Today the United States celebrates Independence Day, with cookouts and fireworks and no dearth of parades. But across the Pond – regardless of the initial claims last week that Britain had occasioned its own Independence Day via the Brexit vote — for FinTech, freedom is just another word for lots and lots left to lose.
Should Brexit go through (and despite the machinations of some opponents and movements to reconsider the vote, the departure is a better-than-likely scenario), FinTech has its work cut out for it, should the industry not want to be trapped in the unknown and be yoked to Britain.
The industry has benefitted, and Europe has benefited, from cross-symbiosis, where U.K. payments firms can innovate and tailor their technologies to a large stage, the continent. In turn, the relative ease of licensing (thus far) has allowed for rapid development of digital conduits to speedier and safer transactions. However, the unity that has marked cross-border money movement in that region may be enjoying numbered days.
FinTech is nascent enough that the U.K. firms that have been forging partnerships with traditional finance firms (relationships promoted by PSD2, as the European Banking Authority’s Payments Services Directive is more commonly known) in a move that brings technology to the incumbents and scale to the upstarts. That might end rather abruptly if the U.K. firms cannot share the benefits of porous borders, for tech and staff, that had been in place for so long.
So as to the thoughts of freedom understandably percolating this July 4th, there’s an easy way out, which would be for the U.K. firms worried about being “landlocked” – or in Britain’s case “isle locked” – to move physical locations, to any of the other financial centers that dot the landscape, such as Berlin or Amsterdam. The potential for all sorts of licensing headaches would make some firms wary of investing time and money in operating in the U.K. (and the converse might be true as well). That’s why an exit from Brexit might be in the cards – especially if capital flows slowly between the U.K. and the rest of Europe. Perhaps just as precious as capital is talent. FinTech firms will look away from the U.K. as a strong pool of tech-savvy professionals and the U.K. will likely face a crunch from attracting people from the E.U. Labor pool. Now competition for that talent will get a lot more expensive.
With both engines sputtering here, is it reasonable to expect that startups will get off the ground with relative ease? Brexit won’t really be real and final till 2018, but the answer to that question will come sooner rather than later.