Brexit and Fintech – Fintexit 2: This time it’s personnel
As the dust settles on Ann Widdecombe’s European Parliament seat, the chamber free from one shrill shriek, Britain is left finding a new way in the world. Chlorinated chicken and twice-price medicine are all on the menu (yum-yum), but how is the fintech landscape shaping up post Brexit?
There are two elements to Fintexit, and they are the components that make any organisation. Funding and people. The success (or failure) of Brexit in the fintech space will come down to how well innovative UK fintechs can continue to garner investment and recruit talent.
On this score, the situation is still looking relatively rosy. 2019 saw the UK set a new record for investment into fintech startups, with $4.9bn pumped into the industry. That figure puts the UK at the top of the European leaderboard in spite of Brexit uncertainty.
You can almost feel the smugness emanating from Widdecombe as she takes up her new political seat on Nigel Farage’s lap at Brexit Party HQ.
Globally, 2019 saw the UK rise to second in the fintech investment scene, peering over the US’s shoulder. The UK now sit above India and China, who saw a decrease of 93% in funding since 2018. There has been no dramatic cooling of investment in UK fintech.
This figure also pleases Ann. But, she can’t for the life of her work out what ‘fintech’ means. She thinks she’s heard of a Baltic nation with the demonym ‘Fin’, and once heard Farage talk of his love of techno music. It probably has something to do with those two, she decides.
In fact, the UK blows its European counterparts out of the water when it comes to funding. Slotting in behind the UK was Germany with $1.3bn and Sweden sat behind them on $778m.
A neon bright picture of the UK fintech landscape is being painted.
However, when it comes to recruiting talent, it’s not so much plain sailing in post-Brexit seas than navigating an asteroid field. The UK’s fintech scene has relied on European talent to drive technical innovation, and major proportions of the UK’s largest companies are recruited from abroad.
Ann doesn’t like that fact, and mutters something about ‘bloody foreigners’. Farage tries to make a disapproving face but only manages a smirk.
These concerns have been propagated by a number of industry leading individuals. Nikolay Storonsky of Revolut commented that “with all of the political uncertainty kicking off right now, lengthy immigration processes and bureaucracy will only slow down the UK fintech industry’s growth.” The UK will lose out on the best talent to other fintech hubs in Europe like France and Germany, he went on to say. Acting on these concerns, Revolut have made considerable efforts to align the business with Europe in post-Brexit times, recently announcing plans to shift European payments to Ireland and Lithuania post-Brexit.
Likewise, founder and Executive Chairman of Azimo, Michael Kent has echoed these sentiments. “Access to talent is a huge and on-going problem – the fintech sector relies heavily on global talent to plug the serious skills gap facing this country.” UK fintech Azimo is also looking to build out its payments platform and expand its presence in Poland. Just days after to UK withdrew from the EU, the European Investment Bank invested $23m in the money transfer company. The message is if UK fintechs want to shore up their operations on the continent, Europe is only too happy to accommodate.
This time it’s personnel
The old narrative of finance remaining relatively unaffected by political upheaval holds some truth in Fintexit. Investment is on the up, and despite 3 years of real uncertainty surrounding Brexit, the UK is still a global hub of activity in the sector.
But, there is a caveat. The UK tech sector is propped up massively by recruiting the brightest and best from Europe. Affordability, good work life balance and interesting job prospects in other European cities are proving attractive. Combined with bureaucratic obstacles like visas, the continued recruitment of European talent could prove a real stumbling block in the post-Brexit fintech landscape.
“What have the Europeans ever done for us?” cries Ann Widdecombe.
They prop up the UK fintech scene with talented individuals, Ann.