EY's Richard Goold and Lauren Taylor share their expert views.
Financial technology is on the tipping point of becoming mainstream, with London at the centre of it in Europe.
However, following the EU referendum vote, questions have been raised as to whether the centre of gravity could shift from London towards another location.
Frankfurt in particular has been keen to publicise its potential as a growing financial hub with an increasingly vibrant tech scene. And, China and Singapore are both developing their offerings at an ever increasing rate, so it is key that the UK continues to support the sector and keeps it front of mind.
Although the details of Britain’s exit remain unclear, restricted access to the Single Market, a loss of passporting rights (the ability for firms to move their regulatory approvals around the European Economic Area relatively easily), and restraints on movement of labour could create headaches for the financial sector.
For financial tech in particular, the squeeze on talent and capital will be acutely felt.
Within Europe, Frankfurt has certainly grasped the opportunity to actively encourage the financial tech community, and the broader financial services sector it operates in, to relocate.
Frankfurt’s inward investment agency recently visited London to promote Frankfurt as the “financial centre of the Eurozone”, based on its financial services credentials, economic and political stability, and highly qualified talent pool.
However, it is not just Frankfurt that wants a piece of the action. A clutch of other cities such as Berlin, Paris, Dublin and Luxembourg have all gone on the charm offensive to attract financial services businesses from London. However, there are many factors at play, and London remains the preeminent centre for the sector, with a fast growing infrastructure and a strong innovation and talent pool.
It should be noted that there have been no high profile moves out of London so far. Berlin, however, has seen some success with a digital banking platform recently announcing its decision to relocate its European head office there.
Berlin’s Senator for Economics and Technology has been busy sounding out UK technology companies on the possibility of moving, and has said that “quite a few” have expressed interest in moving, with the Financial technology scene being particularly receptive.
However, even in the face of uncertainty over what Britain will look like post-Brexit, it is difficult to discount the thriving scene currently in London with its established infrastructure, strong business networks and communities, access to investment, an open regulator and proximity with other established tech and creative industries.
Furthermore, it is clear is that the UK government will be extremely keen to keep financial tech as one of its crown jewels in its thriving tech scene, and it will be difficult for another city to compete with London’s first-mover advantage.
EY provides legal services to technology firms at all stages of development; from start-ups and high-growth innovators, seeking to disrupt the market, to family businesses and large corporates that want to maintain their market-leading position.
Our tech law team has extensive experience of representing clients from all areas of the Technology sector and our expertise in cross-jurisdictional work, particularly in M&A and overseas investment, has enabled us to build a reputation as innovative lawyers providing leading edge advice to our clients.