indian car makers propose tax cut on imports in trade deal with Britain") and attract foreign investment in our industries, especially if we are going to recover and rebuild the economy in a sustainable way after the pandemic. To do that, we need to be famous for a handful of specialities rather than trying to be famous for everything. London is already considered one of the financial centres of the world, so it’s logical that fintech should be one the sectors of focus, but we must commit to and invest in its development and encourage innovative activity within our own borders if the UK is going to remain a [key player](https://www.financedigest.com/aluminum-cans-market-tremendous-growth-opportunity-trends-with-key-players.html "Aluminum Cans Market Tremendous Growth, Opportunity, Trends With Key Players").

It’s promising that we are seeing a certain level of innovation, mostly being carried out by challenger banks that have [come to prominence over the last few years](https://www.financedigest.com/veterinary-tables-market-rise-to-meet-large-demand-in-coming-years-fact-mr-study.html "Veterinary Tables Market Rise To Meet Large Demand In Coming Years, Fact.MR Study"). According to [GovGrant’s Innovation Nation campaign,](https://www.govgrant.co.uk/innovation-nation-survey/) 87% of fintech SMEs consider their activity to be innovative.

In contrast, recent statistics released by HMRC showed that only 10 companies in the financial and insurance sector were claiming funding they are entitled to through the government’s Patent Box scheme for commercialising IP. These companies show the value of the scheme, attracting £350m of support between them. However, the number of [companies claiming](https://www.financedigest.com/game-company-roblox-enabled-girls-sexual-exploitation-lawsuit-claims.html "Game company Roblox enabled girl’s sexual exploitation, lawsuit claims") relief in this sector was the second lowest overall.Clearly there is a lot of [work to be done to encourage companies to see](https://www.financedigest.com/eu-sees-more-work-ahead-to-implement-russian-oil-price-cap.html "EU sees more work ahead to implement Russian oil price cap") their innovation for what it is – a value creator. Commercialising IP through the use of a patent not only improves their own profit margins, but it also allows them to [claim funding](https://www.financedigest.com/russian-funding-claims-spice-up-italian-election.html "Russian funding claims spice up Italian election") from the Government to invest in further R&D activity. The Patent Box and R&D tax [credit schemes are in place to encourage innovation in UK businesses](https://www.financedigest.com/employee-retention-tax-credit-is-a-lifeline-for-businesses.html "Employee Retention Tax Credit is a lifeline for businesses") by offering cuts in Corporation Tax or tax rebates. Not recognising their own innovation means missing out on a huge [source of funding](https://www.financedigest.com/private-equity-funds-approach-italys-serie-a-to-explore-media-rights-deal-sources.html "Private equity funds approach Italy’s Serie A to explore media rights deal -sources").

**Issues at hand**

![Luke Hamm](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/lh-headshot-oct19-450x300-1736838780396-compressed.jpg)

Luke Hamm

However, to benefit properly and receive what they’re eligible for, [companies need](https://www.financedigest.com/why-companies-need-to-rethink-retirement-tips-for-ensuring-a-happy-life-in-later-years.html "Why companies need to rethink retirement – Tips for ensuring a happy life in later years") further clarification on the purpose of a patent. According to [GovGrant’s Innovation Nation](https://www.govgrant.co.uk/innovation-nation-survey/) campaign, only 16% said the main purpose of a patent was to add commercial value. This is [despite over three quarters](https://www.financedigest.com/maersk-triples-quarterly-profit-despite-lower-container-volumes.html "Maersk triples quarterly profit despite lower container volumes") saying it was important for IP to do so. These businesses are recognising their own innovation, but they are not maximising their IP as an asset because conversations around R&D rarely extend to patents. Even when they do, it is considered too much of a long, arduous and expensive process that should be left to the bigger players who have the [time and money](https://www.financedigest.com/modernisation-of-insurance-technology-saves-invaluable-time-and-money.html "Modernisation of insurance technology saves invaluable time and money") to see it through.

This perception [needs to change](https://www.financedigest.com/a-mindset-change-is-needed-in-the-financial-services-industry.html "A mindset change is needed in the financial services industry"). [Businesses need help in recognising that the reduction in corporation tax](https://www.financedigest.com/what-you-need-to-know-about-tax-savings-for-businesses-in-las-vegas-nv.html "What You Need to Know About Tax Savings for Businesses in Las Vegas NV") available through the Patent Box scheme can act as an invaluable incentive in taking intellectual property seriously and help tap into its commercial value. Most IP will create some residual [value and not recognising this means fintechs](https://www.financedigest.com/fintech-incubation-more-value-than-meets-the-eye.html "FINTECH INCUBATION: MORE VALUE THAN MEETS THE EYE") just aren’t capitalising on their hard work. They need to be driven by how they can improve margins, [sell more and engage better with potential clients and investors](https://www.financedigest.com/russia-bans-western-investors-from-selling-banking-key-energy-stakes.html "Russia bans Western investors from selling banking, key energy stakes"). In the long run, this will [improve profitability](https://www.financedigest.com/efg-international-says-profitability-improved-in-first-nine-months.html "EFG International says profitability improved in first nine months") as well as aide the UK’s recovery from Covid-19 as a whole. [Reforming the patent system](https://www.financedigest.com/french-president-macron-reaffirms-that-pensions-system-reform-is-necessary.html "French President Macron reaffirms that pensions system reform is necessary") and simplifying the application process will also attract more businesses to base themselves in the UK, vital after both Covid-19 and Brexit.

**Looking ahead**

As a second wave seems increasingly likely and with a new lockdown tier system in place, many businesses are fearing uncertainty once again. It’s [important to remember that there are already existing government schemes](https://www.financedigest.com/mickey-mouse-spider-man-super-mario-added-to-russias-parallel-imports-scheme.html "Mickey Mouse, Spider-Man, Super Mario added to Russia’s parallel imports scheme") designed to help companies fund their R&D. The R&D tax credits and Patent Box schemes are ready-made vehicles for distributing cash that will boost [spending on innovation and in turn drive](https://www.financedigest.com/spending-drive-knocks-spotify-shares-after-q1-beat.html "Spending drive knocks Spotify shares after Q1 beat") the UK’s economic recovery by attracting direct foreign investment.

Embracing innovation means embracing the possibility of failure, so it’s not surprising that the financial [sector](https://www.financedigest.com/the-technologies-set-to-boost-the-finance-sector-in-2022.html "The technologies set to boost the finance sector in 2022"), particularly traditional banks, finds it so hard. With attention very much on preserving cashflow during the pandemic, it’s [understandable that R&D slowed](https://www.financedigest.com/lets-get-fiscal-how-to-understand-rd-tax-claim-eligibility.html "Let’s get fiscal – How to understand R&D Tax Claim Eligibility"). But the UK is facing some serious challenges in the [next few months](https://www.financedigest.com/prince-harry-and-meghan-to-visit-britain-next-month.html "Prince Harry and Meghan to visit Britain next month") with Covid-19 recovery and Brexit both on the horizon.

Developing a stronger environment where fintechs are encouraged to innovate drives investment, as well as encouraging development and competition in the sector that will help the UK to remain a [financial centre post Brexit](https://www.financedigest.com/post-brexit-uk-workers-can-have-financial-security.html "Post Brexit – UK workers CAN have financial security"). It’s crucial that businesses and the government alike [put innovation](https://www.financedigest.com/the-e-clinical-solution-market-to-stay-put-based-on-innovations.html "The E Clinical Solution Market To Stay Put Based On Innovations") high on the agenda.


---
This blog is powered by Superblog. Visit https://superblog.ai to know more.
---