The UK has made significant progress in modernising its capital markets, including considerable reforms to increase individual investor participation, improve market efficiency and strengthen global competitiveness.
In the run-up to Mansion House, the government has an opportunity to take bold decisions that shift the dial on capital markets and signal serious intent about the UK’s attractiveness as a place to invest and list.
Reforms to date have rightly focused on the plumbing of capital markets; regulation, market structure and incentives. However, for individuals, investing remains unnecessarily complex, with repeated identity checks, lengthy onboarding processes and fragmented user journeys continuing to create friction.
If the UK wants deeper capital markets and broader participation, it must focus on the infrastructure that enables people to participate. At its core lies a simple but critical question: how easily and securely can individuals participate in financial markets?
As we set out in No Time to Lose: Reasserting UK leadership in financial and related professional services…this is where digital ID becomes central.
Digital ID should be understood as core economic infrastructure: a trusted layer that underpins how people, organisations and data interact across the broader economy. Done well, it can remove avoidable friction, reduce fraud and support more seamless, secure access to financial services.
The UK is not starting from zero. Millions already use digital identity in some form, but this adoption remains fragmented. Credentials are spread across multiple providers, with limited interoperability and reuse across services. As a result, individuals are still required to prove who they are repeatedly across different platforms.
A more coherent approach can change this. By enabling individuals to verify their identity once and use it across multiple services, digital identity can streamline onboarding, reduce duplication and improve the overall user experience. This has direct implications for capital markets.
As we set out in From cash to confidence: Building an investing nation, first-time investors, especially those who are digitally cautious, will abandon their intentions to invest due to complex or overwhelming processes. Digital ID could streamline those onboarding processes, increase participation and improve engagement with investment by making re-authentication simpler.
Digital ID is also central to the UK’s shift towards a more modern market infrastructure. As capital markets become increasingly digital and move away from paper-based processes, the ability to link assets securely to verified individuals and entities becomes more important. While a fully interoperable corporate digital ID ecosystem has yet to emerge in the UK, it presents a significant opportunity for businesses. The same applies to the development of tokenised markets, where trusted identity is fundamental to ownership, settlement and compliance.
To realise these benefits, the UK needs to move from fragmentation to a coherent, interoperable framework that works across the public and private sectors. The upcoming Digital Access to Services Bill will be a welcome step, providing the legal framework needed to support a trusted and reusable digital ID ecosystem. It should allow public and private digital ID to coexist, giving individuals genuine choice and control. Trust will be critical, underpinned by strong privacy safeguards, clear governance and effective routes for redress. Digital ID must also be inclusive by design, with assisted and offline routes to ensure it expands access rather than narrowing it.
The UK can lead in capital markets reform, but success will require bold policy decisions. It will require the right underlying infrastructure. By moving to a coherent, interoperable framework for digital ID, the UK can reduce friction in investment journeys, support broader participation, enable modern market structures and strengthen trust across the financial system.
In the run-up to Mansion House, we would therefore encourage the government to:
- Deliver at pace the UK’s national digital ID, ensuring it is designed to be interoperable across and within sectors.
- Set out a clear long-term 'north star' for individual investment, as we called for in From cash to confidence: Building an investing nation.
- Commit to abolishing stamp duty on UK shares to make Britain more investable and remove a disincentive to investing in British companies.
- Progress at pace toward dematerialisation and a coherent single digital register framework for public equities, helping to underpin more efficient capital markets infrastructure, improved interoperability and future tokenised market development.
- Complete the remaining capital markets reforms, including the consolidated tape, investment research reforms and wider measures to improve market attractiveness.
