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What can the UK Government do to Protect the Fintech Sector?
It’s widely documented that Brexit will have a profound affect on the UK’s fintech industry, and on the UK financial services sector too.
The negotiations start in a matter of weeks, with the government wanting to invoke Article 50 by the end of March, so in just over two years the British fintech sector could look very different.
At the same time as the Brexit negotiations, regulations like the Second Payment Services Directive (PSD2) and the Fourth Money Laundering Directive (MLD4) will be impacting the market too.
So what can the UK government do to protect the UK fintech sector?
1). Ensuring Financial Institutions and Fintech Start Ups Have Access to The Single Market:
Last week the Prime Minister outlined her plan for the Brexit negotiations, and a significant part involved the UK’s withdrawal from the European Single Market.
While this had been expected because of the freedom of movement question, the financial sector was still hoping to retain membership of the economic area.
In light of Mrs May’s speech it now looks likely that leaving the EU will end the UK’s membership of the Single Market, but there is still a question of how much access we will maintain.
Passporting is clearly one of the largest issues that UK financial markets face, and the news that HSBC and UBS will be moving 1,000 jobs from the UK will be a stark reminder to the government that the sectors big beasts are willing to leave the City if the right access is not granted.
It does need to be remembered though, that passporting does work both ways. Whilst the UK-based financial institutions want access to the European markets, institutions based in Europe still want to access the City of London.
2). Make a Bold Commitment to The Sector:
Something that financial markets greatly rely on is certainty, and the Prime Minister’s commitment to this in her speech last week will be welcomed by the sector, including with fintech firms, but the government must go further.
For the UK fintech sector to compete in the period following Brexit it will need to continue to be the centre for innovation.
This will need to involve extra investment for the technology sector, and a more focused approach from government.
As Innovate Finance, a leading Fintech industry organisation working with the All-Party Parliamentary Group on Fintech, have made clear in the aftermath of the Prime Minister’s speech, rather than purely focus on a competitive taxation regime, the UK should pursue more ‘activist regulation’.
Additionally, they have concluded that there is the potential for a new Fintech Big Bang if the correct combination of technology and policies are utilised.
There are many questions about how Brexit will affect the Fintech sector in the UK, but what is certain is that European legislation like PSD2 and MLD4 will be coming into force over the coming years.
As such those business with a fintech solution will need to adapt to ensure they comply with these regulations.
For this reason it’s important to have a payments platform which is flexible.
Trusek’s Software as a Service (SaaS) platform is providing a powerful and flexible fintech solution for charities, banks and other businesses needing to process payments.
Our software is flexible enough to adapt to potential changes, and our team has more than a decade of experience in the financial and technological industries.
If we can help with your payments platform or proposition, email us at hello@trusek.com or call us on 020 7048 0470.
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