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Does Brexit come as a great opportunity for the UK’s fintech sector?

The UK’s fintech sector has the potential to keep the country as the global fintech hub

The UK’s exit from the European Union was officially completed on January 1, 2021, almost five years after the Brexit referendum was announced in 2016. While it might seem like an unusual thing to say but UK’s exit from the EU has the potential to bring about a huge change in the fintech sector of the country. There are multiple reports floating around that Britain’s departure from the EU has presented more challenges than opportunities for the country and its economy. But it looks like the fintech sector has offered a way out from these problems. According to experts, if proper measures are taken, the UK could become a powerhouse in the post-Brexit world.

As much as we would like to forget about the 2008 economic crisis and move forward, there is no denying that the economic downfall was brought about as a result of banking practices. It is important to remember just how many hard-working bankers, investors, and traders found themselves looking for a job overnight. A lot of individuals settled down and had become used to job security over the years, hence it’s understandable the fear and the anxiety that surrounds the UK at present.

The economy definitely took a hit but London developed a thriving Fintech scene where innovation took over job security. New companies emerged in the market that aimed to transform the broken parts of the financial system.

According to media reports, British entrepreneur Ron Kalifa, suggests that innovation in the fintech sector has the potential to keep the UK as a world leader in finance post-Brexit. Fintech is somewhere the UK has already seen a lot of success and Britain’s finance market already accounts for 10 percent of the global market share and generates £11 billion in annual revenue. In 2020, UK fintech investment totalled $4.1 billion, which was more than five European countries combined.

The UK, and particularly London has a number of key advantages. London is a global financial centre that has a large number of world-leading financial institutions. Globally, it ranked third in terms of the market value of Top 200 global financial institutions. Additionally, it also has a cluster of top research universities and is regarded as a global pioneer in fintech regulation. While it does have a lot of global contenders, but the UK has a lot of added advantages that most of the fintech hubs don’t.

Since the inception of Project Innovate in October 2014, the Financial Conduct Authority (FCA) has helped the UK to unleash the actual potential of financial institutions. The FCA encouraged the trialling of self-regulation within the industry and also encouraged the industry to develop virtual sandboxes. The FCA also brought in collaboration with and partnerships between traditional financial institutions and its contenders by encouraging the early adoption of fintech and its solutions like open banking. Back in 2016, the UK regulators encouraged large financial institutions like HSBC to collaborate with startups and this is exactly where the opportunities lie n expanding the UK’s regulatory leadership while realising the true potential of the fintech sector.

If the UK wants to become the next powerhouse of the fintech sector, it must have three key elements so that appropriate resources are given to regions where it needs the most. It is also important to keep in mind that in order to become a global fintech powerhouse, there should be a close connection between industry and academic research, and appropriate policy that will support the UK into becoming a fintech powerhouse. Coming back to talent, the primary focus should not only be on attracting and keeping a large pool of non-native talent but also on supporting local talent and skills through initiatives such as Innovate Finance’s ‘FinTech For Schools’ programme. This programme aims to promote awareness of fintech in young people and also presents a large array of opportunities to get involved and to inspire the current and next generation of innovators.

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