Brexit: keep calm and carry on
It’s hard to believe that it’s been just under two weeks since the UK narrowly voted in favour of Brexit. The pace of breaking news across the political and economic spheres has been brisk.
In and amongst what is a great deal of uncertainty about the UK’s future relationship with the European Union, FinTech Futures, along with Banking Technology, gathered a fantastic panel of fintech leaders to consider and help discern – with cool heads – the challenges and opportunities that lie ahead.
We also asked participants to vote on whether Brexit will affect the UK’s status as a world leading fintech hub but more on that later.
Lawrence Wintermeyer, CEO of Innovate Finance, kicked off the discussion with a view from the ecosystem, outlining key concerns and priorities following the referendum result.
Innovate Finance members – in line with most of the UK fintech – had been overwhelmingly in favour of remain (over 80%) but, given the result, are now focusing on the future and their near-term priorities.
The number one priority item is that everything should be done to maintain access to capital and liquidity in a time of uncertainty, Wintermeyer emphasises.
The message from across the whole of the community was that ensuring access to the single market and the passporting rights that come along with financial services is crucial. The same concerns and priorities were echoed by two other panellists, Mike Laven, CEO of Currency Cloud, and Diana Paredes, founder and CEO of Suade.
The level of uncertainly generated by the referendum results was at the front and centre of all of the panellists’ concerns about the near and longer term future. Although as both Laven and Paredes noted, uncertainty can also create business opportunities for nimble and innovative fintech firms, the overall strength of sector was tied to the success of UK financial services.
The impact of uncertainly also has an impact on investment. As Paredes highlighted, although her company was established and had secured investment, other start-ups faced significant near-term challenges with regards to securing funding.
The practical reality for these start-ups engaged in funding is that things are being put on hold post Brexit and firms may well start to look at alternative fintech centres. As Laven noted, “the challenge to the early stage venture community in London is who is going to the first to step up and issue a new term sheet”.
He also highlighted the need, in the short-term, to focus on the practical responsibilities to companies’ key constituencies, employees, customers and investors. Paredes echoed those priorities and shared the other panellists’ view that access to talent, across the EU and beyond, is fundamental to her firm’s success.
The panellists also agreed that a clear message from the UK government regarding the status of EU nationals was critical to retaining and easing anxieties. As Laven commented, the worry is that “fintech will be the roadkill on the way to another kind of settlement”.
Yvonne Dunn, partner at Pinsent Masons, also addressed the challenges that uncertainty poses for the sector. Given the law firm’s role in advising both fintechs and established financial services companies on navigating regulatory environments, “hopes for a revolution or a bonfire of redtape and regulation were both premature and probably not desirable”.
Business and regulatory uncertainly would continue to present challenges for firms right across the financial services sector. In the near-term – calm rational thinking and maintaining the status quo are crucial.
Looking ahead, Dunn flagged the potential for the UK to partner with other regulatory centres (e.g. Singapore and Australia) to take some of the rough edges off the EU regulation and make it more “fintech friendly”, by joining forces in lobbying the EU.
That would build on the work that the UK regulator, Financial Conduct Authority (FCA) has been undertaking already – in establishing fintech bridges to other centres. However, that seems to be very much like a long-term option.
In response to the question as to whether Brexit would actually ever happen, Currency Cloud’s Laven kindly invited everyone to the pub to exchange views on that topic. The rest of the panel may well be joining him for what is clearly a discussion for another day.
Will Brexit affect the UK’s status as a world leading fintech hub?
The majority of respondents – 64% – said that Brexit would affect UK’s status as a leading fintech hub.
In line with the theme of “uncertainty”, which ran through the discussion, a good number (24%) remained undecided.
The clear message from the panel was that in the face of uncertainly, given the time it will take to determine the post-Brexit landscape, sit tight, operate your business, focus on what you do well and ensure that access to the single market and passporting stays at the top of the government’s negotiating priorities.
By Lisa Moyle, brand strategy director, Fintech Futures