On the matter of London’s bid to establish itself as the fintech capital of the world, well known Twitter and blogging raconteur Dan Davies says:
oh my god fintech forget about it. Non tariff barriers will be extraordinary. London fintech is done. https://t.co/dCFi851P9e
— Dan Davies (@dsquareddigest) June 24, 2016
Which fits quite nice with what a fintech/Brexit report commissioned by London FinTech Week at the end of May flagged.
According to the report, the 10 key factors which are likely to stifle the UK fintech scene now that Brexit is upon us include:
1. Human capital – UK FinTech’s growth is dependent on attracting the best and most talented human capital from the EU
2. Software science skills – UK FinTech needs advanced software skills. These skills are in short supply. Seamless access to the EU’s labour pool of c500m is required to be able to remain competitive
3. Access to EU markets and ability to scale – Severely impeded by Brexit
4. Single European Capital Market and Digital Single Market initiatives – UK FinTech will only partially benefit and have no say in formulation.
5. Competitive response of an EU minus UK – potential Tax increases. Competing EU FinTech centres – Amsterdam, Frankfurt and Paris – would seek to grab European FinTech leadership attracting mature FinTech. Berlin, Helsinki, Stockholm and Dublin would try to attract FinTech Startups.
6. FinTech investment – estimated loss to the UK could be as high as $5bn over 5 years
7. Impact on innovation levels in financial services as a whole – would be lowered, the UK’s and “The City’s” competiveness would suffer.
8. Collaboration and acquisition of FinTech companies – larger financial services companies would acquire and collaborate with foreign companies rather than home grown startups.
9. Regulation innovation or “RegTech” – UK could lose its global leadership position with UK companies no longer able to passport seamlessly to a 500m+ market or conversely EU innovators into the UK.
10.Single market in cyber security, privacy, data protection, and data transfer – UK would be excluded, more bureaucracy for UK FinTech companies as another set of regulations and protocols are imposed i.e. UK on top of US and EU.
It’s not all doom and gloom though. As Transferwise’s Taavet Hinrikus joked last week, in the event of a European Union domino effect it may be good news for P2P FX platforms because there will be more FX cross-rates to intermediate and hence more business.
Brexit prep, fintech edition – FT Alphaville