The FinTech Industry Speaks About Brexit and What It Means for Financial Services

Last week, we saw a drastic turn of events with UK exiting the EU, commonly known as 'Brexit' (British exit) along with British Prime Minister David Cameron’s decision of resigning by October. Along with it came the speculation of how these events will affect the UK FinTech industry. According to a source, in 2015, the British FinTech sector generated £6.6bn in revenues and attracted roughly £524 million in investment.

The UK is home to FinTech firms such as TransferWise, Zopa and RateSetter and employs about 61,000 people, about 5% of the total financial services workforce.

LTP has gathered some of the quotes from some of these FinTech firms of the UK on Brexit and how it will affect their operations in the UK:

  1. Brexit means more currency volatility, different regulations and a totally different banking system for the UK. For companies doing business in the UK, this creates a lot of friction, on top of the other sovereign currencies that were already causing headaches (AUD, CAD, CNY, JPY) prior to the UK’s divorce from the EU. Businesses now face an unpredictable payments ecosystem – the days of the GBP moving almost 1:1 with the EUR and having all payments, licensing and regulatory questions aligned between the UK and Eurozone are over. Leaving businesses with an unpredictable payments ecosystem to manage and yet another currency to hedge. – Tomas Likar, VP of Strategy at Hyperwallet
  1. Transfast is operating as normal today. Our currency trading desk was well prepared for either outcome of the vote in the UK. While we experienced high trading volumes in the days leading to the vote, that volatility will not affect our customers’ ability to send funds globally. We are working closely with our bank partners and payout partners around the globe to ensure that our customers’ beneficiaries continue to receive funds in a timely manner and without disruption. In my career in the financial services industry, I’ve seen the industry successfully work through multiple major political and economic events, and in the coming days and weeks, we will continue to monitor the situation closely. – Samish Kumar, CEO at Transfast
  1. We have already taken calls from prospective investors in our next fund, questioning their future commitment to UK tech, said Tim Levene, Founder of Augmentum Capital, a venture capital fund backed by Rothschild.
  1. Epiphyte, which helps firms make transactions using blockchain, says that the firm might have to consider relocating if the UK severs ties with Europe. I hope that the UK and EU continue to operate as a single market which is to everyone’s advantage. If the UK truly does disengage from Europe, we may need to consider relocating. If London differentiates itself with streamlined regulation, reduced tax burden for employees and support for innovation, it could become an even more attractive hub for FinTech and startups. – Edan Yago, Founder of Epiphyte
  1. Richard Lumb, Head of financial services at Accenture, says that half of all European FinTech investment had been made in the UK. But, he added, these finTech companies are footloose with a global mindset and fortress UK is not going to be so attractive now.
  2. Nothing’s changed yet but everything’s changed. This is likely to affect regulation and the movement of talent: two massive issues for business. – Taavet Hinrikus, CEO and Co-founder of TransferWise Ltd., a London-based cross-border payments startup.
  3. The Brexit vote has plunged Britain and the rest of Europe into the unknown. A lot of FinTech peers are thinking about moving to Germany, removing the uncertainty of being based in London. – Erik Engellau-Nilsson, Head of communications at Klarna, a Swedish FinTech firm.