New research on the FinTech sector calls to mind an old but useful saw: Necessity is the mother of invention. Calls for funding for research and innovation in the sector are perhaps a little shrill. If the spirit of innovation is as strong as some make out, FinTechs will find their way.
It’s certainly the case, for example, that those of us facilitating loans to small and medium-sized companies have to be more selective in choosing market niches than before – that’s innovation based on research.
Fintech groups have called for more research and innovation (R&I) support to sustain the UK financial services sector’s world-leading position.
A report by Fintech Scotland and Fintech Wales warns global comparisons show there is a need to act now to protect the UK’s vital industries in the face of stiff competition from the rest of the world.
The report warns that (R&I) in financial services and subsequently fintech is less mature than in other economic sectors, which could be an issue as the UK attempts to adapt to the post-Brexit and post-pandemic world.
“The necessary mechanisms to encourage collaborative R&I ideas and see them through to exploitation is missing,” the report said.
“Current efforts are often reactive rather than proactive, and fintech is a relatively new landscape for universities and research.”
It proposes fintech challenge competitions, the creation of a fintech innovation institute and regional networks to boost and encourage R&I.
Historical Performance And IFISA Process Guide
That figure is the result of over £20 million of loans facilitated on the site, as we bring individuals looking for a good return on capital together with carefully vetted small companies seeking funds for growth. Bear in mind that lenders’ capital is at risk. Read warnings on site before committing capital.
All loans on site are eligible to be held in a Money&Co. Innovative Finance Individual Savings Account (IFISA), up to the annual ISA limit of £20,000. Such loans offer lenders tax-free income. Our offering is an Innovative Finance ISA (IFISA) that can hold the peer-to-peer (P2P) business loans that Money&Co. facilitates. For the purposes of this article, the terms ISA and IFISA are interchangeable.
So here’s our guide to the process:
The ISA allowance for 2019/20 is unchanged from last tax year at £20,000, allowing a married couple to put £40,000 into a tax-free environment. Over three years, an investment of this scale in two Money&Co. Innovative Finance ISAs would generate £8,400 of income completely free of tax. We’re assuming a 7 per cent return, net of charges and free of tax here.
Once you have made your initial commitment, you might then consider diversifying – buying a spread of loans. To do this, you can go into the “loans for sale” market. All loans bought in this market also qualify for IFISA tax benefits.
Risk: Security, Access, Yield
Do consider not just the return, but the security and the ease of access to your investment. We write regularly about these three key factors. Here’s one of several earlier articles on security, access and yield.