By Peter Wood, CEO of CoinBurp
Brexit is the process that began in 2016, with a referendum on whether or not the UK should remain a member of the European Union. The process has now become extensively drawn-out, with no obvious resolution in sight. The EU consists of 28 European countries or member states which is headquartered in Brussels.
The delay of Brexit is caused by divisions on how the United Kingdom should leave the EU and what the future relationship should look like. Possible solutions range from revoking Article 50, the piece of legislation that enacted the result of the 2016 referendum and committed the UK to leave, to leaving the EU with out a deal, a so-called ‘hard Brexit’. A withdrawal agreement drafted by former Prime Minster Theresa May was defeated three times with MPs voting against it.
There has been a petition to cancel Brexit with millions signing it, marches demanding a second referendum, and marches about the way new Prime Minster Boris Johnson is handling the withdrawal process.
The net result is that many, many business owners across all sectors and all parts of the UK are unsure of what the future holds for them and their employees.
Fintech and Brexit
London is perceived as the ‘Fintech Capital of Europe’. It has an ever-growing number of start-ups and established companies, all of which have a positive impact on the city. Job creation has increased by 61% over the past year according to recruitment firms across London. This growth makes financial technology the fastest growing sector in the London economy.
With such promising statistics, how will Brexit affect growth and positive impact within the current economic state?
The UK’s fintech sector has continued to progress since the Brexit vote. The United Kingdom has always encouraged innovation, creating a surge of growth, thus increasing investment opportunities for not only local investors but also international investors. This injection of finance aids the growth of fintech companies.
Brexit, however, seems to be limiting UK fintech companies operating with European companies, with factors such as trade and employment becoming valid concerns.
This growth makes financial technology the fastest growing sector in the London economy.
Brexit has given Fintech companies and the investment community pause for thought, with many risk factors to consider. This has not hindered growth by any means but still provides uncertainty in Europe whilst negotiations continue in the weeks, months and possibly years ahead.
If we start to see a loss of investment and talent from the European region, this can be compensated by potential employees and job seekers from other territories, such as Asia, coming to the UK. London will still remain a global capital of fintech, but that’s not to say there may be a decline in growth compared to other regions.
How can fintech companies prepare for the worst?
- Despite the growing fintech sector in London, preparing for the worst is diligent and necessary. One means of preparation will be to build investor and international relationships which if not already done, will be vital for future development. Doing so provides opportunities following the possible disinterest of EU and local investors.
- Any estate agent will tell you property sales are in decline, and the reason for this is due to the uncertainty of the property market following Brexit, so people are staying put. This applies to the job sector where staff are staying in their positions due to employment uncertainty and vice versa, where companies are retaining staff and reducing turnover.
- As mentioned before, the London fintech market is currently in a strong position, and is filled with innovative and forward-thinking companies. It goes without saying that for many companies, if not all, service is key as customers are their bread and butter. It would be advisable to improve current services or to create and onboard new services to deliver value to your existing and future clientele. Giving your clients a reason to stay.
- A localised service makes you specialised and focused on what you offer and to whom. If Brexit were to limit or cut off your current European clients, you will need to look to expanding your offerings to accommodate for your ‘once was’ audience and adapt to change.
The UK remains the most welcoming country for fintech businesses in terms of the regulatory framework, so regardless of how Brexit unfolds, it will maintain a certain competitive edge over its European neighbours.
This being said, it would be unwise to ignore the negativity that may surround this exit, so stay diligent and adaptive.