R&D in Fintech
Financial technology is a vital part of the UK economy. The financial hub of the western world is located in London, and the engine that keeps the financial markets of London running is without a doubt financial technology. Fintech R&D is therefore vital to keeping London’s edge in the market, and given the generous level of tax relief for Fintech R&D, that edge is essentially protected by the UK government.
These tax credits allow UK firms to spend money which would have been liable for taxation on R&D.
The benefits of R&D are clearly evident, with firms such as HSBC opening labs of their own to try and get the edge in the financial world, as to be even a tenth of a second faster than the opposition makes you more informed than them, letting those with an advantage jump on great deals faster.
Aspects of Fintech which are eligible for R&D
A wide variety of financial technologies have emerged from, and keep developing thanks to, R&D.
As many firms are reluctant to update their systems when new versions arise, they end up having clashes with legacy systems. The transfer between systems is solved to an extent through the growth of emulators, allowing new systems to imitate old ones which reduce the clashes between systems. R&D, in this case, means that the transition between old and new systems is as easy as possible.
Hardware is intrinsic to any major financial firm. Having the right proprietary technology can mean that any company has an edge over the others, thanks to faster technology emerging. With affordable, fast quantum computing just around the corner, the first company to make a breakthrough will see huge advantages, but that can only be achieved through R&D.
Following the financial crisis in 2008, many nations around the world implemented more in-depth regulations on the financial sector. These are likely to limit business growth, and any business that is able to find a benefit within these regulations could see significant growth. To do so requires in-depth research, which the tax credit helps with.
Privacy and Security
Given recent data security legislation, such as the European Union’s new GDPR laws, firms need to pay more heed to the privacy and data of their consumers. Companies have made sure data stays secure through a wide variety of methods, including end-to-end encryption and biometrics. These protect customers from potential fraud, so people can be safe in the knowledge that Fintech R&D has their assets guarded.
As previously mentioned, financial companies need to go through significant amounts of data. Whether personal or general, as the amount of data stored increases, the storage requirements on any company follow. The development of Solid State Drives, for example, has increased the speed of data access, but with demands rising further steps will need to be made.
Blockchain is key to Fintech, as it allows cryptographic solutions to financial issues. Outside of just cryptocurrencies, blockchain has significant potential to increase the security and speed of the finance sector.