Less than two months after Britain’s vote to leave the European Union cast a shadow over London’s future as a leading global fintech hub, there are signs the country’s reputation for innovation in financial services will survive.
Immediately after Brexit, there was confusion about leaving the EU and how it would affect Britain’s access to Europe, potentially damaging the country’s fintech status.
Access to the single market is, as yet, uncertain as the government has still to clarify the kind of agreement it will seek with the EU in talks that may take years.
Some businesses have considered leaving Britain, but a series of startups in fintech, which owes much of its success to the global financial crisis of 2008-09, when people lost faith in banks and other financial institutions and sought alternatives, are already showing signs of staying put, according to Reuters.
Although several firms have closed funding rounds since the referendum, citing investing in fintech as a risk following Brexit, others have spoken of their intention to stay in London.
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For example, InnoVentures, the Spanish bank’s London-based fintech venture capital fund, said last month it was doubling in size to $200 million.
Mariano Belinky, a managing partner, said the idea of fintech firms leaving London in the aftermath of Brexit was “not reality”.
Lawrence Wintermeyer, CEO of fintech trade body Innovate Finance, agreed. “While people were in shock the day after, most fintechs are actually focused on the opportunity now”.
He said it would be difficult to know whether funding had slowed down for the next couple of quarters but that he had heard of pre-referendum funding agreements with break clauses added in the case of a Brexit vote.
UK Fintech Sector
Britain’s fintech sector is reported to have generated £6.6 billion in revenue last year, according to a report commissioned by the British government.
It ranks London as the number one global fintech hub, based on market size, investment, workforce, light-touch regulation and supportive government policy.
Although investment still lags behind the United States, where venture capital firms are more established, a key advantage of Britain is that, while the US tech and finance hubs, Silicon Valley and New York, are on opposite sides of the country, pretty much everything remains in London.