No one knows just what Brexit will mean for commerce, for international trade, for currencies across the Continent. The only certainty is that the effects will be far-reaching.
We’re about to find out what it all means, of course, as the beginning, well, begins.
After nearly three years in the making, and barring any unforeseen events, Brexit will dawn at the end of the month.
And one question worth posing is: What will happen to FinTech? Specifically, what will happen to London’s standing as a FinTech hub?
The data for all of 2019 may not be in yet as of this writing, but by all accounts – and no matter where you look – it was a banner year for London. The city has long been known as a financial center (especially in Europe) and more recently as FinTech. The data compiled into the beginning of the fourth quarter, and as reported by London & Partners and Innovate Finance, showed that more than $2 billion had been invested across 114 deals for firms based in that city. That was outpaced, perhaps not surprisingly, by San Francisco, but led New York.
Follow the Firms (and the Money)
All of this, despite the specter of Brexit. But it should be noted that the uncertainty that comes with major geopolitical upheaval and refashioned trade zones has nibbled at the edges a bit. It may be the case that the pie is big enough for several players – in this case, FinTech hubs – but at least some attrition has been taking place.
Consider that think tank New Financial said that as of March, more than 275 firms in banking and finance have moved at least some of their asset base, staff or operations away from the U.K. and to the EU. The biggest beneficiary to date, according to the data, has been Dublin, which has seen 100 relocations, followed by Luxembourg (with 60), then Paris (41) and Frankfurt (40).
As we noted, Paris may see a boost in startup and FinTech capital flows (and thus, new companies taking flight). President Emmanuel Macron announced in September that within France, asset managers and insurers have earmarked a five-billion-euro investment to help grow startups into tech giants. To be specific, the goal is to have 25 FinTech unicorns by the end of 2025 (we wonder if at least some of those FinTechs will offer solutions that grapple with widespread strikes and transportation standstills. Just kidding. Sort of.)
So, several different financial centers have seen shifts amid Brexit, implying that this is no zero-sum game. But the fact that tens of billions of dollars of assets (via banks and funds) may be crowding into avenues not in the City (as London is called) may mean the money could flow closer to those (new) homes. In other words, deepening financial pools in Paris may look toward investing in firms located there.
All of this is speculation, of course. But one clue as to how FinTech may fare is where the talent goes. It’s the talent, after all, that serves as the spark for innovative endeavors in the first place.
TheCityUK, in tandem with Odgers Berndston, has noted that there has been a decrease in the number of graduates coming to the U.K. from other areas in Europe. “The current shortage of tech talent is a strategic issue for the U.K.’s financial and related professional services industry, yet little has been done to quantify our current and future skills need,” said Nathan Bostock, chief executive of Santander UK bank and chair of TheCityUK’s working group on trade and investment, as quoted in Reuters.
The movement of tech talent will indeed be influenced by the shape of immigration policies that come in the wake of Brexit. And to be sure, there are lots of details (including trade) to be hammered out over the next several months – even after Brexit, when Britain will in effect still be a member state.
Until then, to steal a line from Shakespeare: Uneasy lies the head that wears the (FinTech) crown.