London’s Fintech sector provides a golden opportunity to maintain the City’s leading position in global financial markets post-Brexit, according to a new report from Parker Fitzgerald Group.
Presented today in Washington DC at The Institute of International Finance, Parker Fitzgerald’s economic adviser, Dr Gerard Lyons will argue that neither Brexit nor regulation but technology will be the dominant driver of change in global financial services, as well as being the dominant driver of new systemic and firm-level risks. The City of London is in the prime position to address these risks and reap the potential benefits of a digital financial market place.
London has already built a unique position as a global financial centre with many competitive advantages which are ‘Brexit-proof’ including the English Common Law system, the English language, time zone, lifestyle and a mature ecosystem of professional services which will all endure post-Brexit. The capital is replicating this leading market position in the rapidly developing Fintech market:
- The UK is already an established world leader in Fintech regulation with the Financial Conduct Authority (FCA) having creating Project Innovate (in 2014) and the regulatory sandbox (in 2016) to foster innovation in cloud-based financial services, robo-advice, blockchain and RegTech.
- London has developed a huge talent pool with over 71,000 people employed as software developers, more than any other European city. More even than San Francisco. This figure is set to grow by a further 22% by 2025.
- Tech giants such as Amazon and Google are making huge investments in London. Google has announced plans to build a new HQ in London with 3,000 employees, which represents a vote of confidence in Britain’s tech sector post-Brexit.
Gerard Lyons, Economic Adviser, Parker Fitzgerald, commented:
“Through building on the existing expertise and infrastructure in traditional financial services and the already vibrant financial technology (FinTech) sector, the City can adopt a leadership role in digital financial services and become the standard setter for the global industry.
“Unshackled from a European regulatory agenda we can no longer influence, London will be best placed to maintain competitive advantage – not through aggressive deregulation, but through the intelligent application of regulations designed to manage the new suite of financial and non-financial risks, reduce costs and integrate technology.
“The key, the ace in our deck, is that London is a place people want to do business in, not just from.”
Scott Vincent, Chief Executive Officer, Parker Fitzgerald said:
“As the digitisation of financial services gathers pace, so too does the need to understand and anticipate emerging non-financial risks. Parker Fitzgerald is working closely with regulators, industry groups and large banking clients to identify, measure and mitigate firm-level and systemic risks arising from the growth of digitised business models.”
The economic case for the City to still dominate the EU’s banking and capital markets is strong. London is the world’s largest financial centre in foreign exchange and derivatives trading, bond issuance and international bank lending. Forty percent of the UK’s surplus in financial services comes from trade with the EU, and UK banks have made £1.1trn of loans to European companies.
You can download the full report here.