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More than three-quarters (78%) of UK financial technology (fintech) companies are inadequately prepared for the ramifications of a no-deal Brexit, and 45% don’t feel prepared if there is a transition period, according to a recent survey.
The findings from the survey carried out by fintech trade organisation Innovate Finance also found that 17% of respondents are considering moving to a different jurisdiction as a result of Brexit.
The main concerns were around passporting rights, which currently allow EU banks to serve customers across the trading block, cross-border transactions and access to talent.
According to the survey, 38% of fintechs have not taken any steps to prepare for Brexit. The other 62% have carried out work such as reviewing data processing, safeguarding talent and undertaking risk management procedures, said Innovate Finance.
Two-thirds (66%) of fintechs see Brexit as either a risk or something that offers them no business advantage, the survey said.
Not only is Brexit potentially damaging to business for UK fintechs, but the uncertainty around it is a serious distraction, according to Charlotte Crosswell, CEO of Innovate Finance.
“At this time of rapid growth in the UK’s fintech sector, which is at the heart of the future prosperity of the UK economy and innovation, we would prefer our members to be focusing on their businesses, scaling up to conquer new markets, at home and internationally,” said Crosswell.
According to the survey, 23% of fintech respondents would appreciate additional information from the government about trade.
Cross-border payments provider Azimo is one fintech that has made preparations. In May, it guaranteed itself the right to operate across Europe through an accreditation from the Dutch Central Bank. This followed the opening of an operation there.
OakNorth Bank is another company that has prepared for Brexit. Alok Prasad, deputy CEO at the challenger bank, said the company expects the impact of no-deal Brexit on the bank to be limited.
“However, we have sufficient liquidity at the bank to address the uncertainty,” he added. “We intend to very closely monitor the news, markets, social media and other information to be fully aware of potential impacts of a no-deal Brexit.
“In addition, we will be reviewing intra-day data to ensure we are fully abreast of how our customers are reacting and to adapt our approach in real-time. We are proactively adding capacity to support customer inquiries in case our customers want to talk to someone. Again, while we expect limited impact to our business, we are fully prepared to deal with a no-deal Brexit scenario.”
Another fintech CEO questioned the figures: “I would question the stats. Brexit is not new news and if a company is not prepared for Brexit, it probably shouldn’t be handling people’s money.”