International “bridge” agreements could help maintain the UK as a fintech hub.
Mark Carney, governor of the Bank of England, wants to keep the UK at the forefront of financial technology, as the country braces for the impact of its withdrawal from the EU.
Speaking at the UK’s first International Fintech Conference in London on Wednesday, Carney said the bank was willing to "help build the right infrastructure for the financial technology industry to realise its promise."
The UK fintech sector is considered one of the strongest in the world and is worth about £7bn and employs about 60,000 people, the Treasury reported. A recent report from Deloitte found that London is one of the top places for fintech start-ups due to its welcoming regulation and talent.
Chancellor Philip Hammond, who also spoke at the event, said that the government was working on a modern industrial strategy and funding in talent and productivity would be key to keeping London as the fintech hub.
“We can’t remain the number one place for fintech and the other technologies of the fourth industrial revolution by simply relying on our ingenuity, talent and openness...we have to go out and get the business,” he said.
We stand on cusp of a 4th industrial revolution & British
— Philip Hammond (@PHammondMP)
Hammond and Carney’s comments come a few months after the Financial Conduct Authority made a cooperation agreement with Canada and Japan that will allow the countries to share information and support for fintech start-ups wanting to operate in either country. And just last week, Hammond met with leaders in India at the first UK-India fintech conference in Mumbai.
It’s a move to strengthen UK fintech leadership not just in the UK, but abroad. The UK already has four fintech bridges with other countries: Australia, Singapore, South Korea and Hong Kong. The bridges are agreements that are meant to make it easier for companies and investors, similar to passporting in the EU. Cooperation agreements are a precursor to a fully-fledged bridge.
William Trout, head of wealth management research at Celent, sees the agreements as a way to encourage investments in London instead of Paris, Berlin or other cities vying to be the next fintech hub.
“I think the idea is to give the fintech ecosystem sufficient run way that by the time Brexit actually takes place, it won’t really impact the ecosystem very much,” he said.
The agreements that the FCA is making with other countries fintech regulators is “something of a stance of open arms to the EU that this is a way to sort of bridge any bumpiness that follows Brexit,” he said.
Fintech bridges have been in the works longer than Brexit has, said Lawrence Wintermeyer, CEO of Innovate Finance, a fintech member association.
“We’ve been hugely supportive of any agreement” that promotes UK fintech, he said. “We particularly have been focused on the US and Asia as two territories that we think are important for fintech to be connected to from both a venture capital and institutional capital and talent perspective.”