In some ways, the causes of both globalisation and the fintech boom have much in common.
Both phenomena have been driven by previously unthought-of technological advances, innovation, and increasingly open markets.
So if, as has been argued, the UK referendum was the first case of a major democracy voting against the impact of globalisation, does it follow that Brexit could spell the end for the UK’s fintech advantage?
My view is no – UK fintech will continue to thrive and set the global agenda, thanks to our nation’s unique advantages.
First and foremost, fintech requires an ecosystem economy – and London’s is virtually unmatched. On the supply side, we have mature and liquid capital markets, an integrated financial services and technology talent pool, supported by an agenda-setting regulator and judiciary, as well as unmatched access to specialist accounting, regulatory, and legal professionals.
Second, there is regulation. Any agreement with the EU in principle in respect of equivalence is not in itself something to be feared. The UK is a global leader in regulation – and it is our prudential and conduct environment that has set the foundations for much of our fintech growth and influence.
Even a hard Brexit will not reduce the UK’s influence in global regulation. For example, we are a key member of the Financial Action Task Force and the Global Financial Innovation Network, and continue to set the regulatory agenda within the international sandbox.
Fintech will be looking to avoid the same reputational issues that are currently plaguing the tech giants. This provides an opportunity as well as a need for the proactive and trusted regulatory leadership that the UK provides.
Of course, a no-deal Brexit would not be the choice of much of Britain’s business community. In an increasingly global world, it will present some difficulty. But given the environment – not just in London but across the UK – I believe that the fintech sector will continue to thrive.
And the immediate regulatory and legal impact of a no-deal outcome on a nimble fintech business is much less than for legacy financial services businesses encumbered by legacy infrastructure and contractual arrangements.
The only fly in the ointment is access to talent, which as we all know fuels the fintech ecosystem. While the EU 27 capitals are welcoming skilled individuals from all over the world, the UK, whether by perception or reality, is closing its doors.
The Brexit debate seems to have been threaded by references to migrants from various countries jumping queues, as Theresa May mentioned in her speech to the CBI this week. But if the queue of talent is too long, we should focus on opening more lanes, and finding a much more straightforward immigration and visa system designed for a mobile global workforce.
Brexit does not pose an existential threat to fintech. Yes, remaining in the Single Market would accelerate our fintech advantage but with no deal we are still ahead.
Fintech is the jewel in our economic crown, and as long as the UK can keep attracting talent, and that talent is allowed through the queue, I don’t see how any other country could measure up.