The International Fintech Conference took place in London on Wednesday and the message from fintech companies was: stay away from London. The reason for such a stark message was UK’s decision to leave the European Union last June. However, government officials were also in hand to send a different message.
Straight talk from a fintech ‘unicorn’
The most critical message regarding Brexit came from one of the ‘unicorns’ of the UK fintech industry. TransferWise’s co-founder Taavet Hinrikus said the fintech firm would not have London as its base if he were to do it all over again.
“While we’re happily headquartered here in London, if I were setting up TransferWise today I would not choose London,” Hinrikus was quoted in Bloomberg. He went on to state, “We have no idea what Brexit will mean for the city or for the country and that uncertainty is damaging”.
More importantly, Hinrikus pointed to the problem of attracting talent in a country that might have stricter controls in terms of who gets in. The UK fintech sector has so far relied heavily on international innovation and international co-operation in fintech is often key to success.
According to a survey by venture fund Balderton Capital, over 40% of UK tech startups were founded by people who studied abroad. Hinrikus and his fellow co-founder Kristo Kaarmann are perfect examples of this type of innovation – both are Estonian nationals who set the company up in the UK in 2011.
Hinrikus told the BBC, “We came to London because of a great environment for entrepreneurship and because of a regulatory system that gives access to 500 million people in Europe.
The loss of passporting rights, which provide EU companies unfettered access to all others in the bloc, mean the fintech firm is heading into mainland Europe by 2019.
Different message from the government
However, the conference also featured the UK government, which took a different tone on Brexit. Closing speech to the event was made by Liam Fox, Secretary for International Trade, who said, “Never before have prospects been so great. Never before has investment in the industry been so attractive.”
Fox made it clear the government would continue to back fintech industry and ensure the country remains attractive for this industry, which generates around £6.6 (around $8.3) billion in revenue each year. The sector also employs over 1.2 million people. According to Fox, the government is “committed to maintaining this environment, supporting new businesses and facilitating global market access for British companies.”
The government isn’t the only ones who believe in the UK’s continued success as a global fintech hub. Samir Desai, the co-founder and head of Funding Circle, was quoted in Bloomberg stating, “It’s [London] still a great place to start a company. You have the ecosystem, the talent, and the support of the government.”
Hinrikus wasn’t all doom and gloom either. He pointed out to the optimism of entrepreneurs and concluded, “Fix talent and everything else will fall into place.”
As Brexit negotiations haven’t yet fully gotten underway, fintech companies will continue to operate in an uncertain environment in the UK. This could mean some of them pack their bags and consider setting up elsewhere in Europe.