How do you evaluate the impact of Brexit on UK fintechs? What steps should be done to protect the financial innovation sector in the UK, and to force fintech talent pool development?
Passporting (i.e. the ability of fintech companies to obtain a single authorisation to access the remaining 27 EU jurisdictions) drives capital and cost efficiencies. Without it, UK-based fintech companies engaged in regulated activities will have to set up a subsidiary in the EU, obtain a new local licence, and transfer business to that entity. In the absence of any other agreement, passporting will be lost on Brexit. This is likely to have an increased impact on later stage fintechs as they begin to want to expand into new markets. Of course, not all fintech companies need to be regulated. (Many regtech companies, for example, are unregulated. They are likely, however, to want to provide services to regulated entities and will therefore need to continue to have in mind EU rules on delegation and outsourcing, as those will govern any arrangements with EU Financial Institutions.)