Brexit Fintech Industry is Uncertain
The fintech industry in Great Britain has had significant backlash since the announcement of Brexit two years ago. The concept of Britain leaving the European Union has been postponed until January 31st, 2020. This decision is beginning to take its toll, with numerous businesses opting to leave the region in anticipating of falling markets. Great Britain with the London Stock Exchange is a global financial giant, and the effects of Brexit is beginning to dissipate trading volumes for the country. Analysts remain divided on if Brexit will affect the Fintech Industry.
The Brexit Referendum was first approached in 2016, with leaders continuously debating on the future of Great Britain and the European Union. The slim majority in the United Kingdom voted for Brexit, with the highest percentage of elder voters participating in the referendum. The campaign, led by Boris Johnson, made international headlines. Prime Minister Johnson continually is working with parliament to work out the deal, with the house refusing to accept any form of Brexit. There are now rumours of a second referendum, with a new election anticipated for the new year. It’s expected that Boris Johnson will be removed from parliament, but it doesn’t guarantee the end of Brexit. It’s all dependant on how many voters appeal Brexit with the rumoured second referendum.
Whatever decision is made regarding Brexit, the last three years has damaged multiple industries in great Britain. Growing industries with robust products are reporting transitions to new markets like Ireland, Germany or France. This should be a significant concern for parliament, because the Fintech Market employs over 60 thousand British Citizens and brings in an average of €8 Billion yearly for the economy. It’s also estimated that roughly €15 Billion is invested in the Fintech Industry bi-yearly. These numbers could be lowered by several factors, the same factors that have decreased profits for multiple industries.
Another instance where corporations are starting to worry is individuals working in the Fintech Market are beginning to uproot to new countries. Estimates suspect that by Mid-2020, there could be a significant shortage of Fintech Brokers. Subsequently, firms remaining in Great Britain would have to educate new employees in finance. Costs for new employees will drastically increase, with them having to learn cloud computing and data science.
The British Financial Advocacy Group, CityUK, released the annual Fintech Industry reports. In their reports, the brokerage group stated: “Over the last few years 51% of UK recruiters have seen an increase in demand from financial services businesses to hire candidates with AI skills. They have also seen a 49% increase in demand for cryptocurrency and 46% for blockchain.”
Broadening the workforce for the Fintech Market has never been more critical, with demands for knowledgeable employees growing daily. This has never been an issue before in Great Britain, where accessing their Financial Hub was secure for most European Citizens. Following the decision made in the second referendum, this simplicity to accessibility could be terminated. Most brokers knowledgeable in Fintech trading and brokerages maintain Fintech exchanges have begun pre-emptively accounting for Brexit. It’s estimated that 20% of the workforce has started returning to their home nations, such as Holland or Italy.
The decision regarding Brexit hasn’t been finalized, but already new hubs are appearing across Europe. These Post-Brexit Hubs are seeing significant percentages of Fintech Companies and Firms moving to these new locations. The Capital Market Analytic Firm, New Financial, estimates that more than 275 British-Originating Fintech Groups have relocated to new cities. Detailing their analytic estimates, the Dublin-Based firm noted where these British Firms have transferred. Sixty firms moved to Luxembourg, Forty to Frankfurt, Forty-One to Paris and Thirty-Two to Amsterdam. Capital Market Analytics suspects that number will triple by Q1 2020.
It should be noted that these relocated moved are speculative, with the Capital Market Analytic Firm not receiving any confirmations from the selected brokerages. However, all British-Originating Fintech Firms mentioned have publicly posted new addresses on their website’s homepage. Legality issues could ensue for the brokerages that confirmed their change of address.
Experts Examining the Possibilities
There have been multiple experts that have publicly weighed out all the possibilities regarding Post-Brexit. One such individual is Christian Schroeder, who founded 10x Value Partners and acts as their Chief Executive Officer. He explained that the liberal design for regulations in Great Britain has enabled for its dominance over the fintech industry. He noted that their accommodating laws for venture firms in the fintech industries doesn’t have anything to do with the European Union and shouldn’t affect the market. However, Christian didn’t account for the considerably smaller workforce that’s shorting out in Great Britain. The task of training new talent would allow for fintech markets to be unaffected.
Manuel Hayden, the Chief Executive Officer and Co-Founder of NextMarkets, has also publicly explained his stance on the Post-Brexit Market. He noted on other European City’s and how reregulation in Britain is causing fear amongst brokers. His comment reads: “Paris will likely attract much of the talent that would traditionally move to London in pursuit of a career in finance. Already the city has proven itself capable of capturing European markets via liberal policies and key infrastructure. What we’re seeing is investors getting spooked about a level of deregulation in Britain which would no longer meet European standards. High taxes, barriers to new talent, and all the friction caused by a European exit will be disastrous for the British fintech industry.”
Those individuals claiming that Brexit hasn’t affected financial markets in Great Britain are blatantly lying. Post-Brexit has been one of the most substantial issues facing the European Union and British Citizens. It hasn’t just forced hundreds of brokerage firms to relocate and thousands of employees to move from their homes, but it has also divided families and friends. It’s drawn international attention to Britain in the worse way possible, with Boris Johnson giving the historical nation a horrible reputation, similar to that of the United States with Donald Trump. Unfortunately, the British Government continues to ignore the issues facing financial markets and hasn’t executed any legislation to solve the problems at hand. Subsequently, we are now beginning to see the tidal shift of the Fintech Financial Industry in Great Britain.