As London Fintech week kicks-off today, Coadec examines the current challenges and concerns facing the FinTech community:
Verbatim:
“The harmonisation of financial regulation is a huge, huge asset to British financial services firms.”
“For financial services and pharma businesses, the ability to comply to one set of (local) standards and get access to an entire market was huge. If this goes away, it adds more friction and cost for companies to compete in these areas.”
“Ultimately our effective operation relies on passporting for UK Financial Services firms; there must remain effective financial union. If this cannot be secured, our future in the UK will be at risk. We are therefore supporting the continued transposition of EU legislation into UK law, to ensure that it is still possible to operate on a cross-border basis.”
The big messages from our Fintech community:
Preserve passporting: The retention of financial services passporting — the process which allows UK-based companies to use their British financial licences to allow them to do business in the EU — was perceived as absolutely central to securing the continued place of the UK as the fintech centre of Europe. Founders were also clear that the withdrawal of passporting would fall disproportionately on those UK fintechs looking to scale across European markets.
Retain access to the single market: Our Founders repeatedly cited access to the single market as crucial to their operations. A blueprint on Brexit and detail on the Government’s position regarding single market access will provide much needed clarity and reassurance to the sector. The exclusion of UK companies in the development of the Digital Single Market and Capital Markets Union was also seen as an additional barrier.
Ensure access to investment capital and liquidity: Anecdotal evidence from Founders points towards a more cautious approach from investors, as well as a reduction in the supply of capital and more onerous terms of access. Founders were clear: the Government must take immediate steps to reassure investors and provide alternative funding opportunities to ensure startups access critical finance.
Embracing fintech to finance SMEs: Our community expressed a strong desire for Government to turn Brexit into an opportunity for fintech by increasing support for fintech platforms to enable them to play a leading role in providing much needed alternative finance.
Co-ordinating on payments and data frameworks: A major concern for our fintech community was the potential restriction of access to the Single European Payments area for UK Payment Service Providers and the UK’s membership of the Single Euro Payments Area. Founders were clear on the need to ensure that payments access is not restricted. Additionally, our community also identified the importance of coordination on data privacy and security issues, to ensure fintech players are not exposed to additional complexity in meeting European data requirements.