UK’s post-Brexit fintech landscape
More than 1,400 EU-based firms have applied for permission to operate in the UK after Brexit, which seems positive. However, various news outlets have been reporting large moves from big players in the City to the continent.
The UK officially left the European Union on 31 January and will be entering an implementation period, which is due to last until 31 December 2020. During the implementation period, EU law will continue to apply, but this hasn’t brought a lot of certainty for the financial services sector in the long-term.
What do people in the industry really think now that Brexit day has come and gone? Here’s a compilation of brief thoughts from founders of fintech firms, European government officials and banking foundation executives, based on the report of fintechfutures.com.
– We need to prevent Brexit from damaging our access to talent through immigration. Business leaders need to keep pushing the government to avoid making deals that are harmful to business – Birkett said.
On the other hand, Siim Sikkut, chief information officer of Estonia government sees an opportunity for Estonia to attract the talents leaving behind the UK after the Brexit.
– We are already Europe’s top-rated nation for entrepreneurialism, and we are number three in Europe in terms of the number of start-ups per capita. While Estonia may be small, we have the most unicorns per capita, companies valued at greater than $1 billion with many more companies popping up every day. That means around 3,700 Estonian companies are currently hiring! – Sikkut said.
Ivan Ashminov, co-founder, Trading 212 sees that the key factor is how financial regulation in the UK and Europe will diverge in the future. – Diverging regulation could make fintechs’ expansion more difficult and expensive – Ashminov said – And with expenses rising, in the future, if regulation becomes a challenge, fintechs could turn away from Europe as the default choice for expansion.
Jonathan Jensen, director of identity verification at GBG focused also on the question of legal environment.
– The UK government already published The Money Laundering and Terrorist Financing (Amendment) Regulations 2019 – which transposed the European Union’s Fifth Money Laundering Directive into UK law. So in terms of identity verification and anti-money laundering (AML) compliance, Brexit brings no change – Jensen said.
– In terms of fintech, I’m feeling positive. – added Jensen. – The UK, and London in particular, has so much to offer fintech – from a helpful regulator (the FCA), to talented people, to a great supporting infrastructure that underpins vital aspects of what they do. There will likely be some bumps ahead and issues to resolve, like what comes after ‘passporting’ for financial services but with the right approach these can be resolved.