Britain is on the cusp of seismic change brought on by the 2016 EU Referendum. Brexit has been variously touted as the end of the UK economy and the start of a new British renaissance – and everything in between. But high-profile tech investors including
Michael Moritz and
Michael Blakey are unlikely to be phased, and for good reason.
Fintech has a long history in the UK, based largely on the country’s dominant financial and banking markets. But even the best estimates 20 years ago could not have predicted the rapidity of the UK’s rise to the top spot in global fintech.
Today, it’s estimated that more than 76,000 people work in the UK fintech sector, many more than in Silicon Valley or New York, and last year more investors chose to put their money into the UK than anywhere else in Europe. In fact, in the first six months
of this year, British fintechs attracted record investments of close to £3bn.
The competition for top spot is tough
There are some clouds on the horizon though. The looming possibility of a no-deal Brexit, and continuing political instability – not made any the less for the choice of new prime minister, and of course, the nightmare scenario for traditional banks: the
loss of passporting rights.
These issues have given other fintech centres in Europe, and their startups, room to hope, and grow. Just this week, N26, a German fintech raised $300 million from investors including
Peter Thiel, making the company one of the most valuable unicorns on the continent.
But in the same month, UK-based Revolut became one of the first to expand out of Europe, launching its product in Australia, where it already has more than 20,000 people on a waiting list ready to sign up straight away. And to top that, another London-based
fintech, Checkout.com, raised $230m in Europe’s largest ever Series A funding round.
So while the European continent is fighting back hard, the UK is not going to let go of its crown easily, or any time soon.
Why is the UK going to stay in the top spot?
The reason why the UK is likely to remain at the top for fintech are largely mirrored by what’s happened in the traditional financial services sector, and what is likely to happen there post Brexit.
Finance is a sector that thinks, organises and operates in very long cycles, and snap decisions or huge shifts are not in its nature. Since the EU Referendum was held in 2016, many commentators have been convinced that all the traditional banks would flee
to Germany, namely Frankfurt, taking thousands of staff with them. But this has not happened, and interest in this idea is now on the wane.
The UK’s economy is built on financial services and its laws and regulations are specifically designed to make finance easy. It’s tough on corruption and has a reputation for security and good governance. This rubs off on fintechs, and they are consequently
seen by many as the gold standard.
Never underestimate the pull and power of London
Growing businesses need talent, from wherever they can get it. They need the brightest and best to join their startup and power it forward. It’s easy to say that post-Brexit people will not want to come to the UK, or find it more difficult to do so, but
never underestimate the power of London to draw people from across the world into its orbit, regardless of the obstacles put in their way.
Not only is London one of the most cosmopolitan and exciting cities in the world, possibly more importantly, it has the language and culture too. When Frankfurt was touted as the next place to host large numbers of UK banking staff, the banks found it more
difficult than expected to get their staff to move. In fact, even Deutsche Bank found it difficult to lure their London-based German staff back, scaling down their transfer plans from some 4,000 to just a few hundred.
UK fintech has never been more profitable, secure or appealing for investors, and workers still place London at the top of their list of preferred locations. Yes, this could change post Brexit, but despite all the turbulence, the UK, and London especially,
is more than likely to remain a global fintech hub.
The UK will still be the best place to start a fintech post Brexit