Fintech Brexit sectoral analysis report: Four things revealed by government papers

The government has given everyone an early New Year’s present, publishing the sectoral analysis papers for more than 50 sectors in relation to Brexit – including fintech.

You might remember that these are not the impact assessments which David Davis revealed do not actually exist, but simply “a wide mix of qualitative and quantitative analysis contained in a range of documents developed at different times since the referendum”.

1. It’s not part of financial services

The fact that it has its own analysis would suggest this is how the government is treating fintech, but it is also stating it explicitly.

They clarify that it is “mot a sub-sector of financial services in the traditional sense of describing a particular activity or business model within the wider financial services market”.

“Rather, it is a label applied to firms operating across a wide range of financial services sectors, which use new technology to provide services in new ways,” it said.

2. There are four major fintech sectors

The government has seen fit to group some areas of fintech together, coming up with four: investment advice and neo banks; back-end systems and compliance; payments and technologies underpinning digital currencies; and alternative finance.

3. Fintech comes under a services trade deal currently

Fintech is classed as a trade in services, using World Trade Organisation (WTO) rules as a starting point.

Here’s what it says:

“With respect to international trade, the World Trade Organization’s General Agreement on Trade in Services (WTO-GATS) establishes a baseline for trade in services including in relation to all financial services, including FinTech. This has been developed through EU FTAs with, in particular, South Korea and Canada.”

It also notes that while outlining current trade deals, it does not “represent the options being considered by the Government for the future economic relationship between the UK and the EU.”

4. There is no direct “fintech” regulation

Regulation of fintech comes under rules associated with their activities – eg, banking – rather than specifically as fintech, it notes.

It also points towards there being no current regulation when it comes to alternative finance and digital currencies, though, the European Commission is exploring whether it’s needed., while also pointing out that rules on data protection largely apply to fintech’s activities.

How useful the studies are is debatable. They are more of a round up giving a succinct overview of a sector – a crib sheet for anyone interested in fintech – rather than giving any indication of fintech’s future after Brexit, while sensitive information has been redacted.

Read the fintech sector analysis report in full here.

Share Post