BREXIT is already having a negative impact on the UK’s fintech sector, industry officials have told politicians.
Zopa chief executive Giles Andrews, Abundance managing director (and Zopa co-founder) Bruce Davis and Daniel Morgan, head of policy and regulation at Innovate Finance told a select committee of MPs in the House of Lords that Britain had been shut out of crucial EU talks on the future of fintech and warned of a potential shortage of talent in the post-Brexit future.
“I have to think that unfortunately the UK is underdeveloped in terms of its science, technology, engineering and mathematics education – as of today our graduates are underrepresented in those subjects,” said Andrews. “We’re already finding less desire for bright eastern Europeans, Germans, French people, to come and work in the UK.”
Andrews added that the UK had been “shut out” of recent meetings at the European Parliament, where MEPs were meeting to discuss passporting rights within the fintech sector.
“We pioneered the [P2P] industry,” he said. “The industry will lend around £2bn this year and probably represents around 75 per cent of the whole of the European industry. But they are catching up fast and probably growing quicker than the industry here.
“Would third party equivalents be the same as passporting? No, I think it would be more difficult.”
Davis told politicians that London risks being overtaken by Berlin as a fintech hub, predicting that Germany will “set about making themselves attractive” to fintech talent and institutional investors.
“In terms of the EU we are seen as a leader but the catch up rate is remarkably swift,” he said. “Before the Brexit vote we had ministers coming to the UK to talk directly to fintech firms – I’m talking about finance ministers from Ireland and Germany in particular.
“They were really wanting to understand how they could develop their regulations to attract businesses and also to keep businesses, so they were slightly bemused when they were met by three or four German guys as to why they hadn’t stayed in Germany.
“I think we’re going back in time and that does reduce opportunities for expanding businesses.”
During the meeting, the witnesses also discussed the issue of data sharing, with Andrews suggesting that Britain should align itself with the EU, regardless of the Brexit terms.
“I think we’re better off aligning ourselves…with the EU,” he said. “Because we’re closer to them philosophically and geographically. And therefore if we have a disagreement with the US then it’s better to have that disagreement together.”