# Will there be a post-Brexit fintech boom? Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2021-02-01 Category: FINANCE Category URL: https://financedigest.com/category/finance Meta Title: London Fintech: Prospects Post-Covid Crisis Meta Description: Discover the potential for London's fintech sector amidst the Covid crisis. Experts predict a flourishing industry with global competitiveness and URL: https://financedigest.com/will-there-be-a-post-brexit-fintech-boomhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/mental-health-while-remote-working-3-1736838605341-compressed.jpg) _By **Anca Thomson,** a specialist corporate and commercial lawyer at [Excello Law](http://www.excellolaw.co.uk)._ ‘London’s fintech scene could be a winner from the Covid crisis’. So proclaimed a recent headline in the City AM newspaper. The article underneath offered a glimpse into the potential opportunities for the post-Covid economy, suggesting that the huge acceleration in technology adoption and the surge in share prices of big tech and digital infrastructure firms provide a platform for fintech to prosper and grow. Fintech [success](https://www.financedigest.com/digital-democratisation-through-low-code-the-future-of-finance-success.html "Digital democratisation through low-code – the future of finance success") stories have been making headlines ever since the global financial crisis (GFC), during which time London has established a global reputation as a pre-eminent fintech hub. They are based on a track record of successful start-ups in digital payments, online lending and [finance – stimulated by light-touch regulation](https://www.financedigest.com/uk-finance-regulators-should-pay-heed-to-energy-security-policy-says-sunak.html "UK finance regulators should pay heed to energy security policy, says Sunak") where the Bank of England acts as supervisor. Sector insiders are certainly upbeat. [Fintech will continue](https://www.financedigest.com/the-fintech-digital-revolution-will-continue-in-2022.html "The Fintech Digital Revolution Will Continue in 2022") to flourish, confirms John Collison, co-founder of the payments giant Stripe. In a recent interview, he said that he was “very bullish” about the [outlook for UK fintech firms](https://www.financedigest.com/dollar-firms-in-soft-holiday-trading-outlook-bullish.html "Dollar firms in soft holiday trading, outlook bullish"). London, he added, outstrips the US in [terms of market](https://www.financedigest.com/automotive-glass-market-to-witness-sales-slump-in-near-term-due-to-covid-19-long-term-outlook-remains-positive.html "Automotive Glass Market to Witness Sales Slump in Near Term Due to COVID-19; Long-term Outlook Remains Positive") sophistication. Duncan Wales, CEO & Founder of Tellimer, echoes the sentiment. In a recent comment piece, he noted: “The storm clouds of vast public debt, lockdowns, Brexit and maybe even the threat of the break-up of the UK loom above, but the rapid adoption of [technology and its democratisation give the UK an opportunity](https://www.financedigest.com/airway-clearance-devices-system-market-industry-analysis-opportunities-technology-demand-top-players-and-growth-forecast-2027.html "Airway Clearance Devices System Market Industry Analysis, Opportunities, Technology, Demand, Top Players and Growth Forecast 2027") to be at the front of what could be a significant 2021 bounce.” Evidence provided by the numbers also looks good. According to KPMG, the UK is the second biggest market in the world for [fintech investment, accounting for 11% of the global fintech industry](https://www.financedigest.com/how-fintechs-are-supporting-the-hospitality-industry.html "How fintechs are supporting the hospitality industry"). Meanwhile, 82% of [global financial services expect](https://www.financedigest.com/outbreak-of-the-covid-19-pandemic-is-expected-to-severely-affect-the-global-packaging-and-labelling-services-market.html "Outbreak of The COVID-19 Pandemic is Expected To Severely Affect The Global Packaging And Labelling Services Market ") to increase fintech partnerships over the next 3-5 years. Although Brexit may have temporarily diminished some of London’s financial [markets activity](https://www.financedigest.com/the-plant-activators-market-to-witness-steadfast-growth.html "The Plant Activators Market To Witness Steadfast Growth"), its gravitational pull in fintech remains just as strong. The UK [fintech businesses](https://www.financedigest.com/business-finance-the-fintech-evolution.html "Business finance: the fintech evolution") sector currently employs around 80,000 people, while it attracted £38.4bn in investment in 2019, up from £20.1bn a year earlier. In a post-Brexit world, the UK seems set to capitalise further. Much has already been achieved to underpin London’s fintech reputation, not least the proliferation of London-based neobanks [offering internet-only financial services](https://www.financedigest.com/any-business-can-now-offer-their-customers-financial-services-how-embedded-finance-is-reinventing-the-wheel-when-it-comes-to-banking.html "Any business can now offer their customers financial services: How embedded finance is reinventing the wheel when it comes to banking") without physical branches. Prominent examples include Revolut and Monzo. Currency exchange businesses, such as WorldRemit and Transferwise, have also become big players in the world of international [payments systems](https://www.financedigest.com/covid-19-putting-a-spotlight-on-mea-payment-systems.html "COVID-19: Putting a spotlight on MEA payment systems"). So when did London’s fintech story begin? The GFC marks an obvious starting point. The burdensome level of regulation that ensued hit the financial [services sector](https://www.financedigest.com/the-state-of-cybersecurity-in-todays-financial-services-sector.html "The state of cybersecurity in today’s financial services sector") very hard, resulting in eye-watering fines and penalties for non-compliance. As banks became ultra-cautious, an [innovation void emerged](https://www.financedigest.com/the-personal-emergency-response-systems-market-to-satiate-amidst-innovation.html "The Personal Emergency Response Systems Market to satiate amidst innovation"). Fintech began to fill it. Thanks to the UK’s enormous [competitive advantage](https://www.financedigest.com/turning-the-burden-of-compliance-into-competitive-advantage.html "Turning the burden of compliance into competitive advantage") in fintech, post-Brexit headlines now promise that fintech’s full potential may soon be matched by reality. This argument is predicated on the assumption that fintech is largely Brexit-proof. Despite [banks in London transferring many billions of dollars to Europe](https://www.financedigest.com/europes-banks-brace-for-russia-fallout-while-u-s-banks-see-limited-pain.html "Europe’s banks brace for Russia fallout while U.S. banks see limited pain") in anticipation of Brexit, they moved far fewer people than predicted. In total, an estimated 7-8000 personnel have been relocated. As the British government seeks to take advantage of its newly-established regulatory freedom, there are clear ambitions to maintain the UK’s lead over its rivals in [digital finance](https://www.financedigest.com/the-digital-finance-revolution-empowered-consumers-turn-digital-to-protect-financial-security.html "The digital finance revolution: empowered consumers turn digital to protect financial security"). As Brexit continues to [create uncertainty](https://www.financedigest.com/banning-russian-aluminium-would-create-uncertainty-about-lmes-role-rusal.html "Banning Russian aluminium would create uncertainty about LME’s role -Rusal") in almost every sector, the post-Brexit outlook for fintech is arguably more positive. The Brexit [trade deal provides a definitive agreement on goods – imports](https://www.financedigest.com/exclusive-indian-car-makers-propose-tax-cut-on-imports-in-trade-deal-with-britain.html "Exclusive-Indian car makers propose tax cut on imports in trade deal with Britain") and exports – leaving much of the substance on other matters yet to be negotiated and agreed. To counter this uncertainty, many [sectors are understandably demanding](https://www.financedigest.com/expansion-in-manufacturing-sector-has-increased-demand-for-industrial-cooling-system-market.html "Expansion In Manufacturing Sector Has Increased Demand For Industrial Cooling System Market") greater clarity. Apart from access for legal services, which [Prime Minister Boris Johnson](https://www.financedigest.com/factbox-who-will-replace-uk-prime-minister-boris-johnson.html "Factbox-Who will replace UK Prime Minister Boris Johnson?") lauded, the service sector has barely been touched. For financial services, the [Brexit deal](https://www.financedigest.com/uk-and-eu-reach-post-brexit-customs-deal-for-n-ireland-the-times.html "UK and EU reach post-Brexit customs deal for N.Ireland-The Times") “perhaps does not go as far as we would like,” said Johnson. In reality, negotiations for our [biggest service sector have yet to begin](https://www.financedigest.com/uk-nurses-begin-biggest-strike-ballot-in-more-than-100-years.html "UK nurses begin biggest strike ballot in more than 100 years") in earnest. Our politicians live in hope, as must the rest of us. It seems that the UK has shown enormous generosity towards the EU in allowing European financial [services companies](https://www.financedigest.com/why-financial-services-companies-should-consider-rfps-in-their-digital-transformation-strategies.html "Why financial services companies should consider RFPs in their digital transformation strategies") to continue to operate in the UK on the basis of a temporary permissions regime. However, the EU has shown no sign of reciprocity. At least, not yet. Notwithstanding Brexit uncertainty, the [British economy is set to become](https://www.financedigest.com/snowboarding-british-teenager-brookes-becomes-the-youngest-world-champion.html "Snowboarding-British teenager Brookes becomes the youngest world champion") less bureaucratic than its EU counterpart, although it is unknown whether this will lead to a bonfire of regulations. The [fintech and cryptocurrency markets are already used to quite high levels of risk; indeed, they thrive on it, seeing it as an opportunity to innovate](https://www.financedigest.com/brexit-the-risks-to-the-city-and-fintech-have-never-been-greater.html "BREXIT: THE RISKS TO THE CITY AND FINTECH HAVE NEVER BEEN GREATER"). Since they are defined by innovation, the fintech sector, and in particular cryptocurrencies, want to operate in a decentralised, independent regulatory setting. According to a recent joint report from the World Bank and the Cambridge Centre for [Alternative Finance](https://www.financedigest.com/demystifying-alternative-finance.html "DEMYSTIFYING ALTERNATIVE FINANCE"), ‘2020 Global COVID-19 Fintech Regulatory Rapid Assessment Study’, the impact of the pandemic has fuelled a global appetite for fintech regulation. Surveying 118 regulatory authorities across 114 jurisdictions, the study [found that Covid-19](https://www.financedigest.com/moderna-to-recall-covid-19-doses-in-japan-after-stainless-steel-contaminants-found.html "Moderna to recall COVID-19 doses in Japan after stainless steel contaminants found") has served to push fintech up the agenda of regulators everywhere. As part of its longstanding commitment to support innovation within financial services, the Financial Conduct Authority has been [supporting innovative firms who want to test their propositions in the market](https://www.financedigest.com/the-cancer-supportive-care-products-market-to-stay-innovatively-persistent.html "The Cancer Supportive Care Products Market to stay innovatively persistent") with real consumers. There has already been widespread piloting of regulatory and digital sandboxes that support products and services in the [early stages](https://www.financedigest.com/debt-strategies-for-funding-early-stage-companies.html "Debt Strategies for Funding Early Stage Companies") of development. Inevitably, [fintech’s future](https://www.financedigest.com/the-future-of-fintech-and-open-source-cloud-solutions-in-the-united-kingdom.html "The future of fintech and open source cloud solutions in the United Kingdom") in London will also depend upon effective regtech, where significant adoption of technology in compliance makes it cutting edge. Facilitated by the combined efforts of [British legislators and regulators](https://www.financedigest.com/cash-crunch-for-british-funds-puts-regulators-under-pensions-lens.html "Cash crunch for British funds puts regulators under pensions lens"), fintech’s UK success story seems set to continue. --- This blog is powered by Superblog. 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