Here’s how UK fintech’s rallying action in a post-Brexit no-man’s land
London's fintech industry is rallying to action after the vote for Brexit in a bid to alleviate the fears of startups, along with their investors and supporters, over issues such as capital, market access and talent.
The industry is already formulating a plan in the face of overwhelming uncertainty and a lack of clarification from political leaders on the next steps after Brexit in an attempt to get on the front foot.
A meeting between the industry, City of London Corporation and officials from the Treasury has already taken place in the fortnight following the vote, and there is a certain amount of reserved confidence that fintech will remain high up on the agenda even as Britain deals with the complicated matter of negotiating its exit from the EU, one fintech insider told City A.M., despite the long list of industries likely queuing at the doors of Westminster.
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The government has given high level backing to the industry which was estimated to be worth $6.6bn last year alone and employs around 61,000 people – already to be five per cent of the financial services workforce. This progressive support is one of the key factors contributing to the UK's position as the leading fintech hub in the world, along with close ties to the capital's financial services powerhouse.
A fortnight on, chancellor George Osborne and economic secretary to the Treasury Harriett Baldwin have promised to continue to build on UK fintech's achievements "over the coming years", after the vote for leaving Europe.
And now, an initial plan of action is being put together.
That includes so-callled clinics being set up to advise startups on crucial areas such as finance, talent and crisis communications from leading firms such as consultancy firms Deloitte and EY, law firm Hogan and Lovells as well as PR firm Freuds.
Industry body Innovate Finance revealed the plans at a town hall event held for startups late last week. The group is also working on tool kits to help fintech firms with investment and liquidity issues and will be working closely with venture capital investors and startups to match up their needs.
A squeeze on investment is seen as one of the biggest potential issues ahead and while some investors have been outspokenly bullish on the UK post-Brexit, others have already postponed or cancelled planned investments in startups, according to one fintech insider.
UKTI, the government's trade and investment body and the Treasury will look at extending fintech bridges – a concept that lets the Financial Conduct Authority work closely with regulators from other countries to allow startups working in both locations to set up more easily. The scheme has already kicked off with Singapore and Australia, with India a likely contender to be set up soon.
Christopher Woolward of the FCA, which recently set up an innovation hub and accelerator-style sandbox aimed squarely at fintech firms, said that promoting innovation and competition was still a crucial goal of the watchdog. Around 300 firms have so far been involved with its Project Innovate scheme over the past year or so.
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He added that the first round of firms under the fintech bridge scheme were now arriving in London 12 weeks after the deal with Australia was agreed, indicating the ability to move swiftly with any new plans.
Meanwhile, fellow industry body Tech London Advocates and the Mayor's office have launched a Brexit hotline for concerned startups to call for advice on areas such as investment and talent.
The timely action comes as other European capitals, particularly those with an already strong startup ecosystem such as Berlin and Dublin, try to woo businesses from the capital.
While there is still numerous question marks hanging over the future of fintech in the UK, and in particular in the capital, and the prospect of Brexit itself, it is already pulling together to ensure it remains on a strong footing if or when Britain does eventually take a step forward with Article 50 and new trade negotiations.
However, less easier to prepare for is a more existential fallout of Brexit. Several people working in the industry indicated that the cultural implications of the vote – which particularly highlighted a widening divide between a cosmopolitan capital city and the rest of the country – may well be harder to deal with than the already challenging issues of continuing to do business in a non-European Union linked Britain.