You may find it a little difficult to believe at the moment, but Brexit may open new possibilities for the financial sector in London. Perhaps it’s not up to the big banks to transform or secure the future. Indeed, it may be the perfect time for Fintech companies looking to disrupt the financial world to move into the city.
That’s because Fintech companies should look beyond borders to change the industry as a whole.
Brexit will impact the financial world, but it’s not necessarily a sign of economic collapse for any city, country, or region. It’s possible that it’s merely a chance for the industry to change. And that’s not a bad thing.
London is a Fintech hub, regardless of its status as the EU’s banking headquarters
Think back a few years to the financial crisis that hit in 2007 and 2008. No matter how much we attempt to recover from and block from memory the events that transpired during these years, the world was plunged into a recession as the result of banking practices.
Without considering blame or the issues that caused the Great Recession, it’s important to remember just how many hard working bankers, investors, and traders found themselves looking for a job overnight. Given the job security these individuals had become accustomed to over the years, frightening doesn’t begin to cover the fear circulating in the industry in London and around the world.
The economy took a knock, no doubt about it; but London developed a thriving Fintech scene as innovation took over where job security couldn’t. New companies hit the market with an aim to transform broken elements of the financial system. Sure, the Fintech 50 list isn’t limited to London-based companies, but the effects of the Great Recession weren’t isolated either.
Everyone’s quaking in fear of Brexit
It wasn’t long ago that many startups developed in London as the result of a major shift in the financial world.
The world sat on edge as results from the Brexit referendum were tallied. Fintech entrepreneurs in the UK were certainly among those biting their nails as they simultaneously booked hotel rooms to participate in London Fintech Week.
What would an exit from the EU mean for the financial sector in the UK?
In truth, no one can say yet. While French and German cities demonstrate their ability to play host as the EU’s new financial sector, London-based Fintech companies and banks need to consider their priorities and the needs of their customers.
But, it’s more than funding and finance on the line.
Attracting and holding onto talent is more important for Fintech companies in London; financing will follow when the right people are on board.
At least, that’s one of the major takeaways from the Fintech Without Borders breakfast hosted in London on 21 July 2016. For many key players and young startups, potential visa restrictions pose a greater problem as the United Kingdom officially begins divorce proceedings. Already, it’s difficult to retain international talent in London given restrictive immigration policies. And, they worry that it may become more difficult still.
Talent is always a little more of an issue than we may realise
In his keynote address at the Fintech Without Borders breakfast, Prodigy CEO Cameron Stevens pointed out a crucial element that disruptive businesses face time and time again. Incredible talent is evenly distributed. You’ll find potential in developing countries just as you will in developed countries.
It’s an area where Fintech companies have a chance to make a difference. Cameron points out that when Prodigy started, “we were thinking how do you fund someone from anywhere in the world who has high potential but really is restricted from credit purely because of structural factors. Potential is distributed equally around the world but finance definitely is not.
Looking beyond borders
Brexit creates new limits, whether talent can cross them or not. Fintech has the ability to work around those borders, and indeed London-based companies will need to address this now and as they develop. It won’t be enough to consider only local markets.
All Fintech companies need to look beyond borders, not just London or UK-based enterprises. It’s a global market; the introduction of more borders simply presses that issue for those in the eye of the storm. Growth will occur both in and out of London across Fintech because Brexit doesn’t present only two choices, whatever options were presented on the referendum itself.
Sure, the shift from local to global creates hurdles; there are plenty of additional challenges thrown at anyone attempting to work across jurisdictional boundaries. But, those are only opportunities for growth in the Fintech sector – and a chance to change the lives of those that need access the most.
Want to learn more about Prodigy Finance?
Take a moment to see how we're making a difference in the world.
Prodigy Finance Ltd is authorised and regulated by the Financial Conduct Authority.