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How is the UK's Fintech Industry Reacting to Brexit?
Tracing the course that the UK’s fintech industry is taking in the aftermath of Brexit reveals many interesting possibilities.
FREMONT, CA: The UK has always been considered as the financial centre in Europe. Today, with the ongoing digital revolution, the UK has acquired the tag of being Europe's fintech hub. However, with Brexit finally happening, the fintech hub is expected to experience a churn. These are still the early days after Brexit, and it is difficult to predict what the implications might be for the fintech industry as a whole. But speculations suggest that the geopolitical developments are poised to change many things about the UK’s position and reputation as the best European destination for fintech.
One way to look at the impact that Brexit might have in the context of the fintech industry is by considering investments. Investments, however, paint a rosy picture for the country’s fintech companies. The last year, 2019, proved to be a winsome year for fintech firms in the UK as funds kept flowing in. According to reports, Europe saw a rapid growth in fintech investment, resulting in a new high. A majority of the investment, almost 83 per cent of it, flowed into the UK. These investments happened when Brexit had become imminent. Thus, one can say that the prospects of Brexit did not hamper the growth of the UK’s fintech industry. But this is only partly true.
A more comprehensive view of the situation reveals finer details about how fintech companies in the UK are responding to Brexit. A report published by PYMNTS mentions that hundreds of fintech companies in the UK are shifting operations and assets to other places in Europe. Dublin, Paris, and Luxembourg have been some of the biggest beneficiaries of these relocations. Another factor that is weakening the UK's position post Brexit is the reduced flow of talent into the country from its European counterparts. As a result of this, industries like fintech, which mandate technological expertise, might experience a shortage of qualified personnel. Since innovations rely upon talent, the UK’s position as the fintech hub might be compromised.
However, as has been mentioned earlier, these are still early days, and the possibilities are mostly speculative. Only time and policy decisions will tell whether the fintech in the UK is headed towards growth or will fall behind in the race.
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