The UK fintech industry is facing the major challenge of Brexit but, despite this, the country is set to remain at the front of the pack and retain its crown as the leading hub in Europe.
Fintech in the UK has gained and fortified a formidable position atop the world leader board by gaining a colossal $564 million in venture capital investment in the first half of 2017 alone.
London contributed the largest number of leading fintech startups in last year’s ranking of the top 50 organisations of this kind, with the total of 17 startups even beating San Francisco, home to just 16 of last year’s leaders.
Braced by this progress and investment, the UK fintech industry now faces the unparalleled threat to its dominance with the ever looming Brexit. Organisations will be confident to some extent, having received record investment in spite of the vote being cast.
Fintech hubs emerging in Asia and Africa are also applying pressure, forming a further factor that could challenge the UK’s dominant position while it is waylaid by the challenges of navigating Brexit.
Findings from Early Metrics show that 42 per cent of the top 100 fintech companies are non-Western, underlining the progress being made in other corners of the emerging fintech market, bringing new competitor hubs into the game.
Antoine Baschiera, CEO of Early Metrics, said: “The UK is currently facing its most serious challenge so far as the fintech hub of Europe… Although it’s too early to draw any definitive conclusions on what impact Brexit will have, companies are already assessing the implications of fundraising, talent acquisition and talent retention.”
A major Brexit concern for organisations based in the UK is the ability to source skilled individuals. The tech skills gap already has a tight grip on the sector as a whole, with Brexit set to only exacerbate the problem if foreign talent becomes harder to come by.
“However, amidst the long-term Brexit uncertainty and competition from elsewhere, London remains an attractive hub for talent and a dense cluster of financial institutions. London will maintain its fintech influence if this landscape does not change. Positioned as the gateway between the US and Europe, the UK already possesses expertise in successful fintech ventures and the capability to continue this trend, demonstrated by the $564 million invested in fintech start-ups this year alone,” said Baschiera.
The UK may also face exclusion from the Digital Single Market and the Single European Payments Area, limiting its ability to operate and interact with the rest of the world, potentially reducing the UK fintech industry’s relevance.