In London, Brexit was widely met with negativity by the Financial Services industry and, in covering the FS industry across Europe, it’s been very interesting listening to the views of people in the UK and our European partners.
An issue that has perhaps been overlooked amongst the commentary from the larger headline grabbing banks, is the impact on the UK's FinTech market. Already worth around £6.6 billion, employing around 61,000 and pulling in investment of over £640 million last year, London has become the Global FinTech Hub.
Access to Regulators, enormous banking expertise, the single market and free movement of people, coupled with research from PwC suggesting top Banking Exec’s believe up to 23% of their business is at risk to innovation in FinTech, had created a unique ecosystem here in London.
However, the EU referendum has significantly changed this ecosystem creating uncertainty that is unlikely to pass for at least the next two years.
So, in the fast moving FinTech industry, can businesses afford to 'wait and see' how the UK’s relationship with Europe looks two years from now in the same way that traditional banks can afford to? Or in the FinTech world, where growth and investment is everything, does Frankfurt, Berlin, Paris or any number of other European cities beckon? Afterall they promise what London cannot; stability, guaranteed EU access and reduced costs of operation (London is anything but cheap for the cash strapped start-up!).
It's believed that Brexit will realistically manifest itself as 'Brexit Lite', maintaining our access to the single market and free movement of people allowing London to continue providing this unique ecosystem, however until that becomes clear, the rest of Europe (especially Germany as the EU's second largest FinTech market) has an exciting opportunity to capitalise on the UK's decision - whilst the UK has plenty of work to do to maintain its current status.
The below article in the Washington Post provides some interesting initial reactions from UK FinTech’s.
What are your thoughts?
start-ups are rethinking every aspect of money, from checking accounts to crowdfunding to the complex networks that power the world’s stock exchanges. Top bank executives regularly drop by to scout new ideas, and investors poured $900 million into the fledgling industry last year — creating a heady fusion of Wall Street and Silicon Valley that was supposed to drive the next generation of London’s financial dominance in Europe. But Britain’s historic vote last month to leave the European Union is now forcing the country’s most promising young companies to reevaluate whether to stay in the island nation or abandon ship.