FinTech: The future’s bright

18 July 2016

The UK’s blossoming FinTech sector is a real success story of recent years and London in particular is emerging as the FinTech capital of the world. But will Brexit change all that? In the chaotic days immediately following the referendum there were concerns that the sector could be put at risk – but as the dust begins to settle, let’s remind ourselves of the many reasons why the UK’s FinTechs can look to the future with confidence.

Fintech is a global phenomenon. That hasn’t changed. But in the light of the vote there are three main issues for the sector, in common with the wider financial services community: growing companies want to be sure that they can still get access to the capital and liquidity they need; they want to know quickly the terms of their access to the Single Market, including what happens to the passporting regime for FS companies; and they want to be sure that they’ll still have access to the best talent. Of these three, the last may be the biggest potential risk to FinTechs. It’s no accident that Berlin’s Senator for Economics and Technology made it clear in the days following the referendum that Germany would welcome EU nationals working in UK FS firms with open arms – Britain has the FinTech talent that is the envy of other countries.

Despite this there are some very good reasons why the UK is leading the way in FinTech, and why that is unlikely to change as a result of Brexit. First, the UK has a regulatory environment that’s world class for supporting innovation in financial services. Second, London’s concentration of digital and financial services are relatively unique globally. And third, the UK still has some outstanding academic support for the sector across the UK, especially when it comes to blockchain research.

None of this is likely to materially change as a result of Brexit. The 2008 global financial crisis drove a lack of trust between providers and consumers of financial services. This trust issue hasn’t healed. Indeed we may have seen it reflected in views about business and globalisation in the referendum debate. If that’s the case, FinTech has an important role to play. FinTech helps to develop services and propositions that customers are increasingly expecting from their bank or insurer – better insight, more responsive service, easy digital access and interaction. It’s not a holy grail but FinTech offers one route to help restore trust that was so badly damaged by the financial crisis. Furthermore, it’s something that’s developing across the UK – with fast-growing regional FinTech hubs emerging in Edinburgh, Birmingham, Leeds and Manchester as well as others cities.

The centre of gravity for FinTech has definitely shifted to the UK in the last year.  The FinTech sector is of a scale and has an infrastructure already in place to continue to build on that. There is no doubt that the current uncertainty impacts confidence and that we need resolution on some key topics. But there’s a strong incentive for everyone involved to resolve those issues as soon as we can. So let’s take a deep breath and crack on.




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