How did the UK start to become a homeland for new financial technologies in the Brexit Era?
The UK continues to stand as the winner when referring to the number of financial tech companies incorporated. On the other hand, will the issues created during the Brexit lead the way towards huge complications?
Substantial regulatory shifts and the reforms on London’s listing of companies’ mechanisms in the context of Brexit would probably provoke the “digital revolution” in the UK in an offer to facilitate the development of the financial – technologies within the region – correspondingly to the latest, administration – based forecast.
The communication, which was published early in 2021, underlines that Brexit regulative unreliability and expanding international contention could undercut the UK’s spot as being the head in the world’s financial technology except if proper steps are taken.
The report was created by the previous Wordplay CEO Ron Kalifa and it is also authorized by the administration to aid the consolidation of the UK’s position in the segment of the financial technology leaders.
Considering how the situation is, the UK is rated top in Europe in terms of the number of enterprises incorporated and operating in the financial technology field and start-ups as well. On the other hand, issues created from Brexit may have a worse impact and lead to Germany and France taking the lead in the Financial technology field, being the hubs of the start-ups in this specific industry.
The finance and technology sector are under big constraints from competitors since the UK went through Brexit at the beginning of 2021, but it could also be that the Brexit could facilitate more space of movement to transfigure into a more appealing probability to obtain and construct on the underpinning of the growing financial technology sector.
Considering the financial technology revenues expected to reach more than € 250 billion by 2022, there’s a lot of ground at the back of the UK making its financial technology industry a priority to retain enterprises and attract investors in this sector. Let’s dive extensively into how the UK is seeking to capitalize on the developing financial technology sector in the Brexit Era.
Financial technology “laissez-passer”
The UK administration will use a visa strategy that’s focusing on financial technology specialists in a run to fulfill all the arising issues in the industry market as the result of Brexit creating a huge gap of being able to source the EU’s talent pool.
This movement was already appreciated by the financial technology sector, as many enterprises were very afraid of losing the opportunity to be able to hire employees from the EU as a result of Brexit outcomes.
As a Sunday Telegraph article says, Rishi Sunak, exchequer, will publicize a strategy to support the UK financial technology industry to maintain the professionals at their jobs and continue being the top in the world in this sector.
It’s planed that the financial technology visa initiative will facilitate the UK to maintain its position as a very attractive spot for financial technology top start-ups to rise and develop. After the Brexit, the UK lost the unconditioned right for EU talents to work in the kingdom. At the same time, a lot of qualified European professionals left the UK as the future in the region is not clear, and the negativity generated by Brexit arose.
With the international contestants in the financial technology field arise, the professionals in this sector are highly valuable, and in the metropolis like London that is facing new competition with such places as Amsterdam, Berlin, and Barcelona – becoming more and more popular for people with the right to work in the EU.
This kind of talent expulsion is what UK is actually seeking to stop and prevent, as the danger outlined by Ricky Knox, CEO at a financial technology bank, Tandem, who mentioned: “Financial Technology visas are the best solution and indispensable if we are aiming to be on the top of the world leaders in the industry” “More than 50% of our developers are from other countries then the UK and already some of them are moving elsewhere due to the Brexit”
Space to facilitate decentralized money and tokens development
A slightly different detail of the report was underlining the UK’s need to review its position towards the regulations of the block-chain-assets as a step of improving and welcoming more and more financial technology start-ups in the future.
The latest course of action that has strict regulations in the UK which involve prohibitions on the trading of crypto assets and derivatives and the concealment in the field brought by a new catalog which was created to push on the block-chain environment and the crypto businesses to encamp in London.
The report underlines that other markets have been evolving towards the facilitation of decentralized money framework development, like the European Union markets in decentralized money proposals. It also mentions that the UK has to move on quickly with serious steps to review its position on these endeavors before other contenders take over the tech hubs.
“A tailored system for decentralized money assets must be adopted through a viable and careful approach, aligned with the values of the actual framework of regulations, as well as having the idea of ” same regulation, same risk”, in the same time being created in concordance of the issues arising from the crypto-related businesses” the report underlines. “It must be malleable enough to face the future difficulties – for example how Decentralised Finance (DeFi) must be taken care of” –
On top of this, this review also is proposing that the UK has its role in the Global Financial Innovation Network – a focus group of national regulators – and to be close to the shifts and changes in the policies on the national and international levels.
Among the developing sectors, there is one to be taken a close look at in the UK, specifically in block-chain technologies, known as DeFi, In the industry that had an impressive growth from €1 billion to around €40 billion in less than a year, financial technologies around DeFi applications that are created based on decentralized finance blockchains could be the way to ensure confidence in the development as the technology continues to modulate the financial environment.
The growth of the Initial Public Offering (IPO)
The administration did also select public listings as fundamental directions to support greater stability in financial developments. In fact, PM Boris Johnson met with the CEO’s from Revolut, Deliveroo, WIse, and other tech unicorns to make them want to get listed on the London Stock Exchange (LSE)
Once more, the report underlines a reduction in the number of shares in the public investor’s hands to keep away from weakening the early investors in the financial technology start-ups, as well as the “golden shares” or different second-class share systems that could aid the creators of the enterprises to have control over their companies and be safe from takeovers.
The idea and call for the listings regulations in Lonon may arrive at the perfect time, as enterprises like Wise, Darktrace and Deliveroo are reputedly to debut in 2021. Hence, companies like OakNorth, Checkout, and Revolut have identified themselves in the middle of the IPO hypothesizing as fintech companies valuations exploded in the get going of the Covid-19 pandemic,
This action could take out high degrees of investor interest in London. Even that a lot of IPO’s are focusing on the institutional shareholders, there are enterprises that will help individuals to enter the game through the IPO that would be impossible in the other case. (FRHC), NASDAQ listed company created a platform named Freedom24, and individuals can participate in the IPOs of their preferences – having a threshold of at least $2k.
There are also such enterprises like Fidelity that could offer such possibilities – but at a higher cost of course – from $100k to $500k in household assets.
With succour speculations towards the fintech and facilitating regulations, 2022 could be a very important year in the development of the industry and moreover for the UK to keep the struggle to keep the enterprises to leave its shores for EU hubs.
