UK fintechs claim Brexit could lead to a "lost generation" of London businesses
- UK fintech leaders claim applications from the EU have dropped in the past 12 months.
- Retaining talent and keeping investors is key to avoiding a "lost generation" of London fintechs.
- Most fintechs have succeeded despite Brexit but industry fears remain.
One of the UK's fasting growing and most exciting industries, fintech, is thriving despite Brexit fears weighing heavily on the dynamic sector. Business Insider spoke to 10 UK fintech leaders to get a better perspective on the impact Brexit is having on the industry.British fintechs claim to have made the best of continued uncertainty about the UK's future relationship with the EU, but warn that talent and investment will leave the country is clarity isn't forthcoming. Advertisement
Access to EU talent has been a key driver of London's fintech success with engineers and developers often coming from continental Europe. An expected limitation on freedom of movement after Brexit and a lack of clarity over future access to talent are key concerns for UK fintech, with some reporting clear issues already.While many of the factors that make London so attractive to startups remain, the capital's shine is beginning to dim which could cause entrepreneurs from Europe to set up elsewhere in the future.
"London used to be the clear cut choice for a number of reasons but this is no longer the case," according to Todd Latham, CMO at Currencycloud. "We could see a lost generation of fintech companies setting up outside of London.""A lot of fintech companies in London were set up by EU citizens because the city is the capital of fintech but access to talent is so important and people are increasingly less willing to come," said Fabian Vandenreyt at B-Hive.Advertisement
In many instances, companies have said that EU applications for roles have decreased significantly in the past 12 months, with one interviewee, who declined to be named, suggesting that the pool of talent available to fintechs had been "diminished dramatically."
"We have seen a notable drop in the volume of direct applications from European tech talent," said Tandem Chief People Officer Dan Atkinson. "The number has been falling slowly but steadily over the past months and we are concerned that this trend will continue if not accelerate after March."There is a deeper issue beyond the purely commercial terms in which talent acquisition is usually discussed, according to Shefali Roy, COO at Truelayer. "Half our team are European and the lack of clarity isn't ideal - it's psychologically difficult for our staff to have this uncertainty," she said. Advertisement
The government recently announced that EU citizens already living in the UK would retain settled status, easing fears about immediate changes to visa or other legal requirements. Fintechs also complained that talent from outside the EU can be hard to source with numerous companies stating that tier 1 and tier 2 visa applications for developers and engineers have been rejected by the Home Office - stunting growth.
Making the best of it
Despite some of the clear negativity, fintech is an adaptable and dynamic part of the market with those interviewed making the best of the recent uncertainty. Larger, more established companies such as Funding Circle and Revolut have had little to no impact from Brexit-related issues and have found that if anything investors have been more bullish about opportunities within the UK."Our investor base hasn't been perturbed by Brexit and our business has been growing significantly year-on-year," according to Christian Faes, CEO of LendInvest. "We have lost a senior staff member because of Brexit, but we're optimistic we can continue to hire talented people."Advertisement
Starling Bank, a mobile-only bank, is setting up operations in Dublin, but remains hopeful about the future. "It's no secret that Brexit is a major cause of uncertainty to the banking industry," said chief executive Anne Boden. "But we're confident we will be able to navigate our way through whatever is decided."Similarly, Revolut CEO Nik Storonsky told Business Insider that Brexit hadn't caused any issues for the challenger bank which reached unicorn status - a $1 billion valuation - earlier this year. Advertisement
For many companies setting up operations in Europe was always in the cards, with Brexit forcing them to accelerate the process. "As a group of companies fintechs are well placed to adapt to change," according to Ahmed Badr, general counsel at GoCardless. "Brexit has pushed us into early expansion and our new French office will be more key than we previously thought."Crowdcube, a crowdfunding company for fintechs and other businesses, says that interest in the sector has remained very high from investors. "Brexit has potentially created new opportunities and it's a result of the strength and character of these businesses that fintech has been a strong sector, said Luke Lang, Crowdcube's chief marketing officer. "It's a golden age."Advertisement
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