UK-India Bilateral Trade in FinTech and FinTech-Enabled Services: Emerging trends and potential for growth

FinTech refers to a wide range of ways in which new technologies are being used to deliver financial services, often delivered by start-up firms rather than established financial services firms such as banks. This project aims to enable increases in the quantity and maximise the benefits of trade between India and the UK by identifying potential changes to FinTech-related regulation, policy and practice at a time of rapid growth in the sector. Trade between India and the UK has the potential to grow enormously, benefiting consumers, businesses and governments in both nations; given the thriving state of the domestic FinTech industries in both countries, but low levels of trade in in FinTech and FinTech-enabled services, enhancing trade in this area is a particularly promising avenue for strengthening bilateral trade in goods and services between the two countries.

We have four research aims, which are expressed in our research questions:

(1) What is the current evidence on barriers to and enablers of trade in FinTech and FinTech-enabled services?

(2) What changes could be made to regulation, policy, practice and investment to increase the quantity and maximise the benefits of FinTech trade between India and the UK?

(3) What are the factors specific to FinTech start-ups that influence their ability and appetite to trade internationally?

(4) What is the role of FinTech in promoting cross-border investment?

The proposed project will adopt mixed-methods, including literature reviewing, documentary analysis, qualitative interviewing, and analysis of quantitative firm-level data to establish the barriers to and enablers of trade in FinTech and FinTech-enabled services in order to identify potential changes to regulation, policy and practice that could increase the quantity and maximise the benefits of FinTech trade between India and the UK.

Our research objectives are:

(1) to conduct a systematic and comprehensive review of the scholarly and policy/practice literature in order to establish the current evidence on barriers to and enablers of trade in FinTech and FinTech-enabled services;

(2) to analyse and assess regulatory, policy, practice and investment documents in order to identify what changes could be made to increase the quantity and maximise the benefits of FinTech trade between India and the UK;

(3) to conduct key stakeholder interviews and surveying in order to establish the factors specific to FinTech start-ups that influence their ability and appetite to trade internationally; and

(4) assemble and analyse a database of bilateral investments identifying the degree to which each has been facilitated by FinTech in order to establish the role of FinTech in promoting cross-border investment.

As well as producing scholarly outputs, our study will produce findings that will be of direct relevance to regulators, policy-makers and various practitioners in FinTech and adjacent sectors. We will disseminate these findings to the relevant audiences in order to provide them with additional tools to enhance trade in FinTech and FinTech-enabled services between India and the UK.

The UK project team is led by researchers from the Essex Business School and the Centre for Computational Finance and Economic Agents (CCFEA), School of Economics; Centre for Global Finance, SOAS; Lancashire School of Business and Enterprise. The Indian team is led by RIS, New Delhi; IIDS, New Delhi; GIFT, Thiruvananthapuram. The project will be supported by an international advisory board.

The planned outputs will strengthen the bilateral trade relations between India and the UK, particularly trade in services. The knowledge coming out of the project will help academics and businesses to maximise their potential markets and consumers which will benefit from the diversity of services than they otherwise would.

Since services often cannot be separated from traded goods and an integral part of inputs in the production of manufacturing products, our findings will have an enhanced impact as an enabler in the production of traded goods.

A distinct part of the project deals with conceptualising and estimating the effects of policies and regulation on both business attitudes and trade outcomes. The outcomes of this analysis will therefore be of particular interest to both policymakers and businesses. Policymakers such as central banks, financial regulators and finance ministries will benefit from the supply and demand barriers to trade in services between the two countries. Since we cover the issues of privacy and discrimination, we will ensure policymaker engagements through the forums such as CityUK, Confederation of Indian Industries, Niti Ayog etc through discussions and other joint events. The business community will benefit form a better understanding of the effects of policies and regulations on themselves and on aggregate trade.

We will adopt high levels of user engagement and maximise research impact, including top international publications, seminars and presentations. We will organise two conferences to present the project work, one in the UK and in India. In addition, we will contribute to the annual conferences of UNCTAD, American Economic Association, Indian Economic Association and Development Studies Association (UK).

We will publish working papers through IZA, Bonn and the Working Paper series of RIS, New Delhi and ISID, New Delhi. We will also produce articles for a variety of well-known user publications and media in the UK and in India.

The ease and greater convenience of FinTech pose questions on how to protect privacy. The findings of our study would be beneficial for data-driven online businesses and marketers.