First a referendum vote over the future of the United Kingdom’s EU membership and now a snap election. It’s no wonder uncertainty is looming over London as the fintech capital of Europe and startups are looking elsewhere to set up shop.
Post ‘Brexit’, every aspect of business between the UK and the rest of the world is going to be scrutinised – everything from access to talent to taxation and regulation will be affected in one way or another. As uncertainty abounds, red flags have been raised over the London’s future:
- In her article, Fintech And The UK's Post-Brexit Allure, Forbes’ Madhvi Mavadiya looks at whether London will continue to dominate the global fintech scene.
- Rory Cellan-Jones from BBC News asks Will fintech flee London? and speaks to TransferWise’s Taavet Hinrikus, “who came to the UK from Estonia to start a money transfer business that now employs over 600 people, says Brexit has made everything uncertain.”
- The New York Times’ After ‘Brexit,’ Finding a New London for the Financial World to Call Home by James B. Stewart claims that, “The race is on to be the new London.”
The process of decentralisation for fintech
While European capitals like Paris and Berlin are vying to attract companies currently based in the UK (or thinking of moving there), here in the Nordics, many see Brexit less as an opportunity to steal away startups and more as part of an ongoing process of decentralisation. The world is changing and former strongholds of financial power are being broken down and reinvented elsewhere –anywhere the conditions are right to support growth.
Peter Fredell, chief executive officer at global payments company Seamless, told Stockholm Fintech Hub that, “Brexit is definitely not going to be good for London and possibly very bad for the UK in general. Fintech businesses can’t survive by operating in one country; they need a large addressable market,” he says. “So, when you are choosing your headquarters, you need to choose somewhere where you have access to a large-scale market. But it’s obvious even at this stage that the UK won’t be that place after Brexit. Today, Seamless has an addressable market of around 880 million people – because we operate across 16 markets.”
The Nordics count among the best fintech hubs in the world
Deloitte’s report Connecting Global FinTech: Interim Hub Review 2017 places Stockholm in eleventh place when it comes to providing fertile ground for fintech startups. The Institute of Financial Services Zug recently placed Sweden’s capital in ninth place of the Best Fintech Hubs in the World.
The Next Web’s Nikolai Kuznetsov goes one step further and writes that he believes Sweden dominates fintech right now for the following reasons:
- Progressive banking: “The country’s banking system is quite progressive and it has stayed at pace with the developments in technology. Its major banks put up systems that allow them to easily transact fund transfers and clearing with each other.”
- Cashless preferred: “Banks have teamed up as a consortium to create the Swish mobile app. It is in use by more than 5 million users. It is exclusive for the Swedish krona but there is a possibility for it to eventually allow cross-border and cross-currency transactions in the future.”
- Less-restrictive regulation: “Credit should also be given to Sweden’s government for allowing investments in technology. Government transactions are mostly digital thus making tech-based transactions part of Swedish life.”
Regardless of how Brexit plays out for the fintech community in the United Kingdom, it’s safe to say that Stockholm – along with the other great fintech hubs in the Nordics – will be suitable hosts should any fintech startups or established companies look elsewhere for their next move.
Don’t miss our next post about how Sweden's financial supervisory authority (Finansinspektionen) has committed to provide support and advice to businesses on issues such as regulatory and permit requirements when offering innovative new financial services.
What’s do you think about Brexit? Join the Stockholm Fintech Hub Slack channel to tell us where you see the future of the fintech industry. You can also talk about your company, the industry, share job opportunities, spread the word about events, and find new ways to collaborate.