London defends post-Brexit fintech turf from rival hubs
London isn’t giving in easily to the prospect of losing its place as Europe’s fintech hub as Brexit looms.
While some large banks reportedly are considering relocating to other financial hubs in Paris or Frankfurt, a cadre of U.K. government and industry representatives are traveling around the world to an unprecedented number of events explaining that London’s fintech community is still open and braced to persevere through the uncertainty ahead.
“The fintech sector in London is the strongest in the world made of entrepreneurs who thrive in difficult circumstances, and we’re approaching Brexit like any other business obstacle,” said Mark Walker, tech and urban specialist for the mayor’s international business program of London & Partners, a promotion agency formed in 2011.
A confederation of 13 London-based fintech companies and 7 companies in related industries including venture capital and law came to Money20/20 in Las Vegas this month for the first time, creating a significant presence with 35 people, Walker said. Yoyo, Curve and FingoPay were among companies making the trip.
Response was strong. After “hundreds” of meetings with companies and startups in the financial sector, participants gained hope that U.K. fintech firms will continue to play a vital role in the broader financial services community, even if the geographic range of London-based fintechs shrinks because of Brexit, according to Walker.
“There will be changes from Brexit if London-based companies can no longer freely trade with any other company in Europe, but when we leave—if we leave—what’s most likely is that U.K. companies will have to renegotiate different trade terms with each of the other European countries or possibly establish new trade terms with the European Union, but we will go on working,” Walker said.
Others are concerned about Brexit’s effect on U.K. fintech companies.
“It’s not the end of the story yet, as the U.K. is still negotiating and we don’t know what the exact deal will be, but prospects are not good for London fintechs based on what’s on the table right now,” said Dario Mutabdzija, head of North American business development for PayKey, an Israel-based social-messaging payments technology provider.
London-based fintech providers’ reach could be severely constrained without a financial license to develop and test products and services broadly across Europe, he suggested.
“For fintech companies, London has perhaps been the best city in the world because you could park yourself there and have access to all kinds of local expertise and a market of 600 million consumers, but after Brexit the available market could go down to about 64 million people,” Mutabdzija said.
And competition from other fintech regions is rising.
Israel also made its debut at Money20/20 this year, providing an umbrella for 12 fintech companies showcasing products including PayKey and Splitit.
“The fintech industry in Israel is booming, with heavy activity around enabling payments, providing security and fraud-prevention tools, and more,” said Gili Ovadia, consul for economic affairs for the Government of Israel’s economic mission, noting that participating companies met with representatives from hundreds of U.S. companies including Amazon and Walmart.
Canada’s leading fintech province, Ontario, was back for the second consecutive year at Money20/20 with 12 companies, compared with eight in 2016, said Mauricio Ospina, area director for the USA for the Government of Ontario in Toronto.
“Ontario is the second-largest fintech cluster in North America [behind Silicon Valley], and with 50 pure-play fintechs in Ontario and growing fast, we have huge opportunities globally and particularly in the U.S.,” Ospina said.
Brexit may widen opportunities for Ontario’s fintech community, and the province already sees progress in the fact that the annual Sibos meeting organized by Swift took place in Toronto this month instead of Europe.
“London has traditionally been a major fintech player worldwide, but Ontario also wants that role,” Ospina said.