Just a few short weeks after the Brexit vote that shocked the world, many in the UK’s fintech community are asking what implications the exit may have on the sector.
The historic Brexit vote to leave the EU has placed London and the UK’s position as one of the world’s major fintech hubs into a new era of uncertainty.
Several thousand fintech startups base their operations out of the London because of its central place in global finance, access to capital and the EU market, skilled talent pool and innovation driving government regulations. The vote to leave the EU could, however, make these, and other competitive advantages disappear.
While the exact nature and ramifications of the Brexit vote will only be learned after long and drawn out exit proceedings, fintech startups will have to manage uncertainty as part of their operations in the short term.
Fintech is a large sector, which means different parts of the industry will have to face different issues based on the outcomes of negotiations. There will, however, be some common themes that affect most players in the sector. Access to skilled workers, for example, is one of the main reasons for London’s dominance in the fintech space. If Brexit results in a restriction on EU workers ability to live and work in the UK, the fintech sector would be fundamentally impacted.
Reactions from fintech entrepreneurs and the wider community at this point remain mixed. In a Wall Street Journal article, Taavet Hinrikus, chief executive and co-founder of TransferWise, a London-based cross-border payments startup said “Nothing’s changed yet, but everything’s changed”.
“This is likely to affect regulation and the movement of talent: two massive issues for business.” he continued.
Other reactions mentioned in the WSJ article included Erik Engellau-Nilsson, global head of communications at Klarna, who said that the Brexit vote has “plunged Britain and the rest of Europe into the unknown.”
Richard Willis, a Brussels-based partner at Alston & Bird LLP’s financial-services group, said that operators would have to wait “to see if the single-market features that the U.K. previously availed itself of as part of the EU will continue to be available in the new regime.”