At the annual Fintech Forum in Paris, which ended this week and brings together around 120 exhibitors from the financial technology industry, this time a key topic was the upcoming Brexit. As a large part of the fintech sector is located in the UK, the whole industry is affected by the political event.
The UK has been a good location for fintechs so far
Investments in the fintech industry are increasing. In the second quarter of 2018, global investment reached a record $ 30 billion, according to a KPMG audit firm study. The study was particularly far ahead in the United Kingdom. It received $ 16.1 billion in investment in the first half of 2018, more than half of the EU’s total investment of $ 26 billion.
“It goes without saying that the bigger the market, the better it is for fintechs. The faster they can get started, the more options they have, “said Wim Mijs, managing director of the European Banking Federation for CNBC. “Those who foreclose this market only harm themselves, and that’s actually what Brexit means.”
European and British fintechs are making arrangements for a tough Brexit
Many British fintech companies now seem to expect a hard Brexit. As security, they are now applying for banking licenses in the EU states in order to continue to operate credit institutions there. According to the CNBC report, TransferWise recently applied for a license in Brussels, and Fintech Revolut received its license in December. Conversely, European companies, such as the German Fintech N26, are planning to acquire British banking licenses.
Fintechs are setting up additional locations within Europe. “We were surprised at how many fintechs were interested in setting up a branch in Luxembourg to gain access to the EU’s internal market,” Luxembourg Finance Minister Pierre Gramegna told CNBC.
Other fintechs are still hoping for a transition between Britain’s planned exit from the EU and actual economic changes.
Also published on Medium.