The UK is seeing an increase in capital investments in FinTech, but acquiring and retaining tech talent has become challenging for firms
Fintech firms in Britain are finding it difficult to recruit top talent due to Brexit speculations. While it is quite early to draw any conclusions about the impact of Brexit on Fintech, companies are already assessing the implications of talent acquisition & retention and raising capital.
According to Bruegel, the European FinTech industry is worth just $ 5.9 billion, and the UK holds around an 80% share of the market. For the FinTech sector, the freedom of movement of labor that the EU membership offers is quite crucial given the UK’s technology skills gap. If the UK is not able to agree on a post-Brexit deal that will be suitable for the FinTech industry, its effects could be catastrophic.
The Fuelling Fintech report from TheCityUK says Fintech in Britain employs 60,000 people, but now companies are struggling to fill roles in coding, machine learning, cloud computing, software development, AI, and Blockchain. “Since the Brexit vote in June 2016, there has been a significant decrease of graduates coming to the UK from France and Germany in particular,” said Miles Celic, chief executive of TheCityUK to Reuters.
Many FinTech firms rely on fast-developing technologies, and it requires them to have access to the right talent. According to the report from TheCityUK, FinTech firms will have to work harder to secure the skills they need by generating more “homegrown” tech talent. “There is a risk that those talented migrants with the skills needed by the UK will leave before these skills can be replaced by home-grown talent,” Celic said.
Another important question that arises is, will Paris or Berlin following Brexit surpass London – the so-called FinTech capital of Europe’ – Programmes by the UK government such as ‘Project Innovate’ have fuelled innovation, which has made the place a hub for startups.
According to PwC, several countries have reduced regulatory restraints and increased innovation in their countries following the UK’s lead. Lithuania is set to establish a new regulatory regime that will ease the way for FinTech start-ups. Berlin too has attracted 14 FinTech companies and developing a tech ecosystem. London-run Revolut and Contis have already secured passporting rights. There are a number of other European cities that are emerging to replace London as the prominent seat of European FinTech.
However, amid the uncertainty around Brexit and the ensuing competition, London remains an attractive hub for talent. Over $1 billion was invested into the UK FinTech industry in 2017, according to research by London & Partners. Meanwhile, Softbank has also said the headquarters for its $100 billion technology investment fund will be in London.
Experts, however, suggest that there are FinTech companies spread across Europe with headquarters in London, it might get harder for them to go global if they lose their access to the single market. There is a need for a close look out over the coming few months on the way Brexit becomes or FinTech.