After I discussed Germany’s post-Brexit allure in a previous article, Deutsche Bank announced that it would be committing to a new office in London. This is particularly poignant in the current climate, where financial institutions are contemplating moving from the UK capital to other European technology or finance centers. With the Article 50 trigger date fast approaching, it questions whether banks will weather a potential storm or make a quick exit to other UK countries like Scotland or Ireland.
According to the BBC, big lender Deutsche Bank could enter into a 25 year lease on the new building and the UK CEO Garth Ritchie highlighted that this decision “underlines the bank’s commitment to the City of London.” This could signal similar actions being taken by other traditional banks and in turn, minimise the impact Brexit will have on the UK, or more importantly, the London fintech scene.
However, in the same week, a Goldman Sachs executive explored how moving jobs away from their new London office, in order to increase European presence, as a result of Brexit, would be beneficial. Although, this is a US bank and it is interesting to point out that as France and Germany have experienced increased investment in comparison to the UK, it could mean that other institutions may follow suit and set up shop in other countries too.
A recent report from PwC and Startupbootcamp, fintech startup accelerator, found that Brexit will not make an impact on the UK’s fintech sector because of increased speculation alongside a lack of action. This makes sense, in my opinion and as the terms and conditions of what a Brexit actually means are finalized, banks and fintechs alike will take months or even years to work out how they will handle leaving the European Union.
“One of the key areas of speculation is whether London will remain the ‘fintech capital of Europe’ or be surpassed by cities such as Paris or Berlin. However, rather than seeing these cities as competition, there is a positive story to be told around increasing innovation across Europe,” the report read. This statement alludes to the idea that although the UK is occasionally thought of as separate from the rest of the continent, and perhaps will be thought of in this respect more so post-Brexit, what really matters is fintech growth in Europe as a whole.
On the other hand, London’s success must not be forgotten. There is a reason why fintech is an industry in which the UK capital has excelled in and the reason behind that could be the introduction of the Financial Conduct Authority’s regulatory sandbox or initiatives like Innovate Finance being based right in the centre of Canary Wharf. This is what the PwC report picks up on: “the fact that London is home to such a large concentration of financial services businesses and technology companies, in close proximity to one another, is also a natural advantage.”
The report goes on to say that this success has not been hindered by the vote for Brexit and many bridges have been built between London and Asian tech hotspots. Although, concluding predictions by PwC and Startupbootcamp reveal that London will remain fintech capital of the world because growth in other regions will inevitably slow down. Is this view too optimistic? How healthy is the European fintech industry in reality?
Fintech And The UK’s Post-Brexit Allure – Forbes