Internal policies and their effects will determine the holistic impact of Brexit on the UK’s fintech industry.
FREMONT, CA: The UK has always been regarded as the financial centre in Europe. Today, amidst the constant digital revolution, the UK has achieved the tag of being Europe's fintech hub. However, with Brexit finally, in place, the fintech hub is expected to encounter a churn. These are still the initial days after Brexit, and it is difficult to forecast what the implications might be for the fintech industry holistically. But speculations imply that the geopolitical developments are poised to change various things about the UK’s position as well as a reputation as the best European market for fintech.
One way to view the impact that Brexit might have in terms of the fintech industry is by considering investments. Investments, however, draw a rosy picture for the country’s fintech firms. The last year, 2019, proved to be a fruitful year for fintech firms in the UK as funds kept flowing in. Based on reports, Europe saw a huge growth in fintech investment, accounting for a new high. A majority of the investment, over 83 per cent of it, flowed into the UK. Such investments happened when the fate of Brexit was sealed. Thus, one can argue that the prospects of Brexit did not impact the growth of the UK’s fintech industry. However, this is only partly true.
A larger view of the situation reveals greater details about how fintech companies in the UK are reacting to Brexit. A report published by PYMNTS states that hundreds of fintech companies in the UK are moving their operations and assets to other places in Europe. Luxembourg, Paris, and Dublin have been some of the biggest beneficiaries of such relocations. Another factor that is weakening the UK's standing post-Brexit is the reduced influx of talent from its European counterparts. As a result of this, industries such as fintech, which thrives on technological expertise, might experience a shortage of qualified personnel. Further, since innovations rely upon talent, the UK’s stand as the fintech hub might be compromised.
However, as mentioned before, we are still in the early days' post-Brexit, and the conclusions are mostly speculative. Only policy decisions and time will determine whether the fintech in the UK is headed towards growth or will lag in the race.
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