Post Brexit: Will London Remain the Fintech Capital of the World?
With adversity comes opportunity.
FinTech – Finance Magnates | Financial and business news
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#Brexit + #fintech: What happens now?
The British public recently voted to leave the European Union. Only history will tell whether it was a good decision or not. The immediate issue is… what #happens now? Those in financial services and #technology firms will have to grapple with the unraveling of treaties that will have a direct impact on their business. But first&8230; what happens next? Read More -
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What Does the Brexit Mean for the UK Fintech Industry?
Startups should be ready to pivot if the current climate demands it and build even closer ties with clients.
FinTech – Finance Magnates | Financial and business news -
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How the ‘Brexit’ Could Impact the UK’s Blockchain Influence
Momentum around the UK’s rapidly growing #blockchain industry #could slow following the ‘#Brexit‘ vote, experts say.
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Fintech after Brexit: 3 Positive and 3 Negative Impacts
While the overall balance of #Brexit on #fintech is clearly #negative, this article takes a look at the positives too.
FinTech – Finance Magnates | Financial and business news -
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How will Brexit Impact Banks and Fintech in the UK?
It may not have escaped your attention that the British Public voted to leave the EU. Although in the aftermath it’s still unclear quite what that actually means, this morning bank shares have taken a significant hit with Lloyds off 8%, Barclays 10% and RBS down 15% leading the LSE to halt trading in those … Continue reading How will #Brexit #Impact #Banks and #Fintech in the UK? →
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Fintech & Brexit, DAO, Final, and Fintech5
Host Sam Maule outlines the DAO hack and what can happen next for Ethereum with guests Simon Taylor, John Lilic of Consensys, and Casey Kuhlman of Eris Industries.Other topics include payment security with the CEO of #Final, Aaron Frank, then a double dose of the #Fintech5 with Jesse Podell from Startupbootcamp #Fintech NYCRead More
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Brexit Jolts Fintech, Launches Era of Banking Uncertainty
In a stunning vote, British citizens decided to leave the European Union, and the so-called #Brexit has not just profound implications for #fintech, but creates massive #uncertainty for global financial services. “How can we be so stupid?” tweeted Eileen Burbidge, a partner at Passion Capital and FinTech Envoy of HMRead More
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Fintech Life after Brexit
Let’s assume #Brexit will happen. How will the the UK #FinTech community react? We already know that more than a few financial services firms – mostly #banks I believe &8211; have drawn plans to relocate some of their staff away from London and scale back operations in the UK. Will FinTech firms follow suit? Have some started planning for Brexit? Are Brexit responses being hatched as we speak? Will moves out of the UK be sudden and immediate or gradual? All are questions worthy of an answer.
With the demise of its offshore business, London needed to reinvent itself to retain financial services relevance. Fintech, while maybe not being THE answer, was one of the answers. In the past years we have seen the City of London, the Bank of England, the Financial Conduct Authority and Government signaling they were all opened for FinTech business, launching initiatives and making it altogether easier, relatively speaking, for FinTech entrepreneurs to choose London as their home base.
The attractiveness of the UK as a homogenous market (think South East England with a concentration of tech savvy and affluent individuals in one time zone), a skilled workforce, the lure of a flexible UK economy and labor laws all helped. The relative strength of venture capital funding (both in terms of quantity and quality) compared to Europe should not be discounted.
There has also been a fair bit of regulatory arbitrage going on. There is no question many entrepreneurs will chose a country where the regulator is more sophisticated, enjoys a positive reputation globally, is “open for business” and easier to deal with than in one&8217;s home country; especially when this choice will result in a FCA approved license that is recognized across the European Union, thereby providing optionality around a bigger addressable market. In other words, resisting the allure of London as a FinTech hub while noting all what you build can and will be applicable all over the EU is very difficult to do.
What happens if the EU link is altered? I doubt an FCA license would be recognized across Europe then, which means increased licensing and compliance costs, presumably. Further, as mentioned above, some financial services firms will reduce their operations in the UK and relocate &8211; to continental Europe, to the US… Plus there is the rising uncertainty of how #life will be #after Brexit &8211; financial services life, business life, how removed the UK will be from EU, the types of barriers that will exist.
If you are a Fintech startup thinking of moving to the UK you are going to think twice. The decision will not be as easy as it was.
If you are a Fintech startup already in the UK, in the early stages of of building your operations you will start thinking whether a move is the right decision.
If you are a d2c Fintech startup with aspirations for European roll out you may decide to relocate some of your operations to continental Europe sooner than you had planned or more than you had planned.
If you are a b2b Fintech startup you will tend to follow your clients and their operations wherever they go.
Additionally, if Brexit results in a less opened environment for foreign workers, the tech community might see a net outward flux of engineers out of the UK which may sway Fintech startups to follow talent.
All in all, these trends are not net positives for UK Fintech dominance.
Where would Fintech startups move? There is no obvious FinTech hub that can immediately challenge London. None of the potential contenders are ideal candidates.
Berlin has a strong pool of tech talent and a vibrant startup scene and Frankfurt is the financial services center of Germany. Fintech startups relocating to either would deal with Bafin, the German regulator which is a strong and very well regarded regulator. Yet, language is an issue and the German market is not that easy to crack for a non German entity. Bafin would also have to show a tad more forward looking intent a la FCA.
Paris enjoys great infrastructure and a deep pool of tech talent, but the language is also an issue and the local regulator is not well known for its international and forward looking bent.
Stockholm, Amsterdam, Zurich/Geneva are also interesting candidates.
New York might even be a candidate &8211; same language, much larger market, strong financial services hub.
I tend to think there will not be one clear winner among the above mentioned candidates. Most if not all will benefit. Although this might not be a good thing from a geopolitical point if view for Europe &8211; as London&8217;s Fintech star wanes relatively speaking compared to its global competitors and as no clear European city emerges as the clear leader &8211; there may be a silver lining. Indeed, sensing an opportunity to gain market share, Euro regulators may become more open and forward minded &8211; sandboxes, friendliness and collaboration with startups &8211; thereby creating a healthy competitive environment across the continent towards tech innovation; Euro legislators in Brussels and Strasbourg may help with that process; City Councils may jockey for position with local laws and initiatives to attract startups. Further, UK Fintech VCs may allocate more funds to continental Europe. I can think of many intended and unintended positive consequences and far from putting a damper on Fintech in Europe we may see a revitalization of Fintech across Europe.
If you are a UK based Fintech, I am curious what your current thinking is. Or maybe Brexit will not happen.
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