Header photo by Slava Bowman
To start off our 'Fintech across the world' series, we take a look at the highs and lows of fintech in the United Kingdom.
At the time the votes were cast for the seismic 2016 referendum, foreign investment in the UK’s financial sector was seeing its highest figures than any time during the past decade. A number of startups flocked to London in 2015 to maximise on the huge developments in fintech regulation by the FCA (Financial Conduct Authority), which included the world’s first regulatory sandboxes to allow hundreds of new companies to test out innovative ideas regulation-free.
Then the results were announced, the pound dropped to its lowest value against the dollar since 1985, and unease over the UK’s financial markets set in. Followed by a snap election this June which resulted in a hung parliament, things are looking anything but stable for Britain. It is the view of many financial institutions and technology hubs that leaving the EU single market as Prime Minister Theresa May proposes signifies huge road bumps for business development, creating loss of passporting for some EU employees, cumbersome new licensing barriers, and less ability to hire the foreign talent so necessary for fintechs who compete globally. Companies such as London’s Transferwise believe these new setbacks are enough for them to leave and set up new offices elsewhere in Europe.
However, until the Brexit deals are implicated, nothing is set in stone. A significant proportion of financial commentators remain positive about the future of UK fintech, which continues to grow, and remains to be number one in the developing world. Many believe the new trade deals to be a window of opportunity for escaping the EU’s regulatory red tape and creating new business relationships outside of Europe – particularly with the skyrocketing fintech sector in Asia. The two year Brexit negotiations began last Monday, and the future of the UK’s fintech success ultimately depends on the agreements made in the coming months. There could be hope on the horizon, but It looks like the UK’s fintech will have to face another couple of years of uncertainty before the Brexit storm subsides.