UK Fintech and Brexit

(I searched for the UK Fintech and the Brexit, but I didn’t found any topic about this subject.)

Now that final countdown is near the end, in the end 2020 UK will leave formally the European Union. Some Fintechs will go for a country in European Union (such as much of other more incumbent financial institutions.)

  • Revolut will be go first to Lithuania and then to Ireland.
  • Trading 212 will “reallocate” to Ireland, even having already a Bulgarian license.
  • Freetrade seems to had chosen Sweden (a weird choice? Being Ireland a more consensus choice and a close geographical and linguistic choice).
  • Skrill already have left London to Ireland.

Other UK Fintechs have made any moves to prevent a (hard) Brexit?

For example, TransferWise, Monese, Curve, any P2P Lending platform, etc.

Hi RLX, the UK is already out of EU, but they do still have to follow the rules until the end of this year, unless a trade deal is happening :sweat_smile:

As far as I know most of the fintechs that also offer accounts in EU, have already prepared for this situation.

You can find articles like the ones below for most of them:rocket:

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Well, six weeks to go, deal or no deal? The ahem, politicians from all sides are certainly taking this to the wire.

If only there had never been this insistance that the whole of Europe should eventually become a Federal entitity, then perhaps the whole Brexit situation would never have come about. Our mate ‘Dave’ must be chuffed to bits with the way this has all turned out so far.

Monese and TransferWise will go for Belgium.

Curve planned to go to Germany, the Wirecard case forced them to search for another location, ending in Lithuania.

Crowdcube have a Spanish license, and now that will merge with Seedrs, will go for Spain?

The P2P Lending platforms, will also go for European Union countries?

The British Fintechs are being scatter across several European Continental countries.

Do you think, the Brexit will weak UK as the leader of an European Fintech hub?

And all the other Fintechs that were planning an expansion to the European continent, what will happen? (Atom Bank, Monzo, Starling, and all the other UK-based neo banks that were British clients-oriented.)

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I think, to be honest, the answer to these questions is probably 1) no and 2) they will still expand into the EU market.

It may be more difficult to launch in other markets, trading conditions dependant, but we will still be a neighbouring market and the EU will only require setting up a base in one country to serve the whole 27 - so it will still be an attractive prospect for Fintechs.

London is already far ahead of other European cities in terms of being a Fintech hub and they are unlikely to catch up any time soon - so it will retain it’s position as a European hub, I expect.

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Revolut is maintaining their Head Office in the U.K. and has zero plans to leave London

Europe never had a chance of becoming a Federal Entity and was never one or got near to being one during our membership.

It was easily classified as a Confederation, with the EU only being able to be granted its authority by member states sovereign being in agreement :slight_smile: Germany clarified this understanding that it would be unconstitutional for the government of Germany to seek to surrender the right of the Parliament in Germany to any foreign body including the EU and at most saw the bloc as a Confederation (deriving authority from the nation states within rather than granting authority to them)

Nope! It won’t happen, we’ve seen a drop off with stuff being sent over to Amsterdam, Paris and Frankfurt, but that’s just while we wait for the EU to grant us full ‘acceptance’ and agree that our standards are adequate; they actually do this for the US and ideally wanted us to agree to follow any rule they set (a condition they would have likely never accepted if asked to do so themselves)

We could very easily turn around to the EU and require all European firms to incorporate and capitalise their subsidiaries here and we’d see them running to give us equivalency recognition. Why we haven’t done so is beyond me.

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This confuses me. We were in the EU for 47 years and yet weren’t granted financial equivalence upon exiting, and we still don’t have it while the US was granted equivalence by the European Comission last month!

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Honestly the EU may well have done this to take a swipe at the U.K. - they will give on equivalence eventually, but like everything with them it will be a drawn out period of attempting to think of every possible potential future issue and drawing up a codified agreement on it.

Despite the obvious point that we are starting from the same position, the EU are always most concerned about the potential for future disputes to arise - so attempt to make clear provision for this in any agreement first.

It’s just down to how they operate, I doubt it means that they won’t agree to what is, essentially, a sensible thing for both parties.

Also, the EU itself is slightly conflicted here; the economic benefits of equivalence for them as a whole are plain, but many individual member states want to “poach” business away from the U.K. - a delay allows those states to do some poaching but ultimately not much, and allows for the end goal of a sensible deal. Therefore balancing the competing demands on the Commission. So there is a bit of a political element too.

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I reckon you’ve hit the nail on the head there. Not only do the Commission want to poach financial services for the economic benefits that would bring its member states, it is also under pressure to ensure that the UK doesn’t look to be thriving outside of the EU. There’s a significant and potentially growing populist, Eurosceptic sentiment in more EU nations than I imagine the Commission is comfortable with (Italy and France to name a couple), and by causing a mini-exodus of forex and European equities brokers from the City, they can make just enough of an example out of us without actually facing a damaging backlash. A (unnecessary?) delay in equivalence is a perfect and discrete way of achieving this.

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Yes, I’m naturally cynical about the Commission but my personal opinion is that they’ve been doing this all along.

They will push things right up to the wire, and then pull back at the eleventh hour; it has been the rhythm of the negotiations.

Now, there may be some perfectly reasonable explanations for this - but at least some of the time, I’m convinced it’s been purely on purpose to make an example out of the U.K.

Of course, this creates further internal divisiveness in our country as many remain-leaning people will see it as “Brexit being a disaster, why can’t we stay in” and many leave-leaning people think something along the lines of “the EU are showing their true colours, look how mean they are, it’s a good job we’ve left”.

I think it’s wrong of the EU to be playing games like this now but it’s part of a play, again, in my mind to pave some ground for the case for rejoining - which they hope a future government will do.

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Very interesting - I agree with all of that! :slight_smile:

Not exactly on topic but as someone who strongly supported Remain in 2016, I think rejoining now that we’ve left has the potential to be absolutely disastrous and I really hope it doesn’t happen. There’s absolutely no chance we’d enjoy the same freedoms and privileges we had before, we’d be forced into the Eurozone and probably the Schengen too. (Not to mention the inevitable glee of the Commission seeing a broken, remorseful UK crawling back :grimacing:) Now that we’re out, I think we should focus on maintaining healthy relations with the EU (absolutely essential for trade) but also really capitalising on our ability to make global free trade agreements now - I think there is tremendous opportunity if this is played right. I can personally see potential in some form of Commonwealth bloc, maybe something like CANZUK?

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Yes, I’m totally with you there!

I agree that we would almost certainly be “offered” none of our previous opt-outs or rebates if we rejoined, so it would come as an enormous change (including the euro).

It could even be more disruptive now to rejoin than it has been to leave!

I think there’s little point trying to pursue that option, and we should look elsewhere whilst staying “friends” with the EU.

(Sorry to everyone else about drifting off topic).

Back on topic, I think the potential future trade deals we may do could be good for our U.K. based Fintechs, as they may include mutual recognition of standards with places like Australia, as you say.

This could allow many of our companies to easily break into new markets, so it will be interesting to see how that goes.

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Absolutely! It would be cool if UK fintechs could have a stab at the Australia and New Zealand market. I tried out what is basically the Australian equivalent of Trading 212 recently (Stake) and wow is it miles behind (no instant buying power (unless you pay a fee - otherwise two days for each sell to settle), fees for withdrawing cash, USD only and US stocks only (and as such only US-listed ETFs, meaning you need to have over $30K to access them (some weird EU law), slow deposits). I think our fintechs could do really well over there, and provide some much needed innovation in their banking and finance space.

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I agree.

I also tried out Stake, it had a nice interface but not practical to use!

There could be an opening in the market over there, too, with the local names seemingly struggling at the moment. Xinja just closed down.

I know Revolut have already launched in Australia and it seems they are growing well.

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Forget the local names struggling, I’m struggling to pronounce the local names! How do you say that? Ninja? Zinja?

I actually didn’t know that, that’s very promising. I’d like to see Starling Australia! Would be great for all the expats.

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I think it’s Z-in-ja!
Like Ninja but with a Z.

Irrelevant now anyway, since they’ve closed.

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Well, I’d say they were making things difficult for themselves from the get go with a name like that :joy:

And oh my goodness, I’ve just seen their card… it’s gaudier than Monzo’s!

That’s horrible.

(Sorry for the crossover with the card designs thread!)

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I think you could pick your colour with them, they also did a more Monzo-style bright orange colour.

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Not possible /shrug

  1. eurozone is optional even though it’s technically mandatory (EMI II membership is required to adopt the euro but implementing the mechanism is optional)

  2. Schengen never was something the EU cared to have us join because we have no external borders with EU member states, we already have the Common Travel Area as stipulated by the Good Friday Agreement (that is why the U.K./Ireland never had Schengen membership)

CANZUK is probably the way to go, with Canada’s official opposition party supporting it

To further that we share a language, head of state, have similar quality of life. This allows us to move between countries and make trade easier while not causing an exodus of emigrants from a country with a lower standard of living (i.e. one of our old territories such as Bangladesh)

We’re also looking to join the Trans Pacific Partnership iirc which would remove and decrease tariffs on importing a wide variety of goods and would put us on great terms with SEA

The reason we joined the EEC is because these markets genuinely aren’t very valuable to us, btw

For the record, there are something like 15 million more Californians than Australians. Unless they’re willing to unanimously recognise our standards and require no changes + cut tariffs, the market just isn’t worth existing in, when we’re 10k km away!

Starling if you’re reading this I need a JPY local account for business customers btw haha (and a local personal account ! I’m looking for jobs in Fukuoka and Tokyo rn)