Where banks live, fintech grows, and London’s reputation as a global financial center is under threat following Brexit. Banks, funds, and government have banded together – explicitly mentioning fintech – and promised to protect the city’s reputation.
But questions remain over bank passporting, which allows UK-based banks entry to trade throughout the EU. Access to labor also remains uncertain; in fact, EU citizens’ post-Brexit status has become a political soccer ball.
So if not London, where should fintech startups look? Berlin has emerged as an early contender for the continent’s fintech centre. According to the FT, there is already an exciting fintech scene in the German capital. Two London-based fintech startups, TransferWise and Revolut, are on record as considering a move to Berlin.
Meanwhile, one German political party has mustered a billboard van and sent it roaming the British capital’s streets looking for first movers.
William McQuillan, partner at Frontline Ventures, says he doubts London will lose its central financial crown any time soon. “London still is a global city with a large consumer population, and many global companies are HQ’d there,” he said in an interview with TechPORTFOLIO.
There are top class universities, most of the startup accelerators in Europe, as well as a healthy angel investing environment. “All other cities in Europe are still building up those qualities and most will never have all of them.”
It’s more likely that many other European cities would collectively drain part of London’s power.
Dublin may be a better contender than Berlin in this regard, he says. “It would be the only English speaking country in both the EU and EuroZone, and 250 of the world’s leading financial firms – including half of the world’s top 50 banks – have internationally focused operations in Ireland.”
If there’s one positive thing in fintech that Brexit may have caused, it was the surge in Bitcoin as a safe haven following GBP’s fall to a 30-year-low. The weak pound could also encourage foreign buyers and investors, according to the Telegraph.
The only certainty is that no one knows how much Brexit has damaged London’s status as a fintech center until the political turmoil resolves itself and decisions are finalized.
McQuillan says: “The longer the uncertainty lasts the worse the reputational damage for a city like London will be.”