London’s financial technology community warns of problems ahead as the reality of the UK leaving the EU unfolds
As the UK government continues to fudge its way through Brexit, financial technology (fintech) industry investors and entrepreneurs have been venting their concerns at London Fintech Week.
https://www.computerweekly.com/news/252444566/UK-fintech-industry-fears-Brexit-induced-talent-squeeze
With the UK’s imminent exit from the European Union (EU), the growing fintech sector is at risk of losing momentum, with access to talent and the continued ability to do business across the EU single market seen as vital.
Venture capitalists (VC), which invest hundreds of millions of pounds in the fintech sector, said London is at risk of losing its position as a leading fintech hub.
Despite the UK capital’s undoubted advantages, such as its rich financial services ecosystem and supportive regulator, Brexit-related problems such as reduced access to talent and the inability to trade friction-free across the EU, as well as the high cost of setting up in London, are making cities in the EU more attractive to fintech investors.
Martijn De Wever, CEO at VC fund Force Over Mass Capital, said Brexit is not going to have a positive impact, at least in the short term, and London’s rival cities are using this to their advantage.
“What you are seeing right now is all the other countries jumping on it and trying to get companies to open operations in their countries,” he said.
De Wever added that because London is expensive place to live, it is already quite hard for startups to run an operation there.
“It will become more and more attractive to move operations elsewhere,” he said. “Technology doesn’t know any boundaries, so it doesn’t really matter where your organisation is as you just need access to talent.”
De Wever said London is at risk of “losing a big portion” of fintech business at the moment.
Nikita Tchesnokov, principal at fintech-focused fund Gauss VC, said the biggest concern is access to talent, rather than regulations. “Will people be able to come here as easily as in the past in order to bring the skills necessary?” he said.
Read more about Brexit and fintech in London
- A sudden loss of access to the single market and the ability for banks to trade across Europe will inevitably mean the UK is no longer the place for fintechs to be headquartered.
- The loss of passporting rights, which gives finance firms licence to trade across all the EU, could make the concerns of startups outside the finance sector seem minor.
- London is among the world’s financial services capitals, but it is facing many questions as the UK prepares to break away from the European Union.
Alex Macpherson, chairman of VC fund Octopus Ventures, said the disastrous thing about Brexit is the uncertainty. “Talent is an issue for the companies we work with,” he said. “How do you continue to scale up? Where you have businesses scaling up, they will be thinking whether they should do it in Berlin or Paris or Switzerland.”
Macpherson said entrepreneurs play what is in front of them and a talent challenge is currently in play.
Asif Faruque, head of content at London-based fintech ecosystem Level39, said being a member of the EU has been beneficial for businesses seeking talent. “We have had the joy of living in this single zone where people can come and work freely,” he said.
Faruque warned that Brexit could eradicate this advantage. “If that is taken away from us, it goes without saying that it is going to be difficult,” he said. “There are ways around it, but access to talent is my biggest concern now. Diversity is a key strength of our business.”
Helene Panzarino, managing director of accelerator programme Rainmaker Colab, also teaches fintech courses at various universities. She said London and the UK will struggle to fill the skills gap if talent from the EU dries up.
“I am not seeing the ready-made pool of talent that will [appear] by 2019,” she said. “We are getting there, but it will take time.”
Panzarino added that businesses are already relocating to ensure they still have access. “I am already seeing some companies take early advantage by moving to Dublin, Amsterdam and Berlin.”
With top talent dwindling and uncertainty present alternate talent from abroad that may require Tier 2 General Sponsorship may be key. Some areas such as Data Science, programming and Big Data may require such expertise from beyond Europe.
For more information regarding Tier 2 General Sponsorship as a client or IT candidate do get in touch at consult@mavisas.co.uk.
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Mason