Britain’s Lead as Fintech Sector Hub Still Shaky Post-Brexit

Journalist:
Olusegun Ogundeji
August 9, 2016

Since Britain’s vote to leave the European Union in June, there have been several discussions surrounding London losing its spot as a leading global fintech hub.

The topic became particularly interesting after Paris Europlace, which promotes French finance plans, chose to travel to London to entice financial firms and professionals. The French government agency, Business France, also distributed leaflets to promote the benefits of working and living in Paris.

On the other side of the border, Frankfurt city officials set up a specialist hotline for banks that want to discuss moving operations outside of the United Kingdom. The likes of Jochen Siegert, the chief operating officer of Traxpay, a Frankfurt-based payments platform, described London as having “committed suicide” as a leading fintech centre following the vote.

These were some of the moves that raised the stake that there could be a high contention with London over which city would be the global financial hub. It was a shaky start for London and its vital business statistics in that direction.

According to the City of London’s website, the British capital handles $2.7 trillion of foreign exchange turnover each day – 41 percent of global foreign exchange while 20 percent of the world’s foreign equity market is listed in London. It is also home to 251 foreign banks.

Shrinking the Talent Pool

However, despite the fact that it’s been six weeks since the Brexit vote, there are still obvious fears that these statistics could change in the future.

Britain would likely lose access to Europe’s single market. This, in turn, will shrink the talent pool, put off foreign investors and damage the country’s fintech status.

If that happens, the roughly £6.6 billion worth of revenue generated by the U.K. fintech sector in 2015 alone, according to a report by Ernst & Young and HM Treasury, could be split with another major city or across various cities.

The report ranks London as the top global fintech hub regarding market size, investment, workforce, light-touch regulation, and supportive government policy.

That hasn’t changed for the moment. Startups in the fintech sector seem to be finding a way to circumvent the negativity in the situation to their advantage.

London Still the Best Choice

Nevertheless, London – and to a larger extent Britain – still stands as the best option to be the world’s fintech hub today. It is compact regarding it being a meeting point for the fintech sector. Better than the U.S. whose finance and tech hubs, New York and Silicon Valley, are miles apart. It’s the same with Germany’s Frankfurt and Berlin.

Concerning the cryptocurrency context, top digital currency bitcoin is growing to play a fundamental role in the global fintech sector. As expected, its use will supposedly be higher where there is a larger concentration of fintech startups.

However, though bitcoin had a shining moment in its history as a haven for investors using it to avoid the volatility of the British Pound in post-Brexit, it is not clear if there is any correlation between the current price of the digital currency and today’s turn of events.

Featured image from Shutterstock.

Olusegun Ogundeji