Why the UK’s Biggest Innovation Challenge Isn’t Talent – It’s Adoption

The UK has no shortage of breakthrough ideas. The challenge is turning those innovations into businesses and technologies that reach the market and create real-world impact. For Anna Wallace, CEO of the Centre for Finance, Innovation and Technology (CFIT), the barrier is not talent or technology – it is translation. “The UK has incredible science, technology and entrepreneurs,” she explains. “The challenge is organising markets so innovation can be adopted at scale.” That challenge is particularly relevant for healthtech and biotech founders, where regulation, investment and trust often determine whether a promising idea moves beyond the lab. Established by HM Treasury three years ago, CFIT was created to tackle these systemic barriers by bringing together industry, regulators and government to help innovation reach the market.

Innovation Needs an Ecosystem
For founders, the biggest challenge is rarely the idea itself. Building a breakthrough product is only the first step; getting investors, regulators, institutions and customers to trust and adopt it is where many companies struggle. Wallace argues that successful innovation depends on the infrastructure around the technology – trusted data, common standards, effective governance and collaboration between organisations that may never have worked together before. That is where CFIT aims to play a role. Rather than acting as another regulator, the organisation positions itself as the “connective tissue” between government, regulators, investors, established institutions and start-ups. Its role is deliberately focused and time-bound: bringing the right players together to solve barriers that individual businesses cannot tackle alone. “We’re not a permanent market actor,” Wallace says. “We’re creating the blueprints, governance structures and proof-of-concept work that gives markets confidence to adopt innovation.” The approach has clear parallels for healthtech and biotech founders, where scaling often requires alignment between start-ups, regulators, healthcare providers and investors. A technology may be scientifically viable, but without trust across the wider ecosystem, adoption can remain out of reach.

Confidence Attracts Capital
Access to funding remains one of the biggest frustrations for UK entrepreneurs. Wallace believes founders often misunderstand what investors are actually backing. “Investors aren’t just funding innovation,” she says. “They’re funding confidence that it can scale.” That insight has significant implications for highly regulated industries like biotech and healthtech. Venture capital firms are naturally more cautious when regulation is uncertain. “If an investor has the choice between a regulated health technology and an e-commerce platform using similar technology, they’ll often choose the less regulated opportunity because the pathway to scale is clearer.” This is where regulators can play a surprisingly important role. Wallace, who previously established the Financial Conduct Authority’s Innovation Hub and Regulatory Sandbox, argues that regulators don’t simply enforce rules – they influence investor confidence. Greater regulatory clarity, proportionate oversight and early engagement with innovators can reduce uncertainty, making capital more willing to flow into complex sectors.

The Hidden Reason Businesses Miss Out on Finance
Perhaps the interview’s biggest surprise comes from CFIT’s research into SME lending. Every year, around 700,000 SME lending applications fail, representing an estimated £90bn economic cost to the UK. However, Wallace says the issue isn’t necessarily a lack of available capital. CFIT’s research found that 65% of declined businesses had readily fixable issues affecting lender confidence. Many of these problems have little to do with the quality of the business itself. Late filing of accounts, excessive reliance on overdrafts and missed supplier payments all create negative signals within financial systems, even when businesses have strong products and commercial potential. The organisation estimates that improving these areas could help around 200,000 businesses gain access to approximately £5bn in additional lending. For healthtech and biotech founders – many of whom understandably focus almost exclusively on science and product development – this serves as an important reminder that financial readiness matters just as much as technical excellence. “The financial data around your business is incredibly important,” Wallace says. “Not all entrepreneurs are focused on it because they’re focused on their product.”

Why Sandboxes Matter
Wallace is widely recognised for creating the FCA’s pioneering Regulatory Sandbox, a model that has since been adopted internationally. Its purpose wasn’t to relax regulation, but to help regulators understand emerging technologies before imposing rules. Rather than forcing companies to wait years for policy to evolve, innovators could test products with real customers under regulatory supervision. “It changes the regulator’s understanding,” Wallace explains. “Instead of comparing something they know against something they don’t, they gain evidence and confidence.” The principle translates directly to healthtech. Much like clinical trials allow healthcare innovations to demonstrate safety and effectiveness before widespread adoption, regulatory sandboxes enable emerging technologies to prove their value in controlled environments. Wallace believes future innovation ecosystems will increasingly rely on collaborative testing between regulators, established organisations and start-ups rather than expecting founders to navigate complex systems alone.

Another major lesson from financial services is the power of data sharing. Data infrastructure is becoming as important as the technology itself. Wallace points to Open Banking as an example: its success came not just from new products, but from creating trusted frameworks for sharing data securely. She believes the same principles will be vital in healthtech, where interoperability and patient data remain major challenges. “The success wasn’t the technology,” Wallace says. “It was the governance, trust and common standards underneath it.” 

Wallace’s message to healthtech and biotech founders is clear: breakthrough technology alone is not enough. The companies that succeed will be those that understand the wider systems around them –  from investors and regulators to healthcare providers and customers. The UK has no shortage of scientific ambition; the challenge now is building the trust, infrastructure and collaboration needed to turn that ambition into lasting impact. In the next era of innovation, the winners may not simply be those with the most advanced technology, but those best able to bring an entire ecosystem with them.