How worried about Brexit are fintech companies?
An international fintech delegation to UK: now you see them, now you don’t. Just like that.
I was all geared up to meet 50 fintech companies from across Europe and Israel as part a delegation invited by the Department for International Trade (DIT) and the City of London. I would have got to interview the head of DIT’s Financial Services Organisation as a well as some of the startups.
But sadly I was informed, a day before the event, that rather than attending the entire two-day event, journalists would only be allowed to attend a networking event for just two hours in the evening. A major last-minute change of plan.
This is a shame as I was interested in what these fintechs thought about the prospect of the UK financial services sector losing passporting rights after Brexit, as well as other Brexit-related questions. I am sure every journalist that planned to attend had the same thought, it would be a giant elephant in the room for two days.
It must be hard selling the UK to these fintechs at the moment with so much uncertainty around Brexit. How do you entice a company to come to the UK with so much uncertainty?
Last week I listened in on a recent House of Lords EU committee meeting, where members discussed the impact of Brexit on the UK IT sector.
Russ Shaw, founder of Tech London Advocates and Global Tech Advocates, which is a network of entrepreneurs and tech experts that support the UK tech startup sector, said that fintechs will be finding it hard if the UK can’t secure a good deal with the EU.
“If we go over this cliff edge it will be immensely disruptive. The entrepreneurs that I meet say they will just get on with it and make the best of it but it will be a very, very disruptive process for a number of them, particularly those in the fintech sector. That is one of the most vibrant aspects of the tech community in London and many of the companies will need passporting rights.”
But it is not just the loss of passporting rights that might put fintechs off building a big presence in London or UK, but also issues such as a talent shortage. EU staff make up about 8% of employees working in the UK tech sector. These are highly skilled and talented people with most earning salaries between £45,000 and £80,000 a year, he added.
I am sure the UK and London in particular will remain attractive to these firms, as most major economies are, but perhaps they will have smaller UK operations than they would if the UK remained in the EU. They will want to ensure they have access to the EU market, which is not yet guaranteed, so will ensure they have an EU presence.
Back in June I spoke to a London-based fintech startup at an event who said plans were in place for his company to set up a Dublin office.
If you are a fintech it would be great to hear your views.