Most FinTechs unprepared for no-deal Brexit
FinTech firms in the UK are worryingly unprepared for Brexit, with a staggeringly low 22% saying they are ready for the impact of a no-deal departure from the EU.
That’s according to a new survey out today from Innovate Finance, the industry body that represents the UK’s FinTech sector.
The survey gives insight into the preparedness of the fastest-growing sector of the economy, as it prepares its members for exit from the European Union.
Innovate’s survey found that more than half (55%) of the UK FinTech community feels prepared to leave the EU with a transition period.
However, it also found that a significant 38% of companies have not yet taken any additional steps to prepare. Of those that have gone through additional preparation, this has included reviewing data processing, safeguarding the talent pipeline and undertaking risk management procedures.
Worryingly, in the case of a no-deal Brexit scenario, only 22% of businesses surveyed felt confident they are prepared, Innovate said.
FinTech companies have stressed passporting, cross-border transactions, servicing EU clients & retaining/attracting new talent as the areas Brexit will affect the most.
Overall, Brexit is viewed by the FinTech industry as either a risk, or offering no distinct business opportunity, with over two thirds (66%) of respondents viewing the situation in that light.
The vast majority of FinTech companies are small in size, and like many SMEs around the country, are not as prepared as large financial services institutions, Innovate said.
It cited goalposts and timings that keep changing, for making it very difficult and costly for them to plan.
While Brexit is a risk, it is somewhat mitigated by their ability to act quickly and pivot. That said, FinTech companies are clearly eager for Brexit to be delivered without a cliff-edge scenario that will put their prospects in flux.
“At this time of rapid growth in the UK’s FinTech sector, which is at the heart of the future prosperity of the UK economy and innovation, we would prefer our members to be focussing on their businesses, scaling up to conquer new markets, at home and internationally”, Charlotte Crosswell, CEO of Innovate Finance, said.
“Innovate Finance is determined to support its members during this challenging time, by distilling and passing on information given to us from Government, professional services firms and regulators.
“Hearing directly from the industry and amplifying its message to Government is a vital step to ensuring ongoing growth for FinTech.
“Businesses must take the lead to make sure our FinTech sector remains strong. Now is the time to avoid complacency, further strengthen our position and support the sector’s growth.”
Alok Prasad, Deputy CEO & COO of OakNorth Bank, said: “At OakNorth we pay close attention to factors that may impact the bank and our customers.
“Given that our business model focuses on lending to SMEs and longer-term consumer savings, we expect the impact of no-deal Brexit to be limited.
“However, we have sufficient liquidity at the Bank to address the uncertainty. We intend to very closely monitor the news, markets, social media and other information to be fully aware of potential impacts of a no-deal Brexit.
“In addition, we will be reviewing intra-day data to ensure we are fully abreast of how our customers are reacting and to adapt our approach in real-time.
“We are proactively adding capacity to support customer inquiries in case our customers want to talk to someone.
“Again, while we expect limited impact to our business, we are fully prepared to deal with a no-deal Brexit scenario.”
Luke Lang, Co-Founder of Crowdcube , said: “People are backing FinTech firms in record numbers despite economic uncertainty and the political pantomime we’ve witnessed recently.
“In the last 12 months over 80,000 people have invested more than £65m in FinTech firms raising with Crowdcube.”
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