Although the UK is currently focused on election campaigns, the business world is still trying to get its head around Brexit. The talk has turned into jobs and the industries the UK might rely on after it leaves the European Union. For many, the saviour is likely to be fintech.
Fintech will soften the blow
A number of major banks have already started making plans to move their operations from London to mainland Europe. The shift would mean a loss of jobs but officials are hoping the fintech sector can soften the blow. Bank of England Governor Mark Carney spoke at the UK Government’s International Fintech Conference last month and said he believes the fintech sector can promote growth and help stabilise the job’s market.
But is the business world quite as optimistic about the potential of the sector in helping to compensate for the loss of jobs? Business Review Europe looked the issue in an article and found the mood to be rather optimistic. The article interviewed Bertrand Lavayssiere, a managing partner at financial consultancy zeb, who said, “If, in the worst case scenario, thirty-to-forty thousand jobs are slashed in the wake of Brexit, as has been suggested, then I do believe that Fintech could create that same number of jobs over time.”
However, the same article pointed out the problematic nature of fintech in generating jobs. The sector is, in essence, about digitising the finance sector, which can have the potential to discard traditional jobs, not necessarily to create more.
Dr Nathalie Moreno, a partner in the technology, commercial and data privacy team at Lewis Silkin LLP, made this point stating, “While Fintech may create one or two roles to help implement and run the systems, this does not and will not offset the many job losses that will occur. These newly created roles represent a fraction of the attrition.”
The UK has highest jobs growth numbers in fintech
So far, Brexit has not dampened UK’s ability to attract fintech companies and job growth in the sector remains steady. Indeed, while other European countries have started to focus on promoting the industry and creating new hubs to attract innovators, the UK continues to have the highest job growth in the sector.
According to Joblift research, a German recruitment website, the fintech sector in the UK has seen 5% increase in jobs every month since April 2016. Most of these jobs are being created in London. Contrast the growth with that of Berlin, which is considered a big threat for London post-Brexit. In Berlin, the job growth in the fintech sector has stood at 2% per month.
The worrying sign for many is the investment figures which declined in 2016 from the numbers in 2015. However, even investment has been on a steady footing after the initial Brexit shock and last year’s investment stood higher than in 2014.
Therefore, fintech is likely to have an important role in the economic success of the UK in the post-Brexit world. However, its role as the job saviour is probably not as straightforward.