The UK, and London in particular, has established itself as the world’s most important hub for fintech and an incubator of ideas, talent and capital. We must, therefore, ensure it retains its pre-eminence regardless of what Brexit brings.
Glance at the most recent statistics and you would conclude that everything is rosy in London. Scratch a little deeper, however, and you will find that many unknowns of Brexit are already casting a shadow over the sector.
London is under threat on numerous fronts. With many fintechs based in the capital seeking to serve a global audience, some will probably move part, if not all, of their operations to alternate hubs with greater political stability and clearer trade rules.
A number of competitors are already seeking to take business from London. In Europe, Berlin has thrown its hat into the ring in a bid to replace London as the post-Brexit fintech capital, while Singapore is also developing a vibrant fintech scene.
Brexit is already a burden on the fintech industry by increasing costs and draining resources as businesses are forced to prepare for all eventualities. The 2018 Fintech Disruptors Report found that 17% intended to step up contingency planning across the sector for ‘black swan’ events.
The UK has always been streets ahead when it comes to introducing fintech-friendly regulation, driving innovation and giving birth to a host of tech start-ups.
It is imperative that the UK recognises this legacy and the importance of maintaining its status as the global fintech leader. Financial services have been a key contributor to our economy for decades, and fintech firms bring advances — both incremental and groundbreaking — in the technology and processes that keep the global economy working.
We need to lay the right foundations to develop the next generation of entrepreneurs, engineers and specialists. We must also ensure we don’t lose the rich talent the UK has already attracted by virtue of its reputation as a hub for innovation.
The government has announced that EU citizens living in the UK will need to apply for ‘settled’ or ‘pre-settled’ status by 30th June 2021. This new EU Settlement Scheme may limit the number of working migrants and the fintech sector — like many other industries — will feel the pinch of that. Likewise, homegrown talent will inevitably seek new opportunities abroad.
This is where the government, leading banks, financial institutions and fintechs must join forces to continue to attract and retain this talent if the UK is to remain the centre for excellence and opportunity. Failure to do so will suppress appetite for investment in British fintechs.
The UK is more than capable of maintaining its place as a major fintech player. And decisive action on Brexit will definitely help as uncertainty kills confidence. Meanwhile, regulators should encourage and incentivise partnerships with fintech companies. Collaboration at all levels is essential to ensuring the continued growth of fintech in the UK, and that our financial services remain at the forefront of the global markets.
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