Eileen Burbidge, a.k.a the Queen of British Venture Capitalists, insists London will remain a fintech epicenter decades after Brexit. So far her position has drawn contention from industry influencers and commentators. MarketWatch, following an interview with Burbidge during the Economist’s finance disrupted conference in January, summarized the financier’s optimism.
Burbidge says Brexit does not threaten London’s fintech hub
London already has the requisite infrastructure in place, which will take years to be replicated in other markets. Also, the ease of the British regulatory system keeps it more attractive to fintech firms. Burbidge however admits that the loss of passporting will affect the nation’s financial industry as a whole. The fintech industry will nonetheless only be minimally impacted. According to Burbidge this is because “only 20% of U.K. fintechs” make inquiries about passporting with regulators.
Some industry influencers call caution on optimism
Nasir Zubairi, CEO of the Luxembourg House of Financial Technology, insists that Burbidge’s conclusions do not entirely reflect reality. He says because of Brexit quite a number of fintech companies consider London no longer the most sensible business destination. Hence, they were moving or considering moving to other EU states.
UK fintech loses investment while global capital inflow rises elsewhere
According to Innovate Finance, in 2016, venture capitalist investment in UK fintech dropped by 33.7%. Falling from $1.2 billion to $783 million when compared for the same time period. This is even as overall global investments in the industry registered significant growth. So while Burbidge discounts Germany or the US unseating Britain as a fintech hub. Individuals like Zubairi say Dublin, Luxembourg or even Amsterdam are increasingly attractive locations.
According to a BBC report, venture capitalists usually invest in “higher-risk, early-stage” enterprises. But ambiguity surrounding Brexit may be curbing the enthusiasm to take such risks. Zubairi captures it succinctly saying Brexit conveys too many “known unknowns and any good business will be doing their best to assess potential impacts and mitigate as early as possible.”
Does having a fintech hub really matter?
Pascal Bouvier, Venture Partner at Santander InnoVentures and top Money and Finance commentator on LinkedIn, thinks a more holistic view is needed. He argues that one must consider as many pros as cons in defining factors that concern the EU fintech sub-sector. This will thus draw into the discuss issues regarding immigration and work permit, data handling and the definition of leadership as per funding, and innovation output.
In this vein, Chris Skinner, an independent commentator on the financial markets and fintech, sees all these talk of fintech centers as trivial. He predicts that in the next decade or two the idea of a fintech hub will become irrelevant. The global network of trade, commerce and value exchange based upon open platforms and marketplaces will be all that really matters.
Hence, it will be less about location and more about the quality of service among other customer oriented factors. Because “finance is not a place you go but a thing you do, especially in a decentralized, democratized world,” like ours today, says Skinner.