Britain sets out blueprint to keep fintech 'crown' after Brexit

By Huw Jones

 

FILE PHOTO: Flags of the Union Jack and European Union are seen in Brussels, Belgium December 9, 2020. Olivier Hoslet/Pool via REUTERS

 

LONDON (Reuters) - Brexit, COVID-19 and overseas competition are challenging fintech's future in Britain and the country should act to stay competitive, a government-backed review said on Friday.

 

Britain's departure from the European Union has cut the fintech industry's access to the world's biggest single market, making the UK less attractive for fintechs wanting to expand cross-border.

 

The review headed by Ron Kalifa, former CEO of payments fintech Worldpay, sets out a "strategy and delivery model" that includes a new billion pound start-up fund and fast-tracking work visas for hiring the best talent globally.

 

"It's about underpinning financial services and our place in the world, and bringing innovation into mainstream banking," Kalifa told Reuters.

 

Britain has a 10% share of the global fintech market, generating 11 billion pounds ($15.6 billion) in revenue.

 

"This review will make an important contribution to our plan to retain the UK's fintech crown," finance minister Rishi Sunak said, adding the government will respond in due course.

 

The review said Brexit, heavy investment in fintech by Australia, Canada and Singapore, and the need to be nimbler as COVID-19 accelerates digitalisation of finance, all mean the sector's future in Britain is not assured.

 

"What the UK fintech industry really needs is both access to talent and easy access to global markets," said Mike Laven, CEO of fintech Currencycloud. "Unfortunately, the fallout of Brexit and the pandemic have recently made this more difficult."

 

The review said Britain increasingly needs to represent itself as a strong fintech scale-up destination as well as one for start-ups.

 

It recommends more flexible listing rules for fintechs to catch up with New York.

 

"Leaving the EU and access to the single market going away is a big deal, so the UK has to do something significant to make fintechs stay here," said Kay Swinburne, vice chair of financial services at consultants KPMG and a contributor to the review.

 

A UK fintech wanting to serve EU clients would have to open a hub in the bloc, an expensive undertaking for a start-up.

 

The review seeks to join the dots on fintech policy across government departments and regulators, and marshal private sector efforts under a new Centre for Finance, Innovation and Technology (CFIT).

 

"There is no framework but bits of individual policies, and nowhere does it come together," said Rachel Kent, a lawyer at Hogan Lovells and contributor to the review.

 

Britain pioneered "sandboxes" to allow fintechs to test products on real consumers under supervision, and the review says regulators should move to the next stage and set up "scale-boxes" to help fintechs navigate red tape to grow.

 

"It's a question of knowing who to call when there's a problem," Swinburne said.

 

-- © Copyright Reuters 2021-02-26

 

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15 minutes ago, snoop1130 said:

Britain's departure from the European Union has cut the fintech industry's access to the world's biggest single market, making the UK less attractive for fintechs wanting to expand cross-border.

and another draw back from Brexit but quite sure some key warriors Brexiters  will see it as a gain in independence & sovereignty  555

“What the UK fintech industry really needs is both access to talent and easy access to global markets," said Mike Laven, CEO of fintech Currencycloud. "Unfortunately, the fallout of Brexit and the pandemic have recently made this more difficult."

 

Well the negative impact of Brexit on the UK’s fintech industry is clear, what needs explaining is how the pandemic has had any negative affect.

 

Perhaps somebody thinks they can hide Brexit impacts in fog of talk about the Pandemic.

 

 

17 minutes ago, snoop1130 said:

A UK fintech wanting to serve EU clients would have to open a hub in the bloc, an expensive undertaking for a start-up.

 

17 minutes ago, snoop1130 said:

There is no framework but bits of individual policies, and nowhere does it come together," said Rachel Kent, a lawyer at Hogan Lovells and contributor to the review.

they didn't knew anything about the potential draw backs/impact on their activities/business from leaving the EU.... hard learning times now, it will cost some big quids.... wonder who will be taking the bill, sure not the EU

Another U.K. success story where Reuter’s and Remainers try to spin some bad news from Brexit. It must be so miserable viewing the world from the bottom of an already empty Remainer glass. 

3 hours ago, Loiner said:

Another U.K. success story where Reuter’s and Remainers try to spin some bad news from Brexit. It must be so miserable viewing the world from the bottom of an already empty Remainer glass. 

What success story.

 

Tge UK built it’s fintech industry while a member of the EU and is now having to spend a £Billion in an attempt to protect UK fintech from the outcome of Brexit.

 

This isn’t by any definition a ‘sucess’.

3 hours ago, Loiner said:

Another U.K. success story where Reuter’s and Remainers try to spin some bad news from Brexit. It must be so miserable viewing the world from the bottom of an already empty Remainer glass. 

 

Living in reality can be a bit depressing sometimes but its preferable to living in a fantasy world deluding yourself that everything is good.

7 hours ago, Loiner said:

Another U.K. success story where Reuter’s and Remainers try to spin some bad news from Brexit. It must be so miserable viewing the world from the bottom of an already empty Remainer glass. 

Now both the remainer glasses and the quitter glasses are empty - just ask those who have lost their jobs, the fishermen, the car workers or the regions losing their grants - Cornwall, Wales and the North.

18 hours ago, snoop1130 said:

It recommends more flexible listing rules for fintechs to catch up with New York.

 

Uh huh...

35 minutes ago, George Aylesham said:

Now both the remainer glasses and the quitter glasses are empty - just ask those who have lost their jobs, the fishermen, the car workers or the regions losing their grants - Cornwall, Wales and the North.

Unemployment was down since 2016 (until Covid hit).

 

Of course jobs will move from one sector to another but that is what happens in a dynamic fast moving economy.

27 minutes ago, JonnyF said:

Unemployment was down since 2016 (until Covid hit).

 

Of course jobs will move from one sector to another but that is what happens in a dynamic fast moving economy.

Jobs do not move from one sector to another.

 

When a sector collapses, by example UK manufacturing, the jobs end and maybe new jobs arise in other sectors.

 

The history of UK employment over the past 50 years is replete with skilled workers losing well paying jobs and then being unable to find anything like comparable pay and conditions.

 

It’s also a history in which the UK held a leading position in a number of industries only to see those industries closed as foreign competitors overtook the UK.

 

The UK Government are forking out over a £Billion to support UK fintech, because they know Brexit has placed UK fintech is at risk.

 

 

12 minutes ago, Chomper Higgot said:

Jobs do not move from one sector to another.

 

When a sector collapses, by example UK manufacturing, the jobs end and maybe new jobs arise in other sectors.

 

The history of UK employment over the past 50 years is replete with skilled workers losing well paying jobs and then being unable to find anything like comparable pay and conditions.

 

It’s also a history in which the UK held a leading position in a number of industries only to see those industries closed as foreign competitors overtook the UK.

 

The UK Government are forking out over a £Billion to support UK fintech, because they know Brexit has placed UK fintech is at risk.

 

 

Your second paragraph simply reworded what I said.

 

Total unemployment was down post Brexit until covid.

 

Project Fear is unravelling. Reword it as much as you like. The EU is failing. The vaccine rollout is a barometer of the future.

 

 

 

31 minutes ago, Chomper Higgot said:

The UK Government are forking out over a £Billion to support UK fintech, because they know Brexit has placed UK fintech is at risk.

As apposed to £BillionS to the EU.

 

Sounds OK. Let's see what happens. Time will tell, either way.

On the flip side:-

 

Brexit: 1,000 EU finance firms 'set to open UK offices'

 

https://www.bbc.com/news/business-56155531

33 minutes ago, JonnyF said:

Your second paragraph simply reworded what I said.

 

Total unemployment was down post Brexit until covid.

 

Project Fear is unravelling. Reword it as much as you like. The EU is failing. The vaccine rollout is a barometer of the future.

 

 

 

Exercise your post fails to address the context unintentionally degradation in UK jobs.

 

Over a £Billion being spent on trying to protect UK fintech does not suggest ‘Project Fear’ is failing, rather it indicates a gaping failure of Brexit.

 

Your predictions on the EU failing are without basis, the Vaccine roll out has nothing to do with Brexit or UK fintech.

 

 

Just now, nauseus said:

On the flip side:-

 

Brexit: 1,000 EU finance firms 'set to open UK offices'

 

https://www.bbc.com/news/business-56155531

You should visit Hoofddorp in the Netherlands,  it’s the home of the EU mainland offices of tens of thousands of international corporations, many of which are household names.

 

These offices consist of a mail box and an automatic phone exchange that will redirect mail and calls to where the business, profits and jobs reside - not Hoofddorp.

 

These offices enable companies to bypass trade restrictions and tax laws, which is exactly what EU companies ‘opening UK offices’ will do.

 

They’ll then compete with UK companies without having any high cost presence in the UK.

1 minute ago, Chomper Higgot said:

You should visit Hoofddorp in the Netherlands,  it’s the home of the EU mainland offices of tens of thousands of international corporations, many of which are household names.

 

These offices consist of a mail box and an automatic phone exchange that will redirect mail and calls to where the business, profits and jobs reside - not Hoofddorp.

 

These offices enable companies to bypass trade restrictions and tax laws, which is exactly what EU companies ‘opening UK offices’ will do.

 

They’ll then compete with UK companies without having any high cost presence in the UK.

 

Then maybe these applications will fail then.

10 minutes ago, Chomper Higgot said:

Exercise your post fails to address the context unintentionally degradation in UK jobs.

 

Over a £Billion being spent on trying to protect UK fintech does not suggest ‘Project Fear’ is failing, rather it indicates a gaping failure of Brexit.

 

Your predictions on the EU failing are without basis, the Vaccine roll out has nothing to do with Brexit or UK fintech.

 

 

Yet, after only 2 months, your suggestion of " a gaping failure of Brexit" are with basis?

 

My guess would be, if EU had a magnificent vaccine roll out and the UK were failing, it would be deemed something to do with Brexit.

1 minute ago, youreavinalaff said:

Yet, after only 2 months, your suggestion of " a gaping failure of Brexit" are with basis?

 

My guess would be, if EU had a magnificent vaccine roll out and the UK were failing, it would be deemed something to do with Brexit.

1. Financial services are not included in the Brexit deal, and now the UK Government are spending over a £Billion in attempt to protect UK fintech against the outcome of Brexit = Gaping hole.

 

2. I’m sure you guess a lot of things.

6 minutes ago, nauseus said:

 

Then maybe these applications will fail then.

Why would they fail?

1 minute ago, Chomper Higgot said:

1. Financial services are not included in the Brexit deal, and now the UK Government are spending over a £Billion in attempt to protect UK fintech against the outcome of Brexit = Gaping hole.

 

2. I’m sure you guess a lot of things.

1 Billion is hardly a gaping hole when one considers the rewards that could be reaped.

 

You are basing your post on nothing but assertions. Sit back. Relax. These things take time. Anyone with even fundamental knowledge of finance knows that business remodeling takes at least a year to show results.

 

You are guessing more than most.

1 minute ago, youreavinalaff said:

1 Billion is hardly a gaping hole when one considers the rewards that could be reaped.

 

You are basing your post on nothing but assertions. Sit back. Relax. These things take time. Anyone with even fundamental knowledge of finance knows that business remodeling takes at least a year to show results.

 

You are guessing more than most.

Oh, the Brexit Bird in the Bush.

7 minutes ago, Chomper Higgot said:

Oh, the Brexit Bird in the Bush.

Nope. Simple investment analogy.

 

As I said on another thread. Simply putting all things Brexit down at such an early stage is simple assertion. These things take time. Somethings may be a struggle, maybe a disaster, others may flourish.

 

Unless you have a crystal ball, or maybe some experiences of the future, you cannot possibly relay your doom and gloom with any back up.

 

Sit back, relax and let's see.

 

It's a "bird in the hand". Two in the bush.

9 hours ago, Chomper Higgot said:

What success story.

 

Tge UK built it’s fintech industry while a member of the EU and is now having to spend a £Billion in an attempt to protect UK fintech from the outcome of Brexit.

 

This isn’t by any definition a ‘sucess’.

Too early to judge. Learn how to spell in the meantime.

3 hours ago, Chomper Higgot said:

You should visit Hoofddorp in the Netherlands,  it’s the home of the EU mainland offices of tens of thousands of international corporations, many of which are household names.

 

These offices consist of a mail box and an automatic phone exchange that will redirect mail and calls to where the business, profits and jobs reside - not Hoofddorp.

 

These offices enable companies to bypass trade restrictions and tax laws, which is exactly what EU companies ‘opening UK offices’ will do.

For tax law this will become more complicated : it won't be as easy as selling in France while paying (no) taxes in Ireland. This is in/out of the EU. 

 

So even if the phone calls are redirected, the company pays local VAT on sales (cannot evade that) and tax on profits (more tricky). 

 

As for fintech startups, what matters is not just where they are created, but where they will localise afterwards, when they scale up their activities. 

On 2/26/2021 at 11:55 AM, Mavideol said:

and another draw back from Brexit but quite sure some key warriors Brexiters  will see it as a gain in independence & sovereignty  555

 

... or 'punishment' by the EU.

12 hours ago, youreavinalaff said:

As apposed to £BillionS to the EU.

 

Sounds OK. Let's see what happens. Time will tell, either way.

 

The costs of Brexit have already added up to more than the UK has paid in contributions  s I n c e  i t   j o i n ed.

8 hours ago, Thingamabob said:

Too early to judge. Learn how to spell in the meantime.

 

Oh dear.

11 hours ago, Chomper Higgot said:

Oh, the Brexit Bird in the Bush.

 

They think the unicorns will be lining up to get into UK.

 

Pun intended.

1 hour ago, BusyB said:

 

They think the unicorns will be lining up to get into UK.

 

Pun intended.

 

pun?