FOR IMMEDIATE RELEASE
Last week we saw data that proved the UK economy grew by 0.5 per cent in the three months after the Brexit vote, despite warnings that a vote to leave would plunge the UK into recession.
However, we are not out of the woods yet.
Trusek Co Founder, Steve Hatton, said: “As we leave the EU, the UK’s fintech hub status is at risk if we don’t get a good deal on three areas: passporting, regulation and investment.
By March the government will begin the Brexit negotiations by invoking Article 50, and safeguarding our financial services industry will be vital to the governments strategy.
According to the former Director General of the CBI, Sir Richard Lambert, the financial services sector provides one in 14 jobs in the UK, and helps to finance the organisations that millions of others work for.
When analysing the future of the UK fintech sector here are three ways that Brexit will have an effect.
Current passporting legislation is allowing international banks to access European markets whilst being based in London or anywhere in the UK.
With a vote to leave though, access to the European Single Market is now coming into question.
If this access is restricted it’s likely that the financial services industry will be required to have passporting agreements both in the UK and in Europe, effectively separating their operations.
Recently the Chief Executive of the British Banking Association, Anthony Browne, has warned that international banks are already organising contingency plans in case the Brexit negotiations don’t protect rules related to financial services.
While he didn’t claim that banks would pull out of the UK fully, the Brexit negotiations are a serious concern for the industry.
As with every argument however, there is a flipside.
Figures released on 20th September show that of the 13,484 firms using passporting, 8,008 are on inbound passports, meaning they are using the right to do business in the UK from another EU or EEA member state.
Taking this argument into account, surely the financial sector in the EU has as much to lose from the loss of UK passporting as we do?
With membership of the EU comes the ability to scrutinise and amend European-wide legislation.
The PSD2 regulation coming into force over the coming years will affect the financial technology industry greatly, and our membership of the European Union has meant that our elected officials have been able to provide representations at the intergovernmental level, ensuring that the regulation works as best as possible for UK fintech businesses.
Brexit will mean that the UK loses access to the top table, and that, because any future legislation affecting the industry will be decided by member states only, the UK will have no say on the affect of future legislation.
Over previous years the UK, and London in particular, has become a hub for fintech companies.
Investment in the industry has been huge, with last year reportedly seeing a rise to $901m, but there are fears that Brexit will see this funding dry up.
In an article for Business Insider, Tom Blomfield, co-founder and CEO of start-up bank Mondo, said that whilst technology investors are happy with technology and market risk, they aren’t as happy with regulatory and political risk.
However, with last week’s commitment by Nissan to invest in the UK market, there may be light at the end of the tunnel when it comes to investments.
The Nissan deal shows that the government is signalling that Britain is still open for business. There may yet be future fintech support from government to ensure increased investment in this industry too.
It is clear that there are significant risks as the UK withdraws from the European Union, but the real facts are that at the moment we don’t know what Brexit will look like.
The new Prime Minister, Theresa May, is keeping her cards close to her chest.
Once Article 50 is triggered, and we begin the Brexit negotiations, we will know more about the affects on the UK fintech industry.
We are a 10 strong UK-based team of engineers and technology specialists with a 12 year track record of developing and delivering software and technology to the Fintech and Payments sectors. We have worked with some of the most exciting start-ups to deliver new kinds of challenger financial technology.
We deliver a flexible, collaborative approach which creates the right technology solution to support financial business via a flexible, modular SaaS-enabled application platform. It gives you access to a proven suite of modern banking and financial services technology at a fraction of the cost, and in a fraction of the time it takes to create an in-house solution.
Trusek modular software and platform infrastructure is used by marketplaces, lenders, banks, bank-tech providers, e-money companies, remitters/forex brokers, charities and communities – it can provide a major boost for any organisation that needs to accept, manage and send value. It enables them to scale up from today’s needs with a rich functionality that supports:
Payments Received – from multiple inbound sources
Payments Management – multiple currency; reconciliation and reporting; interfaces, card to card transfer
Payments Out – payroll; foreign exchange settlement; bank transfer capability
Third-party integrations – acquirers, processors, compliance
This allows customers to create and manage propositions that accept and make payments including:
e-Wallets and current, deposit, credit accounts
Full loan facility including managing multiple products and lending sources
International value transfer
Prepaid and other cards and vouchers
02 Feb 2017 14:30
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