Finance Monthly July 2019 Edition

COULD REGTECH BE IN LINE FOR A FINTECH BOOM? Brexit has left a cloud over business for almost three years now, creating uncertainty and reticence in the world of business. However much like any other major economic or political event, there will undoubtedly be sectors and businesses that benefit from the changes. Luke Davis from IWCapital looks at the future of RegTech in a post-Brexit UK. The financial crash of 2008 created a huge amount of mistrust toward big banks and FinTech entrepreneurs have taken advantage of that. The disintermediation of banks from areas such as travel money has given rise to a new kind of financial service firm, an area set to carry on this trend. There are some brilliant ideas in FinTech and the problems they solve are widely unrelated to Brexit, meaning that investment is likely to continue to grow. In much the same way as FinTech came from the financial crash, existing sectors will be disrupted, and new ones created to tackle problems that arise. Many FinTech innovations were born from a lack of trust of banks and traditional sources of financial services. Since 2008, over 200 FinTech companies have been founded in the UK alone, with seven of these going on to reach a billion- dollar valuation or a ‘Unicorn’ status. Unicorns refer to start-ups that have reached what many perceive to be the holy grail of a $1billion valuation. In terms of producing these companies, the UK is the third best place in the world behind only the US and China. In 2018, 13 companies reached this valuation in the UK, bringing the total number to 72. Many of these companies are FinTechs born of the financial crash. It seems likely that in a few years’ time we may be discussing an even greater number of companies reaching this milestone with a contribution from new and growing sectors. Luke Davis, CEO at IW Capital 26 www.finance-monthly.com FINANCIAL INNOVATION & FINTECH - REGTECH