London to Remain Fintech Hub
Fintech companies said London will remain the European hub for the sector despite the UK’s vote to leave the European Union.
Jamie Campbell, head of customer experience at Bud, said: “London will still be in the frontline of fintech due to its ability to attract talent.”
Bud allows users to access a range of financial services in one spot through its website and mobile app. Campbell spoke on a panel today as part of the London’s first “Fintech Fortnight”.
Jasper Martens, head of marketing at Pension Bee, said on the panel: “London will remain the main hub as people will still come to the UK. It will not be possible to move all the fintech activity from London to Frankfurt.”
Pension Bee is the UK’s first online pension manager and has launched pension plans managed by BlackRock and State Street.
Last week The 2016 VC FinTech Investment Landscape by Innovate Finance, which promotes UK fintech, said China and the US dominated fintech investment with a combined $13.9bn, 80% of the global venture capital raised last year.
Innovate Finance said: “Whilst UK fintech venture investment is down 33.7% in 2016 at $783m, largely attributed to the uncertainty of Brexit and geo political / macro economic factors, third quarter funding rebounded, and nine of the top 20 deals completed in the six months following the referendum, with the UK retaining its global ranking in third place.”
The top three UK deals last year were Starling Bank at $101m, alternative finance provider iwoca at $57m and robo advice provider Nutmeg at $52.2m.
“The loss of passporting rights will hit fintech payments firms if special provisions to the single market are not negotiated upon leaving the union,” added the report. “However, maintaining and further improving access to global fintech talent has superseded passporting across the fintech community’s post-Brexit priorities.”
More than 30% of Innovate Finance fintech founders and chief executive are non-British with many employing European staff.
Rachel Kent, global head of financial institutions at law firm Hogan Lovells, said in a blog that the UK’s regulatory environment will not change until the country actually leaves the EU. If Prime Minister Theresa May triggers Article 50 to leave the EU in March the the UK should keep matching the EU’s regulatory environment until at least 2019.
Kent said: “For fintech, this time of change may offer opportunities for those who respond well to its challenges – perhaps a need for new ways of doing business for which it designs solutions. The UK regulators’ commitment to enabling innovation to flourish is well-known so perhaps leaving the EU would enable it to expand its regulatory sandbox concept or to offer an opt-out lighter-touch domestic solution for fintech companies who are only operating in the UK.”
The city's expertise and capital will be there regardless of whether the U.K. is in the 'Single Market'.
Transitional arrangements should be reached as soon as possible.
Consultancy sees MiFID II, ETFs and Brexit as things to watch.
Negotiating transition arrangements must be a priority.
EU rulemaking powers will be moved to the FCA and Bank of England.