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Fintech Investment – Visualising the Impact of Brexit

After the 2008 world financial crisis, the financial technology sector has evolved enormously, and we appear to have entered a new phase in this exciting industry.

To fully understand the impact of the Fintech industry on job creation, money transfer, taxation and the European financial situation, it certainly helps to visualise the data on FinTech investment in selected European countries and Switzerland and try to draw a few conclusions that could shed some light on the importance of this “booming” sector.

Of the findings we are able to clearly identify from this map and the related graph, one of the most striking is the decline in investment following the controversial 2016 Brexit vote, which could have scared some investors who had been adamant in past years to put capital on UK based companies.

There are further reasons for this decline in the past years. One of them could be the seismic changes in the banking, finance and insurance industries that are shaking the foundations of the European financial scene with new banking companies and money transfer providers that are slowly but steadily consolidating their position atop the previously inaccessible and very elite financial landscape.

In this analysis, we’ve taken into consideration venture capital investments, which remains the primary source for FinTech companies. The drop-in investment in the UK and all over Europe in the last few years is not to be looked upon as a loss of faith in this booming industry, but rather the other way around. Whilst it’s true that there has been a slight dip in investment caused by the uncertainty of the Brexit vote and the way regulations will follow a deal or no-deal Brexit, trends suggest an increase in private funding for FinTech start-ups, which is usually an indicator of a maturing market. Furthermore, later-stage funding has become more prominent over the years, and that’s a sign of a strong belief in real-world market results.

Having said that, the Brexit vote has certainly caused some stir in the FinTech sector, leading Germany, for long the unsung innovator in the industry, to become more prominent and gain an advantage on the dominating British side.

The concerns over a Brexit vote remain hypothetical and it’s anyone’s guess what its actual long-term impact will be.

The UK has notoriously attracted the financial technology sector through regulations that have always facilitated innovation and start-up creation and separating from the EU and become even more attractive as a standalone entity in the financial market could lead more business to the UK. On the other hand, part of the attraction and growth of the FinTech industry from 2008 onwards has been based on international talent, which makes immigration regulations fundamental to correctly predict the next phase of the industry.

 

Nicola Clothier is CEO of Accurity GmbH, a Swiss-based employment service provider. Nicola has an Honours degree in English Literature from Stirling University and more than 20 years’ experience in Swiss employment, and personnel leasing up to executive level throughout Europe.

 

 

 

 

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