Finance Monthly hears from Rob Coole, VP of Cloud Technologies at IPC, on the outlook for the UK fintech industry post-Brexit.

In recent years, the fintech industry has become an important focus for the UK, with the sector going from strength to strength. By the end of 2019, the UK's fintech sector was worth £11 billion in revenues, and accounted for roughly 8% of total financial services output. Adding to this, 44% of fintech companies that are based in Europe and valued at over $1 billion are based in the UK, while the UK continues to gain new investment in the fintech sector.

In a similar way to how the COVID-19 pandemic has introduced wide-ranging changes to the way we work and live, the impact of Brexit will continue to be felt for a long period of time.

While no single EU rival to the City of London has emerged yet, different Member States are taking advantage of the uncertainty presented by Brexit and are positioning themselves as new homes for fintechs. For example, both Lithuania and Malta have let it be known that they can provide new homes for UK-based fintechs, with Lithuania even running a PR campaign promoting itself as “the new capital of fintech” in the midst of the UK’s exit from the EU. This provides fintechs with a regulatory authorisation in an environment which has an entry point to the EU, something that the UK is now unable to offer.

The Opportunities

Nevertheless, the Brexit situation is not necessarily all doom and gloom. There is the potential for a number of new opportunities to emerge on the back of Brexit for the fintech sector. For example, the combination of Brexit and the COVID-19 pandemic have given fintechs an opportunity to collaborate like never before in order to piece together end-to-end solutions. This has seen the emergence of a hybrid-European view as providers look to share connectivity across mainland Europe and the UK, with lots of solutions being designed between Frankfurt, Paris and London. Furthermore, this increase in collaboration should resolve a number of issues, such as reducing the dependency that fintechs have on countries and specific technologies.


Additionally, the Kalifa Review – a report on how the UK can maintain its leading global fintech reputation – laid out a number of recommendations to help the UK’s fintech industry to thrive in a post-pandemic, post-Brexit world. These recommendations include making changes to UK listing regulations so as to make the UK’s Initial Public Offering (IPO) market a more attractive location for fintechs, as well as creating a centre of Finance, Innovation, and Technology, to drive both domestic and international collaboration in order to boost growth across the country's fintech ecosystem. In addition to this, Chancellor Rishi Sunak’s 2021 Spring Budget included a new fast-track visa for specialists in the fintech sector – a recommendation from the Kalifa review that aims to provide a boost to the fintech industry post-Brexit. If the UK is able to take on board these recommendations, then there is an opportunity for the UK fintech sector to continue to grow and thrive following Brexit.

Finally, it is also worth noting that the fintech UK has always had a strong ecosystem. This is down to a number of factors, including having good and solid infrastructure already in place, a deep understanding of the industry, and a willingness to continue to innovate and develop fintech. In fact, Brexit provides the UK with a fantastic opportunity to change its financial regulation, which could help make the country even more appealing to fintechs.

Although the winners and losers of trading venues has been a focus for many in the aftermath of Brexit, these volumes overlook the hybrid models that are being created between London and other key European, and international markets. Today, there is more focus on global connectivity, reducing silos and increasing business resilience. Cloud and SaaS models will continue to be key to supporting customers, wherever they are in the world, regardless of borders.

As such, while both Brexit and the COVID-19 pandemic have presented numerous challenges, their combination has created a great opportunity for the UK’s fintech industry to continue to thrive and for the UK to remain an unquestionable leader when it comes to fintech.