A new report from ACCA (the Association of Chartered Accountants) has stated that Brexit could result in greater competition from American and Asia Pacific rivals. The report, titled FinTech - transforming finance, has discovered that FinTech’s impact on finance and business has proven to be just as influential to the sector, as the internet has been to other areas of the UK economy.
However the advantages that London’s FinTech epicentre currently see such as supporttive regulation and geographical location could be off-set through the loss of passporting rights and business uncertainty as it faces Brexit negotiations.
Anthony Walters, ACCA’s head of policy for Western Europe, believes that up to this point the UK has provided a supportive and nurturing model for London’s FinTech sector.
"In recent years there has been multi-billion investment in FinTech in the US, India and China. Yet despite the US benefitting from its economic strength and world-leading innovation centre in Silicon Valley, the implementation of FinTech’s potential has been slowed by regulatory hurdles. In the UK, the Financial Conduct Authority has provided a model for regulation which has been conducive to nurturing innovative technologies. Combined with London’s unique geographical and infrastructural strengths as an international finance centre, as well as its status as leading global city, the UK has proven to be a highly attractive location for businesses, investors and innovators."
Yet, he warns that the potential impacts of Brexit could challenge London’s status,
"The UK’s FinTech sector currently employs more than 66,000 people, with approximately a third coming from Europe. Inevitably the potential burdens of securing work permits for highly skilled individuals in a dynamic industry creates significant uncertainty, as does the regulatory headache which would be created by the loss of passporting rights for UK-based banks operating in the EU. At the moment London’s strengths indicate it can be resilient to these issues, but the potential of FinTech to transform finance means that its future must be considered in any future negotiations."
Overall He believes that the rise of FinTech is good news for industry innovation and consumer choice;
"While the scale of transformation is hard to predict, there is no doubt that the impact of FinTech across the traditional functions of finance has already been significant and there is much more to come. Major banking institutions are already responding through large-scale research and investment in the face of competition from start-up challengers. This is good news for consumers and firms, as the explosion of choice in a traditionally conservative industry offers a range of new possibilities of doing business based around their bespoke needs."
Read the full report here